
402 Payment Required, and why micropayments are doomed - artpi
https://piszek.com/2020/05/19/micropayments/
======
Animats
Yes.

I've pointed out before that the enthusiasm for micropayments is from people
who want to _collect_ them, not those who want to _pay_ them. Unlike credit
cards, which, when introduced, were easy to sell to buyers but hard to sell to
merchants, since the merchant pays fees.

Cryptocurrencies are not a magic bullet here. The technology for preventing
double-spending is incredibly inefficient and slow. Transaction costs are
high. Right now, a Bitcoin transaction costs at least US$5. It's been as high
as $20.

~~~
Jach
As [https://bitcoinfees.earn.com/](https://bitcoinfees.earn.com/) shows it's
only $5 if you want your transaction confirmed the fastest (next block) for
the cheapest. If you're willing to wait longer, you can still pay as little as
2-4 cents. And the average fee will probably go down again, the complete
history is here: [https://www.blockchain.com/charts/fees-usd-per-
transaction](https://www.blockchain.com/charts/fees-usd-per-transaction)

You're right about crypto not being a magic bullet though.

~~~
arcticbull
The actual cost of a Bitcoin transaction (when not socialized via inflation,
or block rewards in the parlance) is ~the electricity cost of 700kWh, or $50,
plus the cost of developing, building, and maintaining the miners. Each
transaction also generates 87g of e-waste so that's gotta be non-trivial.

I'd suspect each BTC payment is actually $60-70. When block rewards end,
someone's gonna have to pay that.

~~~
ShorsHammer
> someone's gonna have to pay that

Ignoring the fact that's going to occur in 2140, what you've stated is simply
not true, users decide what fees to pay, no one else determines the price.

I send zero fee tx's regularly. If you are in no rush the cost ranges from
tiny to non-existent sending money across the planet.

It's never going to be used for micro transactions without a second layer but
the whole premise of this comment is out of whack with the reality.

~~~
arcticbull
As I stated, right now, the direct transaction fees are low because the total
fees are socialized. Miners make that back in block reward. Recently, people
refused to pay more for transactions and BTC price remained constant-ish after
the halving so hash power went down.

The actual cost of a transaction can be represented as the following
equilibrium:

(E * pkWh) = F + (R * pBTC)

\- E is the average amount of power required to process one transaction, a
function of hash rate (~700kWh)

\- pkWh is the average price paid by miners for power (~0.08 $/kWh)

\- F is the average fee paid for a transaction directly (~5)

\- R is the average block reward per transaction (6.25/3500)

\- pBTC is the market price of a Bitcoin (~9500)

If (F + (R * pBTC)) is ever less than (E * pkWh) as happened after the
halving, something's gotta give. Either the fee has to go up, the price of a
Bitcoin has to go up, or the hash rate will drop. The halving demonstrated
(3).

Make no mistake, though, the cost of a bitcoin payment is ~$50, you just have
to distribute it over the parameters.

You didn't think miners were given you "almost free" transactions for their
health or something did you? Your very-low transaction fee is the tip of a
giant cost-burg.

~~~
Jach
As models go this is ok to highlight the cost/reward incentive to mine at all,
but with the original whitepaper we all already knew that full network hash
rate depended on cost of electricity, the block reward, the fees of
transactions in the block, and the purchasing power of bitcoin. What's new,
other than an incorrect focus on "per transaction" when the real cost is
system-wide and depends on different/more parameters (sum of F, difficulty
rather than hash rate, and transactions per block which individually
contribute arbitrary amounts including 0s to the sum of F)? It just seems like
another tiresome way to make the years-old remark of "wow look how much
electricity the full system (a decentralized trustless ledger) consumes and
how few transactions per second it supports!"

~~~
arcticbull
> It just seems like another tiresome way to make the years-old remark of "wow
> look how much electricity the full system (a decentralized trustless ledger)
> consumes and how few transactions per second it supports!"

