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November 1st: Torsten Jacobi, CEO of Creative Weblogging, joins host Anita Campbell. Sponsored by Six Disciplines. Show details.
Tuesday, January 27, 2004
BitPass Micropayments User Survey
This post is a slight departure from our usual format here at Small Business Trends. I’m taking a few moments to describe our experience using the BitPass micropayments system.

From time to time we post photographs on this site to relieve some of the visual monotony that comes from having so many words on a page. Most of the images come from istockphoto.com. They were purchased using a BitPass micropayments account.

Our survey sample is admittedly tiny -- one person, me. But I can report that using BitPass on 8 or 10 different occasions, the experience has been uniformly positive each time.
  • BitPass is a Web-based system, so all I need is a browser -- no software to download. The BitPass user interface is streamlined. Screens don't get much simpler to use.

  • Setting up my account initially was quick and easy. Just the bare minimum of information is requested. I was not required to provide age, gender, household income, hobbies, mother's maiden name, or even number of pets.

  • The way micropayments work is that you purchase credits for your account (similar to buying a gift card). That process was very easy, too. I was given several ways to pay, including PayPal and credit cards such as Visa and Mastercard. I chose PayPal, and the interfaces with the PayPal system worked without a glitch. My initial $3 (USD) was transferred from my bank account to my BitPass account instantly.

  • Once I had a few dollars in my account, I went shopping. Off to istockphoto.com, where I downloaded photographs for $1(USD) each. Here again, using BitPass was fast and easy.
As a user, I saw only two issues: First, photographs are twice as expensive using BitPass versus istockphoto.com's own in-house version of micropayments ($1 versus $.50). Somehow BitPass is going to have to close that price gap. Second, outside of stock photographs, today there is very little content I would want to purchase using micropayments. Until there are more vendors offering desirable content who accept BitPass, usage will be limited.

All signs suggest the market might be ready for micropayments to take off. The last time around, before the Internet bubble burst, micropayments never got much traction. Most of the original micropayments providers went under. But we are now in a different era, with paid Internet content gaining greater acceptance and music download services going mainstream and creating demand for micropayments.

That said, a major issue looming on the horizon for BitPass and other micropayments providers is competition from PayPal. A representative of PayPal has said "we think the stars are coming into alignment" on micropayments. PayPal recently kicked off its own micropayments rate. Backed by its parent, eBay, a cash-rich and well-run powerhouse of a company, PayPal could be a formidable competitor.

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