Microsoft Developing Online Payment System

Looks like Microsoft is planning on developing an online payment system, or Micropayment system, that will allow content creators to charge their visitors for their content in small payments, without adding the extra burden or expense when collecting the many small transactions.

Microsoft Chairman Bill Gates told a breakfast meeting here at the World Economic Forum that he reviewed a plan to enter the online payments business during his “think week,” a twice-yearly ritual where he usually isolates himself in a backwoods cabin to study new ideas. Over the years, these sessions have propelled products such as Internet Explorer, Microsoft’s Tablet PC and an online videogame business.

Microsoft’s move into Internet payments could threaten credit card companies’ online profits. Gates described a system that would undercut credit card fees, making it profitable for an online newspaper to charge small fees for individual articles, for example.

“If you want to charge somebody $0.10 or $1 a month, that will just be a click…you won’t have to manage some funny thing or pay some big credit charge, where half of it goes to the clearing,” Gates said. Source: CNNMoney

This could be a boon to independent musicians, artists, and writers, and any other online shop that can’t afford to develop their own system for collecting micropayments, and as long as the user just has to signup and from then on it is a one click purchase, this could catch on. The article did not mention how they would achieve this, or, more importantly, how secure it will be, as this will be Microsoft’s biggest hurdle to overcome.

Added: I just saw this post by Robert McLaws and he says they are using the Microsoft Points Framework, the one they have been using and building out using Xbox Live. He says it is great for Microsoft because:

• It detaches your brain from the concept that you’re spending money, by detaching the exchange of money from the item you intend to buy. After you buy 800 points for $10 USD, you forget that the 600-point Live Arcade title just cost you $7.50 USD. In the mind of most individuals, you’ve already spent the money on the points. This leads people to spend points more quickly than they would cash (this is not based on hard evidence, just my own personal experience… but Joystiq backs me up).

• Microsoft is able to get around the fees issue because you buy Points in bulk. You can’t just buy 10 Points (that’s $0.12 USD for those keeping track) because MS would get creamed in fees. So they charge just enough to make it worth your while, and worth theirs too.

Source: WindowsNow

This could be even better for content creators, charging for points does sound better than dollars or cents.

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