Ask HN: Is there hope for micropayments?

[nathanganser]

I've always heard that narrative that micropayments simply won't work and that people don't like it.

Recently, I've found myself paying for OpenAI's GPT-3 playground app in micropayments format. I use it for small tasks here and there and pay around 2-4$ a month. It feels totally fine and now I don't see why I wouldn't do the same for my Google searches or usage of maps.

Does anyone else have examples of services/products that they pay for in micropayments?

[jzellis]

Back in the dark ages, I was an early employee of Bitpass, a micropayments startup, and for Bitpass I co-founded what may have been the first completely indie online music store, Mperia (in the sense that artists could simply upload and sell their work directly, with no contracts or middlemen). It used Bitpass micropayments for record sales.

(We may have also been the first online music store to have Creative Commons licensing built in, as our launch coincided with CC's. I'll never forget at their launch party, when the nice, awkward teenage kid I thought was just some attendee's son got up and was introduced as one of CC's developers, Aaron Swartz.)

The thing that killed the momentum then is the same thing that still kills it - card transaction fees. Bitpass got around this by allowing you to buy Bitpass credits for like $3, which you could spend anywhere. It worked great for music, and Mperia was originally seen as a good gateway (and, frankly, loss leader) for getting people to adopt our system.

Alas, it never took off, and Bitpass's brilliant CEO and founder got sidelined by investors in favor of some ronin CEO from the ad world who bogged it down in awkward partnership deal negotiations until the money ran out. I'm still convinced, all these years later, that if they'd focused on the indie media angle, it could have taken off.

(I also wish that this band who played their first gigs ever at my coffeeshop open mic in Vegas called The Killers had put their record up pre-record label deal, as I asked them to. I think Brandon was down but their shitty manager told them not to, and later they sued him for being shady af, which I did warn them about.)

[jzellis]

This, by the way, was my first big burnout moment. You put your life into your startup and you truly believe this might make the world a better place, and then a bunch of MBA fucknuts come in and ruin it and you're left with useless stock options and a broken heart. Now I just want to get paid.

Never trust the suits, kids. Never trust their bullshit. And never give your heart to the business. It'll get broken every time.

[mschuster91]

> The thing that killed the momentum then is the same thing that still kills it - card transaction fees.

Well, the US could follow Europe here if it wanted - in 2015 we've been capping CC fees at 0.3% and debit card fees at 0.2% and at the same time capped per-transaction fees at 5 cents [1], and whoops, suddenly the acceptance of cards in Germany exploded. I can pay the 50ct fee for loos on train stations or 1€ for a soda on a vending machine with cards.

The solution to micropayments are not shitcoins, the solution is to squeeze the rent seekers.

[1] https://www.consilium.europa.eu/en/press/press-releases/2015...

[sneak]

> The thing that killed the momentum then is the same thing that still kills it - card transaction fees.

If only there were some permissionless internet payments system that has near-zero fees and realtime settlement that works across borders and has frictionless setup.

The real problem is not the market or the technology, it's that the state wishes to surveil and ultimately exercise veto over all payments in society. Lightning payments solve this perfectly and could across the whole web but it's illegal in the US to "transmit money" without doing all sorts of market-killing, expensive customer intrusion and surveillance (and buying expensive licenses in every state).

There's nothing technically stopping a browser extension from letting you anonymously pay a penny per request or something in one click to pass a paywall. It's just the state's incessant hunger to want 100% transaction surveillance and veto.

[asim]

This is very interesting, thanks for sharing. We adopted a credit model for our API platform and it's akin to this. I with we were able to do Pay with X as part of that but payments in general are a huge undertaking that requires a lot of upfront network effects. Hence social networks do it really well. Would be interesting to do something Dev centric.

[happymellon]

This sounds similar to eMusic which I had back in the 2000's before they sold out to Sony.

It was amazing all the indie music I was able to purchase, load up the wallet and spend micro amounts per song.

