KEY POINTS

  • Micropayments are defined as low-value payments for goods or services. In person, these types of payments are frequently made using cash. But they're becoming increasingly prevalent for digital merchants and electronic payments providers, as card usage grows and firms look to low-value payments as a content payment option online. 
  • Digital micropayments are on the rise because they help solve a problem for online content providers. Micropayments have proven successful for digital music and app purchases. That's led publishers of digital content, like news or video, to look at them as an alternative way to monetize content, particularly in the wake of rising ad-blocker usage. 
  • For merchants, micropayments are often too expensive to offer. Processing fees associated with card-based transactions are often high enough that they pare down or eliminate almost all potential for seller profit from micropayment transactions. That means that, with the current model, micropayments aren't feasible unless they see massive volume. 
  • Consumer roadblocks will make it almost impossible to achieve that volume. Micropayments make the process of purchasing cognitively challenging and exacerbate existing friction associated with e- and m-commerce. So far, consumers have been largely tepid to adopt them, which means that achieving the scale and volume to make them worthwhile is currently unattainable.
  • Some specific apps in the space present solutions. Blendle, a Dutch platform that has buy-in from publishers across the industry and allows customers to pay per article within its own proprietary feed, has seen slow but steady growth.
  • A major tech giant could seize the opportunity to work with publishers to grow its own apps and payments offerings at the same time. Firms like Apple, Google, and Facebook have all been working to break into both news and payments. Their wide reach and seamless payments infrastructure could get the necessary buy-in from merchants and consumers alike to make the model more successful across the board.

Introduction

When Apple launched the iTunes Store in 2003 and began selling songs for 99 cents a piece, it revolutionized the way people paid for digital content. But years after luminaries like late New York Times Media Reporter David Carr and former Time Managing Editor Walter Isaacson advocated for an "iTunes for news" model to ease digital media companies’ transition from print to online, publishers still haven’t found a way to effectively mimic the [...]