
Ask HN: Best Micro Payment provider? - dell9000
HN crew -<p>What is your advice for the best provider to accept micropayments? Ideally the economics work for products that are $0.99 - but anywhere from $0.99 - $9.99 would be ideal.<p>Obviously the transaction charge is what makes the small prices so difficult... any suggestions would be greatly appreciated!
======
cvinson
I have done a thorough analysis of this; I have a band website builder app
that has a MP3 store.

You should look primarily at the fees. Paypal's standard account has is around
$0.30 per transaction + 3%. If you Google "PayPal Micropayment" they have an
account that is not advertised publicly with lower fees for small
transactions. The downside is you have to make a new account to use it,
including a different bank account. I spoke to our PayPal account manager, and
he said there is no internal plans to change this or promote the micropayments
plan.

~~~
pageman
btw, you have a URL for that band website builder that has an MP3 store? :)

------
patio11
I think you're better off NOT taking micropayments, primarily because the cost
of authorizing the transaction dominates the actual value of the transaction.

What do I mean? Well, suppose you had asked me to pay a nickel to read this
comment thread. I value my own time at about a hundred dollars an hour. I've
already spent more than a nickel of time reading this thread, so clearly I
should have been willing to pay a nickel to read it. But the mental decision
point on whether to cross the penny gap or not, plus the amount of friction it
would take for me to authorize this transaction (fish out credit card, type in
digits, sign in, click "Are you sure you want to pay $.05 to this merchant?",
yadda yadda), is worth far more than a nickel of frustration to me. That
increases the cost of the content to me but it is revenue that _you don't
capture_.

Rather than selling things for micropayments, do what essentially everybody
does in this space: sell a microcurrency in macro-units ($10, $20, etc), and
then make authorizations to spend the microcurrency as friction free as
possible. For getting over that penny gap on the first transaction, you
probably want to give people a significant incentive to buy their first hit of
microcurrency -- 100 dragon eggs for $5 instead of $10 like usual, whatever.

Clarifying edit: for non-Americans reading this comment, it might be useful to
know that a nickel is .05 USD and a penny is .01 USD. They're the common names
for two of our low-value coins.

~~~
HeyLaughingBoy
This is one of the reasons I like PayPal and use it in preference to credit
cards for online purchases. It has very low friction. To buy something online
I normally need to get up, find my card (back when I used CC frequently, I had
the numbers memorized, but no more), type in digits, go through the whole
procedure.

Whereas, with PP, the site just takes me to PayPal's site where cookies know
who I am, so I just enter my password, press OK, and I'm done.

It's gotten to the point where I often check if a vendor takes PayPal as soon
as I even think of ordering.

------
jsdalton
I think the problem is there is no great answer to your question. Here are a
few possibilities though:

TipJoy (<http://tipjoy.com/>) is making a play as a micropayment platform I
believe. I think they're a YC company as well.

Amazon Flexible Payment Service (<http://aws.amazon.com/fps/>) is also one to
scope out.

~~~
dell9000
Thanks much -

Has anyone used Amazon FPS vs. PayPal vs. Regular processor?

~~~
ivankirigin
Shoot me an email if you have any questions about Tipjoy. We're working on
something closer to what FPS provides: ivan@tipjoy.com

------
midnightmonster
PayPal offers a micropayments fee model with $0.05 transaction fee + 5%. It
beats their standard model on transaction amounts up through $11.90.

------
noodle
well, depends on what you want to do. you could aggregate like tipjoy does, if
that fits your model.

there's also <http://aws.amazon.com/fps/>

there's also one other good one out there, but i can't recall the name since i
don't use it. will edit/reply later if i can remember or find it.

------
seiji
A micropayment is less than $0.01 USD. Otherwise, it's just a "payment."

------
somagrand
This is a great question. I assume PayPal is not the answer in this space even
though Apple uses them on the iTunes store.

~~~
apollo
I didn't know that iTunes uses PayPal for credit card charges. Do you have a
source on this?

~~~
somagrand
Take a look at your payment options in your user account preferences. You'll
see a paypal option.

I assumed they only offer PayPal in hopes of bringing PayPal's customers even
at the sake of margin.

~~~
apollo
I see, but it's possible that they accept PayPal but don't use them to process
the credit card charges. I always wondered how big operations like iTunes do
their credit card processing.

~~~
pstinnett
Yea definitely. I wouldn't think Apple would use PayPal to process the credit
card charges. I was just explaining why they might accept it as a form of
payment.

------
hotshothenry
i wrote an article about this same subject,
[http://newsolareclipse.com/2008/12/micropayment-systems-
the-...](http://newsolareclipse.com/2008/12/micropayment-systems-the-next-
killer-app/)

------
tstegart
Both Paypal and Amazon do micropayments with fees of $0.05 + 5%. So basically,
your fees for a $0.99 cent MP3 is around 10 cents. It definitely makes
micropayments feasible.

------
anthony_barker
We did the analysis about 2 years ago for a charity and went with paypal - I
believe the reduced fees for smaller payments only applies if you open your
account in the United States.

------
yelatia
check www.alertpay.com

------
skootch
have a look at www.onetouchpurchasing.com

------
pageman
if you want to go to Asia and willing through an HK LTD. we can help you in
asiapay.com (full disclosure: I'm a director) :)

