Bright idea: micropayments

Name: Micropayments

Launched: Quite some time ago.

What is it?
With Rupert Murdoch mere months from baricading his content inside a paywall so high even Goliath would have to stand on his tippy-toes to see over it; speculators have been pondering the payment model he's going to use. Micropayment, it seems, is probably the answer.

That didn't really answer the question.
Think of it in sweetie terms. Instead of, for example, a subscription model - something the Financial Times is fond of - where you buy a whole packet of Opal Fruits and have to eat them all at once; rumour has it Murdoch will charge readers a negligible amount - say, 50p - per article viewed. More like individual penny sweets: buy them when you need them and don't get fat.

Interesting metaphor.
Thanks. Not sure it's perfect.

50p, you say? Lo! A simple way to get rid of all my coppers!
Well no, not really. Micropayments are usually used by online businesses - and, consequently, are electronic. The most successful examples are websites like Second Life, where your payments are small but frequent. Want a new dress for your avatar? $2 is nothing! Want a beer at a virtual bar? 50c - pah! Want a bit of virtual island to call home? Actually, that'll probably cost you. You can see how it adds up, though.

I can see. But how is this vaguely relevant to me?
Where large firms go, it often becomes much easier for small firms to follow - and with the rising popularity of mobile phone applications, any business can grab a piece of the micropayment action, whether it's by changing the way you charge for your online offering, or reassessing your entire business model. There are even whispers that as technology develops, offline consumers might be able to use their phones to pay for additional pre-booked services on the move without even having to get their credit cards out - which might make impulsively adding a 10-minute manicure at £5 to your £60 hair appointment very easy indeed. Just remember: good things come in small, er, payments.

What businesses will fare best in the cut-throat world of micropayment, then?
"It's any business, really, where you can build customer loyalty, fast," says David Molian, lecturer in entrepreneurship at Cranfield School of Business. "You need a loyal group of followers which is online so you can establish a strong presence very quickly."

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