Can a micropayment strategy make money?

3 pointsby tstegart18 anni fa1 comments

So I'm bouncing ideas for business plans around, and one of them involves selling low-cost digital goods. Basically, an online store would sell goods priced at $.99 and the consumer would pay by credit card. I know a place like the iTunes Store makes money doing the same thing, but on a massive scale. They also have an advantage in that many times the actual purchase is higher than $.99, because purchases over time are lumped together and a consumer often makes multiple purchases.

But is it viable for a business that would sell small quantities of goods, resulting in a credit card charge of $2 or less? Is there any profit at all in a credit card transaction of $.99? Disregarding the overhead for a merchant account for the time being, what are the transaction costs for a credit card transaction, and what is a good estimate of the available margin left over to spread amongst the interested parties? An example: I sell a digital picture for $.99. How much will I have left over after credit card fees to split with the copyright owner?

1 comments

rwalling18 anni fa

You won't want to go with a traditional merchant account since the fees are typically $.30 per transaction plus 3%.

You'll either want to hit up PayPal's little known micropayment feature which runs $.05 per transaction plus 5% (https://www.paypal.com/IntegrationCenter/ic_micropayments.ht...), or use Amazon's Flexible Payments Solution which has a similar pricing model and is set up for developer integration.