3,200 times faster than Visa
Christian Walter ist Geschäftsführer und Redaktionsleiter von swiss made software. Bis Ende 2010 arbeitete er als Fachjournalist für das ICT-Magazin Netzwoche, publizierte zuletzt aber auch im Swiss IT Magazin, der Computerworld sowie inside-it.
Earning money online continues to be difficult. Advertising and subscriptions are the norm, although micropayments could allow content providers to generate income outside these established models. Zurich-based milliPay makes this possible.
The splitting of the atom (from Ancient Greek: átomos – indivisible) changed the world – will the same thing happen online now thanks to micropayments? (© Ezume Images/Fotolia)
Online payments continue to be dominated by old thought patterns. Look at the ad blocker debate: after Apple allowed people them in iOS 9, numerous publishers have begun making their content inaccessible to anyone using such addons. The reader can choose between seeing ads or paying a subscription fee. Anyone else is locked out. Another option here would be to sell individual articles – ideally for just a few cents. Unfortunately, this is not possible using the existing infrastructure. Usually there is a fixed fee of approximately 30 cents plus a variable component for each transaction. The lower the selling price, the smaller the share a provider receives. This fixed-fee model also creates an inflexible minimum fee.
milliPay’s solution changes this. It allows payments of as little as a tenth of a cent (0.001 EUR), charging only a variable fee. The secret lies in the speed: “Our system is 3,200 times faster than comparable systems,” says milliPay CEO Gerrit Sindermann. “Where Visa needed 3,200 servers, we need only one. This makes it profitable to process low-value transactions and the business can be scaled.”
New customer segments
milliPay can be integrated into existing content offerings – be it on the desktop, mobile, or in an app. The content is then protected by a paywall. Users register for the service using a mobile phone number. Payments are then made using a digital (currently prepaid) wallet, topped up using standard payment methods. This allows content providers to monetize content on a pay-per-view or pay-as-you-go basis.
milliPay has already been successfully tested with multiple regional newspapers, such as the Schwäbisches Tagblatt, where readers can purchase individual articles.
The acceptance rate has been surprisingly high, as Sindermann explains: “Once registered, 82 percent of readers actually go on to add credit to their e-wallet. 72 percent of milliPay users who see our payment window with a small price decide to pay it.”
These pilot studies provided another piece of valuable insight: in the first eight months since the introduction of micropayments, subscription business increased by 40 percent. This makes milliPay much more than just a payment system. Used properly, it can also be a powerful marketing instrument. The resistance to making the first top-up can also be elegantly alleviated – customers can be given free credit to help them get started. Once on board and convinced of the value of the content and ease of payment, they have a reason to top up. They may even make a larger commitment, such as purchasing a subscription. While there is already a good fit between milliPay for pay-per-article offerings of news publishers, even better match was found with video streaming content (e.g. sports events), where there has been little innovation to drive up the share of paying users. Video streaming is therefore milliPay's new area of focus going forward.