The only way it doesn't waste inordinate amounts of power and support a
reasonable number of transactions is if you pretend.

~~~
Jach
It is an inordinate amount of power relatively speaking and the transaction
throughput is sad (though not sad enough to get people to use other versions
that make different tradeoffs, apart from the obvious one of mainstream
finance with Visa, Paypal, et al.) So what?

Waste? It's evidently not waste, because miners are compensated. Missed
opportunities for that energy to have done work on something else, or at least
done more efficiently so the surplus could do something else? Perhaps, but
that can be said of anything. I'd instead criticize the far greater missed
opportunities of not coating deserts with solar panels, not peppering the
world with nuclear reactors, not having satellites beaming microwaves down,
etc. etc. We'll never become a Type 1 civilization with attitudes suggesting
we lower global energy consumption or try to allocate it only in approved
ways.

~~~
arcticbull
> It is an inordinate amount of power relatively speaking and the transaction
> throughput is sad (though not sad enough to get people to use other versions
> that make different tradeoffs, apart from the obvious one of mainstream
> finance with Visa, Paypal, et al.) So what?

Well, I mean, if you're trying to launder money or manage a ransomware
product, PayPal and Visa aren't great candidates.

> Waste? It's evidently not waste, because miners are compensated.

People are compensated for all sorts of wasteful garbage. I could pay some
dude to dump gasoline directly into the rain gutters. Or move a mountain 6
feet to the left using only a shovel. That doesn't instantly turn it into a
productive activity.

> Missed opportunities for that energy to have done work on something else, or
> at least done more efficiently so the surplus could do something else?
> Perhaps, but that can be said of anything.

There's no massive energy surplus. If we turned off the 55TWh/yr that's being
burned on multiplayer Excel, it would stop a non-trivial percentage of our
greenhouse gas emissions.

> I'd instead criticize the far greater missed opportunities of not coating
> deserts with solar panels, not peppering the world with nuclear reactors,
> not having satellites beaming microwaves down, etc. etc.

Sure, I'm down. Sounds great!

> We'll never become a Type 1 civilization with attitudes suggesting we lower
> global energy consumption or try to allocate it only in approved ways.

Not with that attitude :)

To me, it's like there's a giant smoldering tire fire in the town square, and
everyone's walking around praising the tire fire for the nice warm glow it
creates.

------
phh
We already have micro-payments, and it's called ads.

It is pretty transparent to the user, there is no per-transaction fixed cost
(though the margin taken by Ad provider is pretty huge), and some people are
living pretty nicely with it.

I agree with the various points this article makes, but it doesn't mean micro-
payments are a no go. Just make it as seamless as ads!

The article mentions subscription, but doesn't mention the possibility of
subscription-based micro-payments?

That's what scroll.com, and I believe there solution has none of the issues
mentioned in this article, even though it would still make sense as a 402
Payment Required! Of course you can't generalize scroll.com everywhere, for
many reasons. But I believe /that/ idea is a start of making micro-payments a
thing.

~~~
e_y_
Google had a short-lived experiment called Google Contributor, where you could
pay a monthly subscription to hide AdSense ads. Each page view would subtract
from your monthly balance and the leftovers would be refunded. I had mine set
up to show cat photos instead.

[https://en.wikipedia.org/wiki/Google_Contributor](https://en.wikipedia.org/wiki/Google_Contributor)

~~~
gxon
It's odd that it was killed suddenly without an apparent reason.

~~~
x86_64Ubuntu
As is tradition (with Google)

------
cft
PayPal already has micropayments, 5c+5%

[https://www.paypal.com/us/smarthelp/article/what-are-
micropa...](https://www.paypal.com/us/smarthelp/article/what-are-
micropayments-faq664)

[https://www.paypal.com/us/webapps/mpp/merchant-fees#fixed-
fe...](https://www.paypal.com/us/webapps/mpp/merchant-fees#fixed-fees-
micropayment)

Without this, my bootstrapped company that employed over 15 people would not
have been possible.

~~~
owenversteeg
Huh, so either you have the micropayments rate on for all payments or none.
Interesting!

0.05x + 0.05 = 0.029x + 0.30 : x=$11.90

Fees would be:

$0.10 vs $0.33 on $1

$0.15 vs $0.36 on $2

$0.30 vs $0.45 on $5

$0.55 vs $0.59 on $10

$1.55 vs $1.17 on $30

~~~
PaulDavisThe1st
Nope, you have two paypal accounts, and route your payment processing
according to whether the amount is < US$12.

Been doing that for around a decade. Make a substantial fraction of my income
from US$1 payments.

