Twitter as a Micropayment system

Thursday, December 18. 2008

Twitter as a Micropayment system

Micropayments in Twitter using TwitPay, from Megan McCarthy at CNet:

Here's the premise: Sign up, put some cash in your Twitpay account through another payment service like PayPal, and then send out a "tweet" to another Twitpay member, structured like "@josh twitpay $10 for beers." Twitpay takes a five-cent commission. Its founders are hoping that, eventually, it can be used for charity and disaster relief payments.

It's a nifty idea, though not for everyone. You don't get cash out of it, for example--Twitpay reimburses you in the form of Amazon gift rewards instead. Also, I'm not sure I always want to make it public that I'm letting @josh pay for my beer (don't want my Twitter followers thinking I'm a lush and a mooch), and Twitpay doesn't work with direct messages or friends-only Twitter accounts. You can, however, go to the Twitpay homepage and use that in lieu of a formal tweet.

According to Twitpay's FAQ page, the app was created "because Silicon Alley Insider said it was a billion dollar business (and) a billion dollar business sounded good to us."

Well, micropayments has been an emerging billion dollar industry for quite a while, but its never quite taken off yet.

Its an interesting idea, though Twitter is just the transport mechanism here - you don't need to do this on Twitter, any transaction recording system would work (a Yahoo Group for example, but that doesn't quite get the buzz in 2008).

In fact, they would probably be better off with a system that allows more privacy, as the piece notes. The minute money starts moving, fraudsters and so on are attracted.

Posted by Alan Patrick in Business Models at 23:39 | Comments (5) | Trackbacks (0)

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Micropayments has never picked up in the US, but I'm sure you're very aware of the breadth of micropayment use using mobile infrastructure throughout Africa and India, just to start.

Personally I think the issue with micropayments in the US has been psychological friction rather than transport mechanism friction. Also, it's less about the friction created by an individual transaction, but more the time, effort and "mindspace" required to setup and monitor an account.

Just my opinion

#1 Taylor Davidson (Homepage) on 2008-12-19 02:13 (Reply)

Yes, we've actually helped launch mobile based small payment services in Asia, and watching people use mobiles as banks in Africa

But to the best of my knowledge they also struggle with micropayments (ie pennies) owing to transaction costs (as I understand it, in Africa the alternatives are non existant so its worth using these approaches)

#2 alan p on 2008-12-19 07:49 (Reply)

$10 for beer is not a micro payment - it's an average size transaction for a credit card! Even the 5 cent commission is too large to qualify as a micro payment in my book.
PayPal for example is well qualified to handle transactions of this size, what is missing is an effective way to charge values under a cent for access to content.
The principle effective way to monetise low value high frequency content at the moment is via advertising where the CPM rate can be a few cents per thousand impressions - the one time vision for Micro Payments is a world where you can subscribe for advertising free content at rates in the 0.01 cent per page range.

#3 Andy (Homepage) on 2008-12-19 09:50 (Reply)

Keep in mind this project is still in very early beta (some might say alpha). I think this has HUGE potential, but obviously needs to have the kinks worked out (point about fraudsters duly noted).

@Andy - $.05 is too large to qualify as a micropayment? Microtransactions/Micropayments are operating in a different world from CPM advertising rates. In a global economy where advertising budgets are sinking faster than the Titanic, these ads won't be worth the pixel space they take up.

#4 Dan Taylor (Homepage) on 2008-12-19 11:09 (Reply)

I think Andy is right re $10 not being micropayment turf though. Certainly up till now transaction costs and workflow frction in micropayments have made Advertising the best form of micropayment going.

#5 alan p on 2008-12-19 11:59 (Reply)

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