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Comment by ed | Hacker News Reader

I mean this in the most constructive way possible: why do you think this idea hasn’t worked before, when it’s been fairly obvious and easy to build for a long time? And what’s your fix for that issue? You present the merchant side of things, but not the customer side which is more important to me, as a potential Small transfers adopter. What’s customer conversion like? Are micropayments actually better than typical payment amounts? Based on my experience I’d expect the conversion rate of a $0.01 and $1 fee to be pretty similar. The friction of inputting a credit card and trusting a service is way higher than the actual payment amount. I’d also have to introduce 2 more services to my customers: Small transfers powered by stripe, and customers would have to fund an account that realistically speaking can’t be used anywhere other than my site. Just offering some questions to think about!

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https://en.wikipedia.org/wiki/Flattr figured out some parts of this. Notably, you picked your own total monthly donation, and then clicked a button on participating sites to allocate a fraction of your total to them. AFAICT it worked as advertised, but raised new issues with donation behavior. E.g. I obviously like curl every month, so should I click its button monthly? Twice monthly? If I am a developer of some other useful OSS software, should I click curl's button and the curl devs click my button? Does the money just slosh around between merchant-customers? Is that good?

See also: Kachingle (2007), Amazon Flexible Payment Service (2007), Dwolla (2008), Tipjoy (2008), Facebook Credits (2009), Google Checkout (2006), Flattr (2010), Changetip (2014)

I believe the idea has been attempted many times before, primarily by large companies that have tried to create their own currency. It seems deceptively simple, but it's quite tricky to get right, both from a legal and technical perspective. One of the main legal complications is the one mentioned in another comment: avoiding the status of an e-money institution.

With Small Transfers:

  - There is no wallet or funding for the account. Customers simply pay for what they owe, usually at the end of each month.
  - There is a lower psychological barrier, since there is no subscription or prepay commitment. Customers who dislike recurring payments are more willing to try something new that avoids this.
  - Merchants need to introduce customers to just one extra service, Small Transfers.

Some customers of Unattach (a service I built) are happily paying for the service via Small Transfers, and early feedback shows that they really appreciate this pricing model. It's worth noting that Unattach also supports the classic subscription model.

As more merchants adopt Small Transfers, customers will still only need one account, making micro-billing even more convenient.

Micropayments introduced too much friction for you, a human. You have to think about how much the thing is worth, and consider whether the merchant is trustworthy, and enter your details to perform the transaction. Maybe you’re unsatisfied and want a refund.

Say it costs 1.7 cents and delivers 3.2 cents of “value”, you need to be able to do all that work in less than 1.5 cents worth of your time. You can’t do that as a human. But an agent maybe could, to pay for content or MCP calls. I see a big role for micropayments in this genetic future.

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