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Old 10-19-2002, 01:35 PM   #1
fallesen
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Default Possible Case for Micropayments

Hi,

First of all let me introduce my self, I’m the owner of a small corporation in Europe. We are currently developing a micropayment gateway to allow quality to charge small payments from webusers (down to 1 cent).

Technically there is no major difficulties in developing this system, and the technical site of the project is currently in the beta stage. We have just agreed on the name PayReg for the project, and this is the first time I discuss the project outside the company.

But tech stuff is defiantly not enough to make such system work, what we need is quality publishers which makes content that users would pay say 5 cents to view. The system must have complete backing from the Internet publishers from around the world. Therefor we would like discussing our plans in these forums (and I seriously hope that Steven would allow this) as these forums are a goldmine of experienced webmasters. When opening the system it is our plan to have an “independent” board of publishers controlling the future development.

To use the restricted areas of the websites users would establish an account balance (e.g. $10) at PayReg, these founds will then be transferred to websites when users visits the websites using the system. This is in our opinion the best way to do this.

The concept is inspired by “Jakob Nielsen's Alertbox for January 25, 1998”: Link

I would be very thankful if some of you would take some time commenting the concept. I personally think that our future system (or others like it – if any) would help finance content sites. But then again such system must have a massive backing from the Internet publishers – you )


Best regards,

Steffa S. Fallesen
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Old 10-20-2002, 12:26 AM   #2
Czar

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Hi Steffa, and welcome to Geek/Talk. I'm confident that you'll receive a great degree of constructive feedback from our members, and wish you the best in this endeavour.

If I may contribute 2 cents upfront, I'd like to bring to your attention the fact that another Geek/Talk member is pioneering a system remarkably similar to the one you describe as we speak.

No Ad Network by BUDS Inc debuted mid September, and it would be in your best interests to both review the following thread:
http://www.geekvillage.com/forums/sh...threadid=18622
and to investigate any patents that are pending on this type of system.

I mention this since I know that BUDS Inc have filed a patent in relation to No Ad Network. And while clearly no firm could patent the broad concept of micropayments due to prior art (the payment model has been in practice on the French Mintel network for more than 15 years, and described in detail as a key revenue stream for web publishers by MIT's Nicholas Negroponte at least two years before Jakob Nielsen proposed the system), No Ad's claim could very likely be cause for caution on your behalf.

So, anyway, check out NoAdNetwork.com to see what's already on offer in the space, review prior Geek/Talk threads on the issue, and in the meantime our members will contribute comments or advice to assist you in determining the best course of action to take.

HTH
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Old 10-20-2002, 05:42 AM   #3
fallesen
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Hi Czar

Thank you for your reply. Regarding the NoAdNetwork we did not know of it, but our system is in fact not that similar to theirs. We have chosen a different structure in our system users should not subscribe to the sites, since we don’t think (no offence) that it fits the Internet.

Quotation (Jakob Nielsen):
“The main problem with subscription fees is that they provide a single choice: between paying nothing (thus getting nothing) and paying a large fee (thus getting everything). Faced with this decision, most users will chose to pay nothing and will go to other sites. It is rare that you will know in advance that you will use a site enough to justify a large fee and the time to register. Thus, most people will only subscribe to very few sites: the Web will be split up into disconnected "docu-islands" and users will be prevented from roaming over the full docuverse. “

Our system gives the publishers freedom to choose how they would like to charge their users. Some sites would charge maybe 5 cents for an article, others would charge $1/month for an e-mail address etc. It is all up to the publishers, we only provide the infrastructure and some backend API’s.

When a webuser signs up with us he/she will establish an account balance, and then have access to all sites in our network. If a sites charges between 1-7 cents the users will automatically be charged, if the site charges above 7 cents the user will be prompted and asked if he/she would proceed.


Best regards,

Steffa S. Fallesen
PayReg.com site
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Old 10-20-2002, 12:10 PM   #4
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Default Sounds like a good idea

Steffa,

Payreg sounds like good project,

I would certainly be interested in seeing more of what it does/will do.
I would like to offer special 'paid' services from my site, using something like your system in the future.