~~~
owenversteeg
Huh, does Paypal not get upset at that? Given the stories with PayPal freezing
everything on a hair trigger I'd be very worried. Or is it officially allowed?

~~~
PaulDavisThe1st
When I first did this, I ran into problems because PayPal didn't automatically
allow more than one of their accounts to be "linked" to the same external bank
account. I got written approval for that. Recently I had to update my
information with them (after a long-distance relocation), and they were
entirely fine with the two account state.

The stories about PayPal freezing everything on a hair trigger are indeed
worrying, but after using PayPal to collect the majority of my income for
12-15 years, my attitude is that these stories are just another example of how
the internet magnifies the bad/abnormal and buries the normal. There's no
doubt that they happen, but in the context of the total amount of activity
that PayPal is involved in, my sense is that they are a tiny, tiny fraction.

------
lazyjones
Micropayments have already taken off. They're extensively used in Steam (loot
boxes, even c2c sales) and on Reddit. Implementations are simple and
straightforward: pay someone who keeps your credit a larger amount and spend
fractions of it with 1-2 clicks whenever you want. The confusion stems from
the fact that people want to sell uninteresting stuff (and items of unknown
quality, the "cat in the sack" as we say in German) on the Web and wrongly
blame microtransactions.

------
Glyptodon
I'm not sold on the argument that US credit card swipe fees are a true floor,
given that transaction fees fluctuate from country to country somewhat
significantly, though I do agree there's likely a "single transaction floor."

That said, I'm not in agreement overall. I think there are likely many things
that can be billed in "sub-minimum-transaction-increments," it's just that
they only become worth charging when they exceed the floor. So I guess in my
head most of it is tracking "microdebt," and only sometimes is combining
enough of the outstanding "debt" enough for it to be worth a payment.

It's basically a permutation seen in every game with (much hated) in-game
currency. Maybe there's dirt cheap things to buy, but you still have to
exchange to IGC at a $1:n floor.

~~~
PeterisP
For an actual example of a single transaction floor in a functioning financial
system, the pricing of Euro TIPS transfer system
([https://www.ecb.europa.eu/paym/target/tips/html/index.en.htm...](https://www.ecb.europa.eu/paym/target/tips/html/index.en.html))
may be relevant, where the bulk cost for transferring money between different
banks in different countries is much less than a cent per transaction, €0.002.

There's some overhead at the sending/receiving institution as well, but it has
a similar order of magnitude (0.0005-0.005€/txn mostly depending on your scale
because of the fixed costs); the total cost for a proper interbank transfer is
less than a cent if you do things right. The price is mostly determined by
other factors, not the cost - it can be (and often is) zero for
competitiveness purposes, recouping the costs from other services, or it can
be something like the same 30 cents as the original article lists if someone
is willing to pay that.

~~~
dannyw
Bank transfers don't come with dispute resolution (chargebacks), or credit.

~~~
skeletal88
Neither do debit card payments. Which almost everyone uses here in my part of
the EU. Also, the idea of doing a chargeback for something here, is totally
alien to the people in my surrounding countries.

Chargebacks and distpute resolution and all that stuff is just something
people in the us rely on, because using credit cards makes fraud easy. If I
use my chip and pin card, then I can be sure that I did the payments. If I
rely on a number printed on my card that I have to give someone, then fraud is
just too easy.

I wish all online credit card transactions would use 3D Secure, but for some
reason they don't.

The same for when people complain that european bank cards don't have any
cashback or other "free" stuff associated with them. People don't realise,
that they themselves are paying for that, no? I'm really glad the EU
legislated caps on card transaction fees, because moving some bits around can
only cost so much.

~~~
oarsinsync
> Neither do debit card payments. Which almost everyone uses here in my part
> of the EU. Also, the idea of doing a chargeback for something here, is
> totally alien to the people in my surrounding countries.

Debit cards come with chargebacks. Chargebacks are a feature provided by the
payment networks themselves, so it doesn't matter whether you're using a
credit or debit card.

------
nottorp
Right, I know. A subscription is less than a Starbucks coffe. Old song.

Newsflash: perhaps I'd like to support more than a couple sites. Those coffees
add up.

Also, I don't do Starbucks coffee. It's overpriced.

