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Micropayments
Selling with micropayments
mwls.com


A micropayment is a financial transaction involving a very small sum of money and usually occurs online.

They are increasingly being used to fund websites because advertising is being blocked and people don't want to donate large amounts. I'm not surprised that more people are using advertisement blockers because avertising is becoming more and more intrusive.

Even though I try to keep the advertising on my own website as unintrusive as possible, it doesn't stop the blockers affecting my site. This puts me in bit of a paradox because on the one hand, I want to continue moving towards free content and free applications but on the other hand, I have to pay for the website to be hosted and developer fees for the free applications that I write. It is for these reasons that I have decided to concentrate on donations and to give Flattr micropayments a try.

Flattr

The way that Flattr works is that contributors first add an extension to their supported desktop browsers (Chrome, Firefox and Opera). They then decide on how much they would like to contribute each month. Flattr records the number of times you engage with participating websites and your monthly payment is proportionately shared out between these websites.

PayPal Micropayments

PayPal's standard transaction fee within the UK is 3.4% + 20p per transaction which means that, for small payments, the fee is a very large percentage of the sale.

If the average payment you receive is £5 or less, you can apply for micropayments where the fee is 5% + 20p per transaction. This means PayPal fees on a £1 transaction will be 10p instead of 23p. You should be aware that for any payment over £10, micropayments are more costly.

If you don't already have one, you will first need to set up a business account. You will then need to contact them by phone - asking online for a callback is cheaper than phoning direct. PayPal don't make micropayment information or set-up details particularly easy to find but there is an information page.

Bank Transfers

Bank transfers are a method of transferring small amounts of money that has been overlooked - probably because they are usually used to settle larger bills and because of the hassle involved in setting up a new payee and then making the payment. However, with the introduction of banking applications and the appearance of new online banks like Monzo, payments have become much simpler and, with Faster Payments, can be almost instantaneous. BACS takes 3-5 business days to come through. No fees are in involved with either Faster Payments or BACS.

In the UK, all you need to do is to give the customer a name, the sort code, the account number and a reference so that you can trace the payment back to the purchase. Like all financial tranactions, you do need to exercise caution when using this method and make sure that additional information is not available which would allow unauthorised funds to be taken from your account. I would also recommend using an account (like an e-saver) that can only make transfers to another of your accounts within the same bank.