Cheers

Tim
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Old 10-20-2002, 01:26 PM   #5
lemon
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Thumbs up

I have a web site I think could benefit a lot from a system like yours. In fact, I have been waiting for quite some time for micropayments to become a reality. But for one reason or another, it doesn't happen..

If you are interested in my feedback on your system, I'm willing to provide it.. just let me know.

I would need more info on your system, but I would suggest it would require always *explicit* authorization even for 1 cent charges. I think it is very important to know what and when you are charged, no mather how small the charge, it is still a purchase.

I would also suggest it doesn't require any software on the client. And if you provide something, it should be optional.

I assume end users make deposits via their credit cards. But how would webmasters be paid? (mailed check, wire transfer?)

Good luck on your project, I really think the Internet needs a good micropayments system.
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Old 10-20-2002, 01:53 PM   #6
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I do not think a project like this can be undertaken by anyone except Microsoft.... they are the only ones with the infrastructure(IE) and money to pull it off.

I am suprised the AVS system common in the adult site has not been adopted into the mainstream sites. A group of sites get together and sell a season ticket to all their sites for $20, the webmasters get 50% of the profits for each signup they bring in.
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Old 10-20-2002, 02:44 PM   #7
fallesen
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Hi,

Thank you for your feedback – it is appreciated

Quote:
[i]I would need more info on your system, but I would suggest it would require always *explicit* authorization even for 1 cent charges. I think it is very important to know what and when you are charged, no mather how small the charge, it is still a purchase.
I think you are right, some people might want to be prompted even for 1-cent charges – so I have asked to have the system made so that the user decides if authorization is required. Thanks for the idea

Quote:
[i]
I would also suggest it doesn't require any software on the client. And if you provide something, it should be optional.
No software is needed, there will be two versions for webmasters; An easy to implant version and a advanced API for PHP/CGI sites.

Quote:
[i]
I assume end users make deposits via their credit cards. But how would webmasters be paid? (mailed check, wire transfer?)
Yes, the user deposits e.g. 10 bucks. Site A then charges 10*1-cent and site B charges 5 dollars for one month of hosting, PayReg then splits the payment (10 cents for site A, and 5 dollars for site B). When the website account reaches 50 dollars the websites will receive payment (through PayPal or other form) – like the adnetworks do.

Quote:
[i]
Good luck on your project, I really think the Internet needs a good micropayments system.
Thank you for your great response


Best regards,

Steffa S. Fallesen
PayReg.com site
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Old 10-20-2002, 03:15 PM   #8
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I hate to break the news to you, but your system is in fact an identical replication of ours. In terms of how you are going to charge to have a large account balance, and then smaller payments of that balance can be used to pay for sites, is exactly how our system works. It is within your rights to compete with us directly and that is perfectly fine, but as far as I know, using the system the way you are explaining it will definitly infringe upon or copyprotection, and possibly patents.
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Old 10-20-2002, 03:34 PM   #9
fallesen
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Hi,

Competition is just fine and will benefit the Internet community. Regarding the patent I would like to read through it, could you possible direct me to it ?

But as far as I can tell (I’m not a lawyer) a system like ours can not be patented becouse of the fact that it is like Jacob Nielsen described back in 1998 and have been used at French Internet predecessor Mintel net. Anyway I would like to read you patent.

Thank you – and good luck with your system



Best regards,

Steffan S. Fallesen
PayReg.com site
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Old 10-20-2002, 05:09 PM   #10
Darryl
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I'm quite skeptical that a patent on this system would ever hold up - there's simply too much prior art.

Pick your poison - Jakob, Mintel, any phone company (think prepaid phone cards, prepaid cell phones, etc.), or almost anybody that works on a prepaid basis with small amounts.

Want an internet example? Check out AllCharge - I first talked to them about two years ago, and trust me, everything you can do, they can do better (Luckily for you, they're working on a larger scale...).