I think the situation may have improved, with some card processors like Zettle who only take a flat 1.75% of your total daily taking, which makes it a bit easier to do many small transactions.

[jasode]

>, I've found myself paying for OpenAI's GPT-3 playground app in micropayments format.

Unless I'm misunderstanding OpenAI's pricing format for "bulk tokens" [1] prepaid for by credit-cards, this isn't web micropayments in the way many others think of that term. Likewise, buying audiobooks via Audible Credits by prepaying $229.50 to get 24 credits isn't really micropayments.

Some were hoping for internet micropayments at the granularity of transactions rather than pre-paying a large upfront amount to be parceled out in smaller amounts later. What prevents micropayments at the fine granularity is the high VISA/Mastercard credit-card transaction fees.

E.g. many want to micropay 2 cents for a news article without prepaying $10/month or $120/year to a "media aggregator" taking a percentage cut of that.

[1] https://openai.com/api/pricing/

[tzs]

Another thing that puts a damper on them is taxes.

Let's say my site lets people purchase news articles for 1 cent. I get 4 readers in Chicago who each purchase 1 article per week. That's 208 transactions for a total of $2.08.

That's over the threshold in Chicago's state, Illinois, for creating an "economic nexus". Their threshold is $100k sales per year or 200 transactions per year. So now I've got to register with Illinois and do regular tax filing. I may also have to collect more data than I want on my readers there, such as address information, to figure out the right rate (rates vary by location within most states).

23 other states also have that annoying "or 200 transactions" condition on their economic nexus laws.

Compare this to if I instead only offer my news articles through an aggregator. Now when those 4 readers in Chicago buy my articles they are doing business with the aggregator. I don't have to deal with any Illinois taxes. Or any of those other 23 states' taxes.

That's the aggregator's problem. That's fine because the aggregator presumably has not just my 4 readers in Illinois but also plenty of readers of the other content they aggregate, making their business in the state large enough that the costs of dealing with taxes are comparatively small.

[nathanganser]

Just regarding OpenAI's pricing, the usage is paid for at the end of the month (Stripe's pricing would indeed make it unfeasible to charge for each cent individually, hence they bulk-charge at the end of the month).

I could imagine The Economist charging me at the end of the month for the 20 articles * 10 cent I consumed.

[jitendrac]

Transferring the $1 vs $1000 digitally, have no technical difference and hence the commission based payment cut is something that I have a hard time to accept.

Btw I am from India. Earlier,every time I see people swipe the cards in the retail stores, I felt sorry for the shopkeepers as they had to bear the 1.5%-2% as transaction charges of the total amount paid.

It all changed after the launch of UPI payment system, now I can just pay 5-10 INR(7 cents to 13 cents) to a shopkeeper without feeling the guilt of payment charges. It has been more than two years when I used my last VISA card payment transaction for any retail shopping. I think other countries should also develop such not-for-profit payment network system that can be used to pay efficiently digitally without making any side the victim.

[SwiftyBug]

Brazil's Pix[1] completely transformed the way we deal with payments day-to-day. It's available 24/7, free of fees and has really good UX. Many small merchants are giving up on credit card and accepting only Pix. And the Central Bank of Brazil keeps pushing Pix's capabilities forward. Last year they launched two features that can be translated something like Pix Withdrawals and Pix Change (Pix Saque and Pix Troco in Portugues). The two features work similarly. Essentially they turn every commercial site into an ATM. You make a Pix to, say, a supermarket and get that money in cash. Or, in the case of Pix Change, you'd pay in Pix more than the total value of the purchase and receive the change in cash.

Pix is not even 2 years old and it's already changed the way people deal with money. It's incredibly reliable and astonishingly fast.

Who would say that the biggest Brazilian fintech revolution of all times would come from the Central Bank?

[1]: https://en.wikipedia.org/wiki/Pix_(electronic_payment_system...

