Tips:
1) Don't call anything a donation if you're not a registered 501c tax exempt charity. (You won't be.) Instead, let people buy a supporter button on your home page or a "registered" version of the software with whatever trivial difference you want. (e.g. displays "registered" or "Thank you!" in the about screen.) This is a preventative inoculation against lots of trouble down the line with your credit card processor.
2) If you don't have a specific reason for forming the LLC, skip it and take money as an individual. Many devs have an inchoate fear that this is somehow illegal. That is the opposite of the truth: sole proprietorship is overwhelmingly the most common form of business operation in the US.
3) Do not encourage people to pick their donation amount. Instead, pre-pick three, which you can assign three levels of status to (bronze, silver, gold, whatever -- you and I know it is meaningless, but the customer won't perceive it that way) and price them at modest, generous, and high. e.g. If you are thinking $5 right now, I would suggest $10, $20, $30 or $10, $25, $50. You'll get most of your transactions at silver and make most of your money on gold.
I live in Uruguay, $0.05 is a very common amount ("un peso").
There are basically two ways to do five cent transactions. The first way is to buy a virtual currency for a non-micropayment amount (e.g. $5 or $25) and then subdivide that virtual currency into infinitely divisible bits which you can spend seemlessly within the application. This is the successful, Zynga-esque way to do micropayments, and it sits nicely atop the legacy payment infrastructure, which is entirely suited to doing $5 or $25 transactions.
The other way, where you attempt to make an actual transaction for $0.05, is an operations nightmare. The legacy payment system is fundamentally not equipped to handle it. The conversion rates to purchases will be terrible, because of the "penny gap" (asking people to spend money, and in particular asking them to make a new relationship to spend money, always causes a huge dropoff) and the conversion rate will not be meaningfully higher than if you had charged $5. Customers hate the experience of authentication for $0.05 transactions even more than they hate actually paying money, and common schemes for doing the auth once and then bundling transactions across merchants like e.g. Flattr are basically a non-starter for most users.
(I'm largely speaking about making services for the global rich here. It is possible that the situation in Uruguay is different, although I'd still suggest not getting into this field as a student.)
We're specifically NOT targeting the global rich, 2/3rds of the population here in Uruguay don't have a credit card and are left out of internet payments, and the same or worse happens across Latin America (the so-called "Base of the Pyramid" approach http://en.wikipedia.org/wiki/Bottom_of_the_pyramid ).
I do worry about legal implications, the virtual currency approach is probably what we'll end up implementing not only because of the payment infrastructure, but because of legal reasons as well.
We've met with the legacy payments structure (to get money into the system) and the response has been largely positive, but we're facing some serious challenges in not having more overhead than that.
By the way, if we found 100.000 paying customers and made 0.01 off each transaction that would be a 50% raise for both of us :) , that's how low we're being paid at the moment. And we hope to make money off the financial market as well (off the time between the money entering the system and the money leaving the system), which is how my current company makes money.
Does it sound reasonable or is it still a pipe dream? We still need 100.000 more customers, but we teamed up with a nonprofit to get the first 2000.
Are you both working 'normal' salaried jobs? If you were and you were to do contracting, the usual guide of how much to charge is to double your normal rates, i.e. 100% raise.¹
So getting 100k customers/transactions per month should be seen as a big success, and hence you should be getting much more than a 50% raise.
¹: This is to cover sick days, holiday, dry spells, etc.
I expect the time investment to be less than a full time job (though at first it will probably be a lot more!) and flexibility and independence is very valuable for me.
Don't only think of the classic "poor", think of: - people earning 500 dollars/month (lower middle class here) which Visa and Mastercard don't accept as customers;
- young people (under 18 or 20) and women (that's A LOT of people);
- people in informal work agreements (that's 1/3rd of the population here), black and gray market, which cannot demonstrate their income and avoid taxes.
For example, Paypal has this Micro Payment option: https://micropayments.paypal-labs.com/?bn_r=m
$0.05 cents + 5% per transaction.
Its just not feasible. I can't remember, but Facebook is not helpful when dealing with low payments for game items.
I believe MercadoPago is not in Uruguay. Seems weird.
I'm researching MercadoPago for a personal niche project of mine in Argentina (where I live, hola!) and I found that the minimum amount is ARS $10, which is around USD $2.30 or $2.40.
What we're looking at is two options:
- SMS payments, but the gameowner or webmaster only gets 30% of the amount sent
- Pre-paid, virtual currency / e-wallet approach, which gets more than 80% to the gameowner / webmaster, but has other difficulties (gaining traction and trust among customers).
I've been looking for a way to buy and transfer Facebook Credits between accounts for example, and I thought the best way might be to become an app where you can buy virtual currency and then trade that virtual currency for Facebook Credits. I'll have to try it out, but does that sound ok or too many hoops for the user to handle? I suspect Argentinean and Uruguayan gamers might be motivated enough to jump through all those hoops (I've seem them desperately looking for surveys to fill and non-payment options to get Credits since most don't have a payment method).
Edit: btw sorry husafan for kind of hijacking the thread but I'm very interested in the subject right now.
Sounds good :) and the fees are very reasonable (3.5%)
BuySimple https://www.buysimple.com/ is the one I liked the most (and the one most similar to my own service)
There are a lot of SMS micropayments services with a very high per-transaction cost:
http://www.daopay.com/?language=es
A trade website:
Other stuff I haven't tried:
https://checkout.google.com/inapppayments/
There are dozens of others