Micropayments meet macro confusion

Microtransactions are defined broadly as any digital payment transaction involving a small sum of money. First popularized in the late 90’s when the Internet started to grow, these small transactions were used to charge visitors for access to site content or for digital downloads and were seen as an alternative revenue source to website advertisements. Today, micropayments are widely used to monetize online games, social networks, mobile applications, dating sites and any other digital goods and services.

What is a micropayment?

You’re probably wondering how “micro” a payment must be to be deemed a micropayment, and rightly so. This is where micropayments get complicated: there’s no universal definition of what a micropayment is. With many organizations and companies such as the World Wide Web Consortium (W3C) trying to create a universal definition, none was ever agreed upon and is still open to interpretation.

Today, many payment service providers can’t seem to come to a solid agreement on how to define microtransactions and for the most part have created their own definitions; one major company, for example, says microtransactions are payments of $12 (USD) or less while another defines a micropayment as any transaction that’s less than $20 (USD). Paymentwall defines a microtransaction as any online payment transaction for a dollar amount less than $10 (USD).

Securing and simplifying micropayments

Many online customers are hesitant to share their banking information with websites or applications when making small purchases; not only do they feel it’s inconvenient to enter their card info each time they check out, but also they fear their data could be exposed, leaving them vulnerable to fraud. Fortunately, there are alternative payment methods that work well for microtransactions:


eWallets, sometimes called digital wallets, aim to simplify the online checkout process by allowing users to store all of their credit card, banking information or other payment data in one place so they don’t have to re-enter their payment data each time they make an online purchase–they simply log in to their eWallet and select which stored method they’d like to pay with. Many different eWallets exist and each region will have a preferred ewallet so it is important to support the local eWallets of your users.

Prepaid cards and vouchers

Prepaid cards are popular with unbanked, underaged or privacy-conscious users because they can be purchased and used without sharing bank account data or other personal information and are easy to obtain either online or at convenience stores or other retailers.

SMS payments

Also called “direct carrier billing,” SMS payments do not require users to enter their personal data online to pay. Customers can simply pay with their mobile phone–either by texting a certain number or by entering their own phone number online to receive a PIN to confirm the purchase.