How do I get paid?
Big Changes in Small Payments

By James Maguire

In a perfect world, all of your customers would be able to pay for their purchases with credit cards, but if you sell small-ticket items such music downloads, newspaper articles, trading cards, fonts and so on, that isn't feasible. The good news is that there is an alternative to credit cards, enabling retailers to make a profit even on small-ticket items: micropayments.

Micropayment technology is especially popular among sites selling music downloads or single newspaper articles. Because these items sell for just a few dollars (or less), merchants can't afford to allow consumers to buy them with credit cards -- the per-transaction fees would gobble up any profit from the tiny purchases.

"If you're selling something under $10, you pay the credit card companies more than your profit," said Gartner analyst Avivah Litan.

Micropayment vendors let consumers make tiny purchases by deducting from a pre-paid balance. So a consumer with a $10 or $20 balance can make $0.25 and $1.50 purchases at all her favorite sites, while those sites get a transaction rate that allows them to make a profit on those items.

Here is the full article.
http://ecommerce.internet.com/how/paid/article/0,,3330031,00.html


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