What Are Micropayments and How Do They Work?
A micropayments system is an advanced mechanism of making financial transactions online involving very small amounts of the transactional amount for purchasing goods, products or services from a merchant site. It was first used in the year 1960 by Ted Nelson and a number of systems were then proposed down the line in the year 1990. Though unsuccessful at that time, Micropayment system has gained its popularity over time and has become one of the advanced systems to use virtual wallets for making small transactions quickly, securely and anonymously since the year 2010.
How does it work?
Micropayment systems these days like PayPal, Flattr, M-Coin, etc. have a very flexible payment system from Pre-paid to Postpaid as well:
- A simple example to understand the functionality of Micropayment systems is that a merchant ties up with a third-party Micropayment service provider for easier payment directly through the digital wallet maintained by the third party vendor. During or before the transaction has to be made, the consumer must also set up an account with the same Micropayment service provider to be able to pay for even small transactions. These small payment amounts are then combined together and eventually the entire payment is made to the merchant for the purchased goods and services.
- There is another way of how the Micropayment system work which is with Pre-paid transactions. In such a case, the customer already has an established Micropayment system and with a certain amount deposit in the digital wallet using secured payment gateways, managed by the service provider. Whenever there is some transaction that has to be made on a merchant site and if it uses the same or accepts the payment made from the same Micropayment platform then the required amount could be easily and smoothly be debited from the account without any hassle or the need to use credit or debit card
Using Micropayment platforms on your website can help your customers achieve amazing benefits like versatility, anonymity, security, privacy, convenience, flexibility with lesser risks of credit card thefts and frauds and higher possibilities of making even smallest of transactions.