~~~
jfengel
I support a number of podcasts through Patreon, for a nominal five bucks a
month. But that's more than I pay for Netflix and amounts to several hundred
per year.

I'm happy to do it. It's worth it to me to support people who are often
working full time to produce quality content. But it's no surprise that only a
microscopic fraction of people do. It would be nice if a higher fraction gave
a tenth as much.

~~~
nottorp
That's subscriptions to things that you use regularly.

Would you pay $5/month indefinitely to every site that has an article linked
to on HN that you read? No, didn't think so.

Would you pay 5 cents per article read though? If the technical possibility to
do that existed?

~~~
Leherenn
The issue I see is that based on what I've seen with sites that offer both
options, it would be $1 per article to push you towards taking the
subscription.

~~~
nottorp
That's a greed issue.

I'll never subscribe to the new york times because I'm not even on the same
continent and I don't care about their news generally.

They could get some pocket change out of me when HN links to them though.

------
xrd
This article assumes that things like transaction costs are fixed, and
customer support is legally required.

If you removed those two assumptions, micropayments make sense.

Crypto currency actually can solve those problems elegantly. You can have low
transaction costs. And, transactions can be anonymous and irreversible
(depending on the currency).

Critics will rightly point out those promises are not always kept (ethereum
gas prices, for example), but they are the goals. Lower transaction fees, I
would assert, are not the goals of PayPal.

The problem is not technical. It's that there isn't mass adoption. If a well
funded startup did a "Fresno Drop" they might be able to overcome that. That
would be interesting and could be very effective.

[https://99percentinvisible.org/episode/the-fresno-
drop/](https://99percentinvisible.org/episode/the-fresno-drop/)

Full disclosure: I'm working on such a system and have a patent pending on the
process.

~~~
zozbot234
Crypto currency does not have "low" transaction costs: it takes a _lot_ of
energy to commit a BTC transaction to the blockchain. Crypto can only ever be
viable for non-trivial (large, or unusually valuable) transactions where trust
cannot be provided by common mechanisms, such as a stable government or a
private escrow agent. This clearly doesn't match the typical use case for
micropayments.

~~~
gruez
>it takes a lot of energy to commit a BTC transaction to the blockchain

This is a misunderstanding of how mining works. It takes virtually zero energy
to create a block (ie. commit a transaction). However, it takes massive
amounts of energy for your block to be considered valid. This is because each
block also comes with a block subsidy (currently 6.25BTC), which many miners
are competing for.

~~~
littlestymaar
I don't think the OP is misunderstanding anything, but you seems to be: the
proof of work occurs at the creation of the block (which doesn't really mean
“commit a transaction” but instead “acknowledge a bunch of transactions
requested by users”), the “validation” comes from other miners adding more
blocks to yours (the “chain” thing).

------
BitwiseFool
As someone whose parents run a small business, I've found out that the average
person doesn't realize how complicated it actually is for businesses to get
payments from customers. All of the overhead in payment processing happens
because meticulous records need to be kept for transaction to happen (Account
Balances, Payer/Payee IDs, AML/KYC requirements). All of this needs to be
logged and audited in case of invesitigation or a charge reversal.

With cash you don't have that problem - the transaction is physcial and
immediate. But I doubt any micropayment system will get approval to transact
money without anti-money laundering laws and transaction reversibility.

------
nolantait
This article focuses on micropayments for consumers for something like movies
or news subscriptions. But what about micropayments for something like micro
work. Platforms like Amazon Mechanical Turk, Fiver, etc all build their own
minimum wallet systems (must have $5 or more to cash out). I feel like the
ability to pay small amounts to do work in parallel would be huge but remains
fractured and clunky until this micropayments future matures

~~~
arbol
Yeah it's not addressing the use cases for micro payments. Streaming music and
video could similarly pay out micro payments to creators who could cash out
when it's profitable to do so, bearing in mind tx fees.

~~~
PKop
Avoiding the situation of requiring many payment decisions is still there.

