A Simple Solution to the Micropayments Problem?

This morning's news that Amazon.com (AMZN) is going to start selling e-books to be read on the iPhone and iPod Touch (AAPL) has got me thinking: What if the solution to making micropayments work is easier than we think?

Critics of micropayments as a possible savior for the newspaper -- such as our own Felix Salmon -- like to point to the first-penny problem: Lots of people who would be hypothetically willing to pay, say, 4 cents a piece to read articles from The New York Times (NYT) simply aren't able to clear the initial psychic hurdle of handing over their credit card information. "I don't think that micropayments will work, largely because I haven't seen any indication that the technology exists to make them work," says Felix.

But what if it did? What if, that is, your method of payment and your method of reading were one and the same, allowing for a seamless, painless transaction? In Japan, the practice of using cell phones as credit cards is widespread. For various reasons, that innovation hasn't made it to the United States yet and may not for years to come, but it's far from inconceivable.

If and when that happens -- adios, psychic hurdle. Right? If you're reading nytimes.com on your iPhone (or, perhaps, on your iPod Touch, which is wirelessly communicating with your iPhone) and you want to view some premium content, you'll be able to do so with a single click. Check the little box that says "Charge me automatically in the future" and you can forget all about it for the rest of time. It's even better than the "iTunes for news" that David Carr recently envisioned.

I fully expect to hear that someone else has already mooted this scenario, and that Felix or someone else in his micropayment-hating clique has already shot it down. In the meantime, it's a hope to cling to, no?

Comments

[Deepfryer999:]

Good solution, but I don't think the psychological hurdle is really the problem. I have no problem using my credit card when I shop on Amazon. And, paying with Paypal would be fast, convenient, and safe. The problem is convincing people to pay for something they're used to getting for free.

Mar 05 02:02 PM

[cherf:]

I think Deepfryer has a good point and I'll expand on it; people in the US are conditioned to expect advertiser funded content. Being a content provider myself I prefer the micropayment model, it lets me compete with the NYT on a level field. For this reason alone micropayment systems will fail.

Mar 05 04:37 PM

[HTHTFH:]

USAir kind of went down this road when they started charging for watered down coffee. They recently reneged on that idiotic maneuver. Have to be careful with this kind of pricing, else it starts to resemble the pay-toilets of old.

Mar 05 09:37 PM

[Roger Knights:]

I believe that micropayments would work if their mechanism were somehow embedded in the OS of the device. Microsoft and Apple should get together with Paypal, etc., and work something out. (Users would have to be given a heads-up and a price before they entered a pay-to-view site, of course.) Micropayments will be needed to save journalism, so at least a modest effort to provide them should be attempted.

Mar 05 10:37 PM

[User 372614:]

Your idea may or not be original but its form of uniqueness has also caught the attention of a similar hypothesis pertaining to the future of money as we know it and its use in transactions. I can see mechanical payment as very viable by mirroring the Japanese use of cell phones or more sophisticated future device. But instead of worrying about credit card information I would envision a central repository (as often depicted in futuristic movies)with each individual storing digits or credits. These digo-credits could be deposited in the repository by individuals from whatever source of monetary accumulation they have established according to the article I reference in my blog. The repository would be the central clearing house and control center to value deposit according to a world wide system of equivalent exchange. Encrypted individual codes would be the future equivalent of our now not so secret social security numbers and each person would have one world wide. Payment for reading the NYT or for that matter any form of literature could be made by word or linear measure as you have stated. Whether it would be the answer for saving the Times I am not sure. It seems that the Times is in actuality way behind the times when it comes to their thinking and I personally look to see them completely in the toilet and either bankrupt and out of business or sold off for pennies (digo-credits) before our reso-depression is over.
The article I reference can be found @ notsosilentthoughts.co... titled "How To Collate this with Atlas Shrugged;The Future" it is a cross post entitled:"The Collapse and Ebay Saves Us All"
I posted it on March 3, 2009.

Mar 09 12:26 PM

[John Inman:]

The problem might be with credit card companies. If it cost more to run the transaction than the transaction itself, is it really worth it?

May 14 02:49 PM

[Themoose:]

Micor payments huh? doesn't anyone on this board use an iphone or itouch... how hard is it to buy an app or song.. same goes with articles.. micro payments is apple bread and butter.. hello

May 14 03:04 PM