Micropayments: What Are They and How Do They Work?

Micropayments are internet transactions involving little amounts of money, typically ranging from a few cents to a few dollars. Businesses are frequently willing to sell intangible things like information for a low price. The issue in e-commerce, however, is to keep transaction costs low. Micropayments can be made in a variety of ways. Each strategy has advantages and disadvantages that vary depending on the type of business transaction and customer purchasing preferences. Visit 소액결제현금화 for more information.


This type of micropayment usually takes the form of a subscription, which gives consumers access for a set amount of time or usage. Newspapers, online games, and social media sites are all examples of advanced payment. One online social networking corporation, for example, permits pre-purchase credits to be used across its site and takes 30% of the proceeds to provide this service to affiliate businesses like app developers offering products. Gift cards for customers without credit cards and a purchase price high enough to cover business transaction costs are two advantages of prepaying. The obligation for customers to pay a flat sum upfront, as well as the need for e-commerce enterprises to maintain a sophisticated system to track individual usage and leftover credits, are potential drawbacks.


Several microtransactions are pooled and charged after they occur under the postpay model. Online music sales with charges after multiple individual songs are purchased are the most obvious instances. Some internet firms have merged the postpay and prepaid models to great effect. One company, for example, gathers micropayments while simultaneously providing prepayment gift cards. The elimination of the advance payment obligation in the prepay model, as well as the reduction of higher transaction fees by consolidating multiple smaller transactions into a bigger one, are both advantages of the postpay model. The need for a functional electronic processing system to aggregate sales, as well as a practical requirement that allows for a single microtransaction when consumers just wish to buy one song, are both disadvantages.


This type of micropayment entails paying for each transaction as it occurs, as the name implies. This strategy does not work in practice since transaction charges could rapidly outweigh the price of the sale. For example, if the cost of purchasing an individual article is as low as 3 cents in order to generate widespread demand, the current processing fee of 5 cents plus 5% of the transaction will wipe out any possible profits and result in a net loss. Pay-as-you-go is primarily advantageous to consumers because they only pay for what they need.


The most practical micropayment option for internet publishers is a commercial collaboration approach that connects several sites. In most circumstances, an online publisher’s audience volume is insufficient to support a lucrative micropayment system.

The main benefit is that many internet publishing companies may be able to earn more money from written material. For the time being, one significant disadvantage of the collaborative approach is the difficulty in developing a realistic system that will be accepted by consumers.