Streaming music consists of a single transaction that some platform logic
would then divide behind the scenes. The consumer isnt forced to make multiple
payment decisions. If and when they are, it probably won't work. Even having
to pick and choose what portion of some pool of funds one wants to give to
which creator creates cognitive friction that I don't think we've seen solved
yet.

~~~
TeMPOraL
> _Even having to pick and choose what portion of some pool of funds one wants
> to give to which creator creates cognitive friction that I don 't think
> we've seen solved yet._

Humble Bundle would probably have good stats on that: how many people bother
to alter the default proportions of the devs/charity/HumbleBundle split?

------
arcticbull
Payers don't want micropayments. They don't want them because each time you
spend, you have to make a decision. This leads to decision fatigue. Nobody
wants to make a million individual tiny purchasing decisions.

This is why Netflix is so successful, but Apple's pay-by-the-episode model is
far less engaging, even though I wager for most people it'd be much cheaper.

------
rjmunro
> ... every Credit Card processor charges a roughly similar rate for
> processing payments ... 2.9% + 30c of the fixed cost.

In Europe, this is not the case. The EU introduced a cap of 0.2% of the
transaction value for consumer debit cards, and 0.3% for credit cards for the
amount that banks can charge each other. So as a retailer, you can get 1.6% or
better rates here, with no 30c minimum. People use credit cards every day to
get bus tickets worth around $1-2 - that would be like 25% of revenue if there
was a fixed 30c amount or similar.

~~~
asciimike
This is also why rewards credit cards in Europe are much less common, yes? I
feel like most "mid to high end" US cards are in the 1-3% range (or up to 5%
in rotating categories), which are effectively funded by the merchant fees--so
having a cap on them means no (or much lower) fees. Curious how US folks would
react to a 90% reduction in the CC rewards, even if it meant a more efficient
system.

~~~
PaulDavisThe1st
I benefit substantially from rewards cards. But I view them as just one more
way for the rich to get (a little bit) richer. If they all just went away, I
believe it would be a better world (or at least, a better USA).

I still can't figure out how Amazon's Prime/Chase card can give me back 5% of
everything I spend at Whole Foods. It's absurd.

~~~
ac29
> I still can't figure out how Amazon's Prime/Chase card can give me back 5%
> of everything I spend at Whole Foods. It's absurd.

For one, it requires a $120/yr Prime membership to get that rate - the non-
prime rate is 3% (which is seen on many cards). I have an Amex with an annual
fee that gives 6% back at all grocery stores (including Whole Foods), though I
also wonder how that can be profitable for them. The break even point where
you earn more on the 6% card after the annual fee compared to the no-annual
fee 3% card is only a little over $3000/yr (~$60/week), which isnt much even
for someone single.

------
uberneo
Simple example of MicroPayments using Bitcoin Lightning Network -
[https://twitter.com/micropaylink/status/1231255048509952002?...](https://twitter.com/micropaylink/status/1231255048509952002?s=20)

------
sneak
Micropayments won’t take off because a service to send or collect them is
illegal in the US without carding every user and $1mm-per-state legal and
licensing fees to be a money transmitter.

This was to be my next company, and it was effectively banned.

We have all of the tech to anonymously demand a real-time irreversible penny
payment for a pageload, a download, or an API call. Pervasive, suspicionless
financial surveillance demands of the government have made the resulting
businesses mostly impossible.

~~~
carlsborg
Would Uber for example need those licenses?

Why not use “credits” where buyer makes a single payment and then uses those
credits to make smaller transactions

~~~
sneak
I'm not really sure that the financial model of micropayments, nor the
incentives of those accepting such payments, lends itself very well to
middlemen, platforms, or rent-seekers.

For anything that hopes to become as ubiquitous as HTTP, it needs to be
standard, decentralized _and_ distributed, and extensible, a system where
anyone can stand up an endpoint without centralized approval. I think the
governmental stranglehold on payments in most of the developed west is going
to be a hard barrier to such a thing ever developing, and instead we'll see
the continued growth of centralized chokepoint platforms like Facebook,
Medium, Uber, PayPal, Square, et c.

