With PayPal Backing, Will Micropayments Work This Time?

A new pricing plan, PayPal argues, will make micropayments
viable for everything from ring tones and video clips to
online greeting cards and downloadable stories. Will
consumers buy it?

The concept of e-commerce micropayments—small Web purchases typically less than $2—is nothing new, but it has never gained widespread acceptance among e-retailers because credit card fees took too much of a bite out of a micropayment to make the exchange profitable.

eBay’s PayPal payment service, on the other hand, is restructing its fee structure to encourage micropayments.

Although specifics vary depending on the retailer’s sales volume and other negotiated details, retailers selling online end up paying credit-card processors, gateway providers or other middlemen about 35 cents for every sale—and that doesn’t include the percentage of the sale that Visa, MasterCard and AmericanExpress typically also take.

By Evan Schuman, Ziff Davis Internet

Full Story: http://www.cioinsight.com/article2/0,1540,1857615,00.asp