[bluGill]

> I felt sorry for the shopkeepers as they had to bear the 1.5%-2% as transaction charges of the total amount paid

I used to feel that way. Then I discovered how much time/effort is spent counting cash. Credit cards are all electronic and so the money goes directly into your bank accounts without needing to count and recount all that cash. Companies are money ahead vs cash once they account for all the labor cash costs. That is before we get into all the costs of theft that you avoid.

The above assumes a straight 2% transaction fee. If you are paying $.25/transaction then for small purchases the transaction costs are way too high.

[blep_]

Personally, I'd prefer to just pay tiny constant monthly fees for things, than to have the mental overhead of knowing there is a nonzero cost for every search I do.

I am prone to microoptimizing things, and I would absolutely spend an objectively excessive amount of time and mental energy trying to avoid doing another search to save three cents.

[Raed667]

I have the same issue. If I'm paying 0.005$ for every search, I would stop searching because of the mental effort to optimize everything.

One alternative that could work, is to make a subscription service, and then reimburse the unused amount.

Like make people pay 20$/month, then do your micropayment system in the background, by the end of the month, refund them to difference if they didn't exceed that monthly value.

It creates a positive feeling instead of a constant background stress with every interaction.

[em500]

Yes, this is the main argument in Clay Shirky's "The Case Against Micropayments" (2000) [1]. It holds up pretty well 20 years later.

Micropayments are not "pay $2 or $3 per month" (either flat-fee or average), there are plenty of successful examples of that. Micropayments are "pay $0.004 or $0.02 for reading this article or using this service now". As Shirky noted, the problem with micropayments are not the technology or transactions costs. The problem is that they require a huge amount of user time and attention, relative to the value of the item being bought. This has not changed in the past 20 years.

[1] http://mx.thirdvisit.co.uk/2002/10/04/theacaseaagainstamicro...

[mbg721]

I always thought of micropayments as the equivalent of buying a bag of quarter-inch mini-Oreos. It can be advertised as a way to diet, and some people eat just one and do fine, but the business model only works because brains are bad at summing up a lot of very small things, and most people will end up eating more mass of cookie than they would with full-size Oreos.

[perilunar]

I'm the opposite. I'm sick of subscription service fees, and would much rather pay per view/listen/read.

I'm also annoyed I can't get a cell plan in my country that just charges me a flat rate per GB of data I use. Instead I pay a flat monthly fee that includes "free" call minutes and messages that I never use.

In both cases I'm sure I'm overpaying and cross-subsidising people who consume a lot.

[moritonal]

I imagine the line in the sand is the same as whether you enjoy all-inclusive resorts or pay as you go?

[ibz]

The whole Podcasting 2.0 / "value 4 value" movement is built on top of Lightning Network micropayments. It works. People use it. When you listen to a podcast that has the v4v tags in the feed using a compatible app you are given the option to send contribution based on how much you have listened. Also, you can send "boosts" which include a message that the podcaster could, for example, read out live.

I think the next step would be something similar but for blogging / text content.

PS: I myself wrote a RSS reader & podcast client that I released on the Umbrel app store. As you listen to podcasts, you can stream donations straight from the app running on your Umbrel node using funds you have complete custody of. It is pretty amazing.

PPS: In the Lightning world, micropayments can be as low as a millisat, which is 1/1000 of a satoshi. Routing fees are also very low and transactions are instantly confirmed.

[Quindecillion]

There's also a lot of work happening in the gaming space for economies and rewards in virtual worlds. Zebedee is one, but there are others.

Bitcoin with Lightning finally makes micro/nano-payments practical and it's going to flip the Internet economy on its head.

[teekert]

Why is this downvoted? I'm atm streaming Coder Radio (using Castamatic), and streaming 40 sats/min back. I can send a boostagram with any amount to give feedback + value. It works and it works well. I really hope this will mean an ad-free feed at some point (so I hope this becomes popular).

To me this is the first and best example as of yet where I feel that a cryptocurrency/blockchain is delivering real value (for value). And indeed, I like it.

[politician]

This is cool and I’m a fan, but I don’t see how Lightning can be in good standing with the US when it explicitly ignores the Bank Secrecy Act.