It's a real tragedy, because all of the tech is now in place for a total any-
to-any model of content, APIs, and payments. It's just illegal.

(And not even "a little bit" settle-your-way-out illegal like web spidering
under a super strict interpretation of copyright law, but SWAT-machine-guns-
in-your face, "terrorism and child porn and money laundering!" pearl-clutching
dozens-of-years-in-jail mega super illegal.)

~~~
mschuster91
> terrorism and child porn and money laundering!

Because that's, let's face it, is exactly what such a system would be used in
a non-negligible way. Bitcoin got a _lot_ of early adopters with Silk Road and
the likes.

~~~
sneak
Buying controlled drugs online is none of terrorism, child porn, or money
laundering. I'm not sure that the available data supports your argument.

You'd also be crazy if you thought that e.g. PayPal is not used "in a non-
negligible way" for the purchase of controlled drugs or child pornography or
sex trafficking victims.

Anything widely used by millions of people is going to be used for the kinds
of payments that millions of people make, whether legal or illegal. That's not
an argument against the system existing.

~~~
mschuster91
> Buying controlled drugs online is none of terrorism, child porn, or money
> laundering. I'm not sure that the available data supports your argument.

Illegal drugs are a major source of funding for terrorism, e.g. Afghani
heroin, or the Latin American cocaine gangs.

> Anything widely used by millions of people is going to be used for the kinds
> of payments that millions of people make, whether legal or illegal.

It also creates a paper trail which any criminal worth his salt wants to
avoid. I have never heard about Paypal being used for child porn or paying a
trafficked hooker, the latter is a purely cash based business anyway..

------
seph-reed
I really enjoy the BAT system in Brave. It's often broken, or the person I
want to donate to doesn't take BAT tips. It's also hard to convert USD into
BAT. But I keep on wanting to use it, and assume that eventually they'll
figure it out.

------
8bitsrule
When the 'micropayment' idea first came around decades ago, I got the
impression that it would let us voluntarily send a little change to
individuals who'd posted something that was 'worth' looking at/hearing _to
us_.

Had that option ever arisen, I'd have 'sent' x cents _directly_ to the account
of hundreds of creators. Because it was simple and person-to-person. Now and
then, I'd have 'sent' x dollars to -someone- who'd created something of
extraordinary value ... _to me_.

In my view, the rewards collected by brokers are usually not deserved, and the
rewards for streamers highway robbery. A 'facilitator' at cost+ (limited) is a
different ballgame.

The idea - simple, direct, voluntary, user-chosen 'rewards' P2P - never became
a reality. I regret that. A cent, a nickel, a dime - anyone could play - from
100,000 people in a year (or even longer-tail) amounts to a very tangible
reward, and valuable feedback. I don't need anyone telling me what something
is worth _to me_ ; the creator does.

~~~
shepardrtc
You should check out Coil: [https://coil.com/](https://coil.com/)

