nanopayment schemes

This page considers micro-pay and nano-payment schemes.

The publishing guide elsewhere on this site points to studies suggesting that 'for-profit' online publishing of books, images, music and other information commodities is dependent on a 'pay-per-play' regime with very low charges, typically a few cents or fractions of a cent to view a particular chapter, image, page or sound clip.

The results so far from trials such as Millicent and Silk Road have been underwhelming.

While basic technological challenges may be overcome through the development of international standards and the establishment of very low cost digital clearing houses, whether within publishing groups or intermediaries such as banks and connectivity providers,  the task of persuading content providers and users to accept the new regime will be more difficult.

Usability, discussed in our design guide, appears to be a major impediment. Currently it is difficult for the consumer to download and install a software 'wallet' and then to set up an account with a broker to buy digital cash. The bundling of such services with standard software - eg paying per page to the Bank of Microsoft - poses interesting industry concentration, competition and privacy questions.

Just as importantly, most consumers appear to envisage the web as as a zone of free content, with free alternatives to those information goods for which payment is required.

     studies

Several papers offer a useful starting point. 

For the big picture consult the paper  by Yanos Bakos & Erik Brynjolfsson on 'Aggregation & disaggregation of information goods: Implications for bundling, site licensing & micropayment systems' in  Internet Publishing & Beyond: The Economics of Digital Information & Intellectual Property (Cambridge: MIT Press 2000) edited by Brian Kahin & Hal Varian.

The 1999 Berkeley report Internet Micropayments: An Analysis of the Technological, Business & Economic Factors Driving Micropayments in E-Commerce and the 2000 paper by Jari Kytöjoki & Vesa Kärpijoki on Micropayments: Requirements & Solutions are more specific. They supply cogent analysis and several case studies. Scott Worden's 1998 paper on Micropayments & the Future of the Web is thinner but includes a legal perspective.

    standards

As several of the above papers noted the lack of standards bedevils establishment of micropayment schemes. The W3C Micropayments Working Party (MPWP) has yet to build a consensus among hardware/software developers and associated interests, although in 2000 it released a draft proposal on markup standards. 

     some of the schemes

Jalda is a non-proprietary scheme aimed at online gambling, retail, software providers and telephone operators. It was launched in 1999 by EHPT, a joint venture of Ericsson and Hewlett-Packard. Although functional on wired personal computers, the emphasis unsurprisingly is on mobile phones or wireless personal digital assistants.

Jalda associates every user with a specific account, enabling users to be charged by different parameters such as elapsed time, mouse clicks, searches, or game levels and amounts from fractions of a cent to large sums.

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