There’s no one doing OFAC screening or compliance checks on these transactions, so of course it’s going to be cheap.

I would expect headwinds preventing this from going mainstream.

[sam345]

If you are in US what are you going to do at tax time ? Each of those payments are a taxable event for you the payer. What a nightmare. No thank you.

[siwatanejo]

Mod parent up! I don't understand why these comments are being flagged. Too much white-knights in HN in opposition to open innovation.

[steveylang]

Maybe we can use Terra UST now.

[viraptor]

We kind of do have it, but hidden behind prepays/pooled payments. Nobody wants to deal with people actually paying $1.5 for something. Just processing that from a card is not worth it unless you're a massive company. (AWS does charge me $0.46 for S3 on some account) But my Nebula subscription is effectively a few micropayments in a trench coat. Same for Vultr.

The only time I'm touching actual micropayments is when someone sends me $0.50 through Brave.

[rocqua]

Why is 'after the fact' aggregation not something that took off.

[ramshanker]

Meanwhile in India, offline micro payment has become more convenient than Cash. Look for UPI. Unified Payment Interface. I regularly make payment of INR 10 ( USD 0.13) for a cup of Tea at a roadside stall.

[anonymousDan]

Can you say a bit more about how it works? Who runs the infrastructure to support it? Is it some kind of collaboration between the local banks?

[mavili]

In Europe and the UK there is now the Open Banking standard [1] that should technically make it a lot more feasible to do micro payments because it allows account-to-account transactions, therefore not needing to go through Visa/Mastercard processes and fees.

[1] https://standards.openbanking.org.uk/

[Terry_Roll]

The cost of going through a payment processor for micropayments has always been more than the micropayment because the "security checks" over and above using TLS security on a website starts pushing the costs up _if_ done properly.

Saying that those costs should be coming down today compared to a decade or two ago because there is also much better surveillance, more bugs and backdoors/zero days have been found and with the global inflation stalking the planet, ironically it could be the inflation that helps make micro payments become more popular.

This is why advertising fees pay for search engine results and its an excuse to intelligence grab from businesses through their advertising criteria so its not just human end users who get surveilled.

[tomatocracy]

Maybe. One potential problem is that the banks aren't likely going to want to spend time dealing with verifying security and onboarding for smaller operators who want to use the APIs directly for this, which will mean aggregators have to get involved (who in turn will need to take a cut to cover costs and make a reasonable profit).

[gwbas1c]

Chargepoint: An electric car charging network.

You seed your account with $20. Sometimes charging is free, sometimes it's $1-2 dollars, and sometimes it's more. When your account gets low, they bill your credit card.

EZ Pass: The electronic toll network on the East Coast of the US. Works similar to Chargepoint. If you only drive a few miles on a toll road they deduct a few cents from your account.

[AndrewStephens]

Mircopayments (in the form of "Read this article without a subscription for 2 cents - click here") are one of those ideas that everyone claims they want but don't.

The only way consumers can use micropayments is to set up a subscription via a credit card (or similar). Either with the vendor themselves or via a thirdparty. They don't want to do that.

Publishers don't want to deal with the hassle of accepting 100000 small transactions, some percentage requires them to add sales tax, some percentage will fail, and a non-zero percentage will be reversed. In the face of these problems, getting a check every month for advertises seems like a much better bet.

The closest thing to micropayments for content makers is something like Patreon, where consumers pay a small amount up-front for access to future content. But even here, a small amount is usually a few dollars rather than cents.

[gigaflop]

I feel like there's a way for crypto to be useful in this problem space, but I don't have faith that the actors who build such a system would be good-natured enough to make it a healthy environment, especially after all of the scammy projects that have surfaced these past few years.

I think back to when people used to tip dogecoins via a bot on Reddit. It was low-friction, low-cost, and seemed to seek no rent. A similar model may work well for micropayments (instead of microtipping), but I don't have enough faith in the current web3 sphere to develop this without it turning into a scam.