They have a browser add-on that does streaming micropayments directly to
creators as you view the content.

~~~
PaulDavisThe1st
No, they're a broker, just like all the others.

"Direct to creators" means from your (financial institution of some type)
account direct into the equivalent for the creator. No middle-men, close to
zero fee, no cut, no membership.

------
mmm_grayons
There are a few people pushing micropayments as a means to support independent
content creators etc., but most are pushing them because it's well-known that
people will spend more if you charge them small amounts many times. See the
99c app plus 99c more for each small thing model. That's the reason why I
don't like them: because they're bad for me as a consumer.

------
asciimike
Not entirely related since this is less of a peer-to-peer and more of a "how
do we solve things like paying for website views", but I really liked Rivest's
approach for "Electronic Lottery Tickets as Micropayments"[1], as it keeps the
amount transacted high enough to avoid transaction costs being a material
amount, while also meaning that customers aren't charged that much for any
individual transaction.

[1]:
[https://people.csail.mit.edu/rivest/pubs/Riv97b.pdf](https://people.csail.mit.edu/rivest/pubs/Riv97b.pdf)

------
unexaminedlife
I think there are certain "properties" that will need to exist in a truly
sustainable micro-payment system. One of which was discussed, but only to
expose why the author doesn't think micro-payments will work.

I think the system will need to allow a user to allocate a flat monthly total
they're willing to spend on micro-payments. Then, as the user accumulates more
and more people they want to pay, the total gets split evenly (or at a
designated ratio) across all.

Sort of like the saying "give what you can, take what you need".

I think there are several opportunities here:

1) I think government needs to be involved so they can create a new
"designation" so we can provide rules this new designation follows. Most
obvious of which would be taxes.

2) I think as the world becomes more and more connected, there will be a real
need for tooling to allow users to manage the 10's or 100's of thousands of
people they're paying with micropayments.

3) Probably would be good for standards to exist, so interconnected, de-
centralized systems can keep "subscribers / payers" up-to-date with the latest
from all applicable platforms, with all of the people they're currently
paying.

Tons more, but not sure anyone will read this so won't go into too much
detail...

------
k__
Probably a right assumption.

As long as you can't do payments well under $1 things are doomed.

Just look at camming sites.

You buy 100tokens for 10€ and can "tip" people ¢10 if you like.

This works pretty well, and I think people would be happy to pay like ¢10-¢50
en masse for all kind of stuff if it was possible.

------
mD5pPxMcS6fVWKE
I am actually using one such micropayment system. This is the recaptcha solver
that solves every recaptcha I encounter on any web page, and I pay 3 cents for
that service. I refill my account with $5 once every few months. No decision
is involved, in many cases I overpay, but no complains here, still worth it.
So if a mechanism exists that allows to automate the decision "pay or not to
pay", even if the mechanism is not perfect, it could work.

------
jpindar
Micropayments work fine in the Open Simulator community. Gloebits are the most
popular kind.

[https://www.gloebit.com/](https://www.gloebit.com/)

------
m0llusk
Starbucks can make a huge business selling coffees for a few bucks, but it is
completely impossible for anyone to do that with articles on the Internet.
Sure, Mac. Sure.

------
PaulDavisThe1st
The blurb at the end of this article about the "gravity of rates" is seriously
unglobal in its scope.

What can be considered a "high" rate in Bangladesh is going to be very
different from Norway or Switzerland.

If you're doing business globally, the question of an appropriate "rate" or
"price" is vexing, and isn't solved with glib western-industrial myopia in
which you limit yourself the world's 0.001%. Unless of course that is
precisely what you want.

------
maehwasu
Theoretical articles like this ("proving" that X won't work) are almost always
doomed to be wrong, because you can't enumerate all possible ways that
something COULD work, but won't.

A shorter way to say that is that something can fail thousands of times, but
only has to succeed once. If the right technical, social and business factors
come together, you get working micropayments.

------
satvikpendem
I would hate to have microtransactions on the web, could you imagine paying to
see every webpage? It doesn't even have to be a large amount, just the
psychology of free versus paid is quite powerful to compel the user to not use
as much for fear of overspending. I can see it being useful for small
transactions such as services but not in the general web.

~~~
freddie_mercury
I imagine that, in the same way content is spread across multiple pages to
increase ad-views, the same thing would happen with micropayments.

Best movies of 2020 would be "pay 0.10 for #100-90 and then .10 for each
#90-#80 etc". Stratechery would be "pay 0.10 for the above the fold part and
then 0.10 for the rest".

