Minimum Disagio
Micropayment refers to payment transactions in which only small amounts are transferred from the buyer to the merchant in exchange for goods. As a rule, payment amounts of up to five euros fall under the term micropayment; payment amounts above this are called macro payments. Thus, the purchase of a bread roll or a newspaper is classified as a micro payment. With the advent of the Internet in particular, online service providers are selling many products and services that only generate very small amounts. This is particularly the case with intangible goods. Above all, so-called “paid content” is typical of micropayment in the context of content goods. This usually involves the sale of digital content such as ringtones, newspaper articles, apps, music, or movies.
Direct debit or credit card not useful in micropayment
As with all products or services sold, costs are incurred for the individual payment methods, which the merchant must deduct from the price achieved and transfer to the payment provider. In particular, common payment methods such as direct debit or credit card payments are not suitable for micropayment, as the payment costs can quickly exceed the value of the goods.
Providers specializing in micropayment
Various providers have specialized in micro payment. A lack of or extremely low basic fee and unconventional payment services mean that even transactions in the micropayment sector do not explode in cost. Well-known here are payment services such as PayPal, Picopay, Flattr or methods such as payment via cell phone or in advance (prepaid).
Billing collection systems widely used in the micro payment sector
Billing collection systems are also widespread. In these systems, several individual payments are added together and only then billed. The customer who wants to purchase a digital good is redirected to the micropayment system in the form of a website. There, they must log in to their previously created user account and confirm the transaction. The store operator or publisher is then confirmed the transaction of the costs and the product is activated or delivered. Billing is done via the micropayment service. These services, in turn, often bill customers via credit card or direct debit. Particularly popular representatives are Click&Buy and Firstgate. However, the billing of micropayments is still problematic for store operators or publishers, as the discount can amount to between ten and 20 percent of the value of the goods.