[eliblock]

Why would you need a subscription? You could just add money to your account when it runs low. And the publishers wouldn't get small transactions, they would get paid out by the platform.

[imtringued]

It sounds like the only way you could possibly implement this is by having ad networks sell ad blocking. However, there are too many ad networks for this to be viable.

[LocalPCGuy]

While it isn't micro-payments as many think about them, we did run this experiment with cell phones. First it was SMS messages, commonly used to cost $0.10 per message. Still the case for a small group of people, and some may seek out pay as you go plans to optimize their bill, but for most, they prefer to just pay a little more monthly it seems and not worry about being billed for each one. (I know it's not a perfect correlation, but it is probably the largest scale study of pay as you go vs. other options that we have.)

I've been waiting (both with anticipation and dread) for a day when micro-payments are ubiquitous, as I think it's the only way to compete with the subscription and ad business models. I just don't know if people will really accept it given previous examples of it have played out. But I still hope someone gets it right, and I can pay 5c to read a newspaper article without needing to subscribe, and things like that.

[drieddust]

India have this very well figured out with its Universal Payment Inferface (UPI)[1]. Payment of any amount small or big is possible online as well as offline. I use the same interface to transfer 100k+ to my trading account and also to buy vegetables from a roadside vendor for few rupees.

This is an open system so lots of competition and zero lock-in is possible. It's su successful that world's 40% digital transaction are hapenning in India.

[1] https://en.m.wikipedia.org/wiki/Unified_Payments_Interface

[debdut]

I love the idea but never saw a good implementation other than monthly billing or prepaid credits

[ArtWomb]

I think the idea was coalesced in Jaron Lanier's Ten Arguments for Deleting Your Social Media Accounts Right Now: if there are no micropayments, there's no middle class. If there's no middle class, we're essentially doomed. So it feels logical that there has to be a marketplace for "ideas" and "thoughts", not just services. Creating a kind of global network of independent researchers as in E. M. Forster's The Machine Stops (1909):

https://en.wikisource.org/wiki/The_Machine_Stops

[rchaud]

The point of micropayments is to make it cheap to charge for content, whenever, wherever. In that context, a $2-4 payment is not a micropayment because it's a monthly subscription fee. That fee has baked in the cost of transaction processing.

Micropayments should be like cash on the Internet. No transaction fees, no filling out payment forms, and instant settlement. This would allow us to leave behind the SaaS pricing models and ad-funded models that have taken over the internet.

[radu_floricica]

It helps a bit if you look at the business ecosystem as being made of various fish sizes, up to huge krakens like Facebook. And everything is sitting on a tortoise called VISA.

The size difference between what we're used to think as "players" and credit card processors (and a few others) is fking huge. We don't have cheap micropayments because they don't want cheap micropayments, period. It's not going to change soon.

[8bitsrule]

Barter's been around longer than money. Each party in the trade has something the other party wants. No middleman.

For scarcer, non-local trades, maybe there's a long-distance bartering protocol waiting to be invented. Tell what you have and what you want, and wait. Optimizing trade chains might minimize shipping/handling (but take longer).

Expect bankers not to like this.

[iandanforth]

Many of the limitations are around the values for payment processor minimums. With rapid inflation it will be a race to see if those values change first or the values of what we consider 'micro' today exceed their minimums making 'small-but-not-micro' payments easy because they are just normal payments in the eyes of payment processor policies.

[sshine]

DigitalOcean droplets: $0.007/hour.

Most of my servers run for a long period of time, but sometimes I do experiment with running a certain setup that I kill after a few hours or days. Knowing that I only pay per hour at the same low cost allows me to experiment more.

Those are not cryptocurrency micropayments, and the actual transfer aggregates to one accumulated, monthly payment.

[niahmiah]

Everybody coming in with the lightning angle, but I just want to point out that constantly having to sign micropayments is a pain. People really want prepaid draw down of the account. Having to approve every transaction is a horrible UX, but not something you would want to automate for crypto either.