Authors used to get paid in micropayments (by the word or books were
serialized) so we don't have to guess about the effects. Victorian authors
(whose works were all published serialized) stretched things out to the point
where modern readers often find them unbearably long.

~~~
mrkramer
I had the similar idea, for example you are interested in only certain chapter
of a 500 pages book and you pay micropayment to access only that pages of the
chapter and the book.

------
jedberg
I'm sort of shocked this isn't already solved. Mozilla, Google, Microsoft, and
Apple could cement themselves as the "only viable browsers" by solving this.
Here is how I see it:

\- Form a consortium (just like the competing banks did in the 50s to create
Visa).

\- Google, Apple, and Microsoft already have expertise in collecting payments
and running services, which they can lend to the consortium.

\- Each member creates a UI in their own browser for micropayments that is
backed by the consortium.

\- The UI has the ability to add funds (processed by the consortium) and set
budgets and have little check boxes for "ask me every time" or "automatically
pay if below 1 cent" or "allow up to $5 / mo on this web page" or lots of
other budget options so that you don't have to think about it every time.

\- When you go to a page, they can throw up a request for payment (which if
you've already made a budget decision you don't even see as a user), you send
a token, they pass the token to the consortium who moves the money from your
account to theirs.

\- The consortium pays out to web pages when they have earned more than $10
(just like Adwords!) and generates a 1099 or equivalent. They take a piece of
pie at this point.

And now if you want an ad free experience, or want to use a site that requires
micropayments, you must use one of those browsers. And the site owners can
offer both. Send back a payment request, if it fails, show ads.

Heck, even if Google didn't want in, Apple, Mozilla, and Microsoft could pull
it off without them (they still have about 38% of the market).

You can secure it using standard crypto. The browser generates a
private/public key pair. The website generates a keypair. Both sends the
public key to the consortium. When you make a payment, you generate a message
that says "I pay foo.com 1 cent" and then sign it. Foo.com takes the message,
wraps it up and says, "I want 1 cent" and signs it. The consortium verifies
the signatures, makes sure the amounts add up, and then sends back an "OK"
response if the user has the funds available.

They key here is that if those four agree on a UI and agree to a central
payment processor, they have enough pull that website owners will want to use
the service. Especially if there are no per transaction fees.

This also solves the onboarding problem for website owners. It pushes it to
the consortium. Who can push it right into their parent companies. Google
could automatically tie payment to your Google account, and so could Apple and
Microsoft. It would be part of the UI.

In fact it would be a good workaround for Google in the new "do not track me"
world.

People block ads because they are annoying, and trackers because they get no
perceived benefit.

But payments provide benefit to the user, so they would be more willing to
make the payment, thus providing tracking data. And for Google it would help
cut Facebook out of the tracking because then they could encourage blocking
tracking while accepting payments!

~~~
TACIXAT
Yea, this is so frustrating. ACH fees are sub cent. Have people ACH money (buy
credits) to the provider. Then payments are simply updating a balance. Pay out
when a user makes a certain amount.

The legality makes it difficult but with a few hundred thousand you can get
all the licenses. It's tough to find a partner bank but with any sort of
funding it would be easier to get meetings.

You don't even need to start online. It's my world and what I'd want to do,
but brick and mortar stores would kill for lower fees. Could start in a single
state at physical retail and really cut down on the MSB licenses needed.

------
betimsl
Hah, "doomed". Micro payments are just getting started mate ;)

~~~
9nGQluzmnq3M
They've been getting started since the 1980s:
[https://en.wikipedia.org/wiki/Micropayment#History](https://en.wikipedia.org/wiki/Micropayment#History)

------
yoava
Really enjoyed reading this one. A fresh perspective, at least for me

------
godot
I was a cofounder of a micropayments paywall / subscription startup that
operated for about 3.5 years, several years ago. (We shut down due to lack of
growth and running out of money)

We mostly tried to sell to news/magazines publishers. The points that the
article author brought up are all good points; but what we kept seeing was
that it wasn't the consumers who were unwilling to pay, it was the publishers
who were unwilling to try a new model. Whenever a site with quality content
integrated with us, the percentage of visitors who paid was more decent than
you'd imagine. What we couldn't do was convincing a sizable national-level
publisher to use us. We had various niche content sites and some local region
newspapers integrate with us and they actually saw a pretty good payers to
visitors ratio. Some niche content sites even made pretty good revenue using
our paywall product.

~~~
doctor_eval
I would love to hear your story as I am doing something in this space. Would
you be willing to drop me a line at mark-at-commandquery.com? Hearing other's
experience would really help me validate what I'm working on.

~~~
redis_mlc
Some advice: if you don't have a compelling brand name, make sure you have a
relative, close friend or PR rep who works for a micropayments client.

Large companies have absolutely no reason to partner with an unknown. Worse
than NIH, is "why fund a parasite on top of our business model?"

------
clarkmoody
The LSAT protocol[0] implements the HTTP 402 code with payment performed over
the Lightning Network, which has minescule fees and instant settlement.

[0]: [https://lsat.tech/](https://lsat.tech/)