Damn, I hate patent scare tactics.
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Old 10-20-2002, 10:24 PM   #11
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I wasn't making a patent scare tactic at all. In factor patent is for our blocking technology and not the payment system at all. In fact on our site we say the blocking technology is what is being patented.
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Old 10-21-2002, 12:03 AM   #12
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hmm...

Let's see if we could please return to the program (http://www.payreg.com/) under discussion in this topic.

Hi Steffa,

Best wishes with the program. A few random thoughts in no particular order.

- Who will promote this program? Obviously, sites that wan't to earn money for their content but above and beyond this?

- I would suggest some private deals to get the ball rolling. These "foundation sites" should be under NDA and paid more than your publick rate/term.

- Fraud Control: You will (not if) be cheated and they will be knocking on your door the moment you open.

If you don't have folks on staff with experineced "eyes" and sometimes "ears" to handle this, you should consider hiring a consultant of some sort.

- Your site needs an About Us page, Privacy, street address, and phone number. A lot of folks won't take the trouble to visit your other site at: www.servage.com

Good luck again and HTH
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Old 10-24-2002, 01:17 PM   #13
fallesen
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Talking

Hi,

Thank you for your post. We are working very hard to make the system a reality, and actually not much remains to be done )

The PayReg system will primary be promoted through the members sites, users should feel that they want a membership because of the great content on our network of sites. However we recognize the need for promotion the first year or two. Our own sites will provide 50 million 468x60 impression per month, and we will invest a limited amount (~$20k) on 3rd party ad agencies the first month or two.

Or company has been accepting credit cards for a long time and we have the necessary experience to handle this. However we have calculated with some % of fraud, but by address verification and good old experience/feeling we should be able minimize fraud.

The work are primarily done at the backend system at the moment, but because of your advice I have requested that some more information should be available before the launch.

Thank you for your feedback


Best regards,

Steffan S. Fallesen
PayReg.com site
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Old 11-03-2002, 12:55 PM   #14
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I like the idea of micropayments - but, to the end-user, it's not really a micro-payment: you have to pay a minimum of ($10?) to view 1cent or 10cents worth of webpages. The network of sites would have to be enormous (thousands) to succeed. Initially at least, a lower minimum payment should be considered.

Which brings up the payment to the websites - in discussion so far, there's no mention of any webmaster fees. If user 'pays' 10 cents to a site, how much does the site get?

The member site doesn't make a sale until it (a) sells the user of the idea of paying a few cents to access your content, and (b) the killer- convinces the user to prepay ($10) for something more.

As for PayReg vs NoAd - similar, but different.
In my opinion - and experience - offering ad-free access is not enough to be successful with a subscription model - you have to offer more than no ads. PayReg is described as a pay-per-transaction or page, and NoAds as pay-per-site. NoAds uses a confusing point system that's hard for me to understand, while PayReg apparently will work with pennies/dollars. (I can't figure out what the payment options/minimums are with Noads: the NoAds site lists point price for sites, but if you click buy, there's no info on any $ pricing. I guess you have to Register - get e-mail to find out more?) In my opinion, the sign-up/payment must be easy, automatic and 'instant': don't give me time to lose interest or change my mind - give me a paypage, and access right away!
What's the minimum in $ a user pays to establish account at Noads? What's the minimum site transaction in $ and how much does the site get?

I'm sure both systems will be refined - but I'm not sure if either can succeed without some of the cash that used to be available to seed net ventures: spend millions offering end-users free $ to sign up, and thousands in marketing to publishers to build the critical mass needed to become the PayPal of micropayments....

v.Rich
www.modemsite.com
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Old 11-03-2002, 01:23 PM   #15
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Quote:
Originally posted by v.rich
...spend millions offering end-users free $ to sign up, and thousands in marketing to publishers to build the critical mass needed to become the PayPal of micropayments....
And by that time, PayPal will have become the PayPal of micropayments.

Certainly, these guys have a great degree of resistance to overcome, but they may just have hit the market at a time in which publishers are realising en-masse that advertising alone cannot sustain the entire online content model, so there are potential niches to be had for platform providers/content aggregators that hit the right notes and maintain minimal overheads.
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