By James Caunt and Medb Kiely-Cuddy · Authors at Blockmate.io
The micropayments revolution is just around the corner. New advances in blockchain technology mean that fast, reliable, and super-cheap transactions are now a reality.
Imagine being able to read that article you were interested in with a simple click and an instant payment of a few cents? No more sign-ups, no monthly or credit card fees, and no more providing unnecessary personal information.
This will become the reality in an open crypto economy.
Why micropayments?
Well, it’s better for the user, who has a wider range of affordable content to choose from. Rather than being tied into subscriptions from a single source, they can connect directly to creators and pay them a small but fair sum for a single view.
It’s better for creators too, who don’t have to rely on third parties or advertising to get paid for their work. They’re also rewarded for the popularity of their content—more views equal more revenue for them.
Barriers to micropayments
So why haven’t micropayments become the norm already?
Transaction fees have been the biggest barrier to progress. Credit card companies, banks, and payment processors often apply a minimum fee to any transaction. While this can be as low as PayPal’s micropayment merchant fee (5% of the transaction and $0.05), this is unsustainable for microtransactions of a few cents.
Meanwhile, Stripe charges $0.30 plus a small percentage for accepting payments. For a workable micropayment economy, we need a way to reduce or eliminate transaction fees on both ends.
There’s also the issue of the status quo. Many media outlets prefer the security of long-term subscriptions and want to keep a share of the revenue generated by content creators. Working with advertisers to collect user data has also been quite lucrative. These entrenched habits and interests are hard to break—cutting out the middleman is never popular with the middleman himself.
Enter Web3
Companies like PayPal currently offer micropayments, but the prices of transactions make them unsuitable for very small payments. They also provide less anonymity which can be problematic for users who wish to keep their income or personal expenditure private.
This is where blockchain technology comes in. Layer 1 chains like Solana offer instant transactions with fees as low as $0.00025. With just the click of a button, micropayments can be approved and sent within seconds. For fintechs, this creates the possibility for a viable business model that’s affordable for all parties involved.
Web3 offers a frictionless way to carry out micropayments.
With Web2, users must create an account, supply identifying information, and enter credit card details. Many individuals have valid concerns about these companies’ ability to protect their data safely. Regular data leaks occur on even the biggest platforms. Web3 users, however, don’t need to link their personal details and identity to their wallets. They can interact and transact anonymously while maintaining ownership and control of their data.
The very act of creating an account is often enough to dissuade potential customers from completing the subscription process. Think about it. Is that article worth my valuable personal information? Can I spare 5 minutes to grab my card and enter my details? Most people, when confronted with a paywall, simply close the page and move on to something else.
If it was as simple as connecting your software wallet with just a click, we might see an increase in users willing to pay a small amount to access exclusive content or services. Independent creators and media outlets could integrate crypto micropayments with a low cost and a potentially high reward. It could provide an additional source of revenue for artists, writers, newspapers, content creators, and many more online businesses.
How can fintechs help?
Using Web3 APIs, fintechs can help creators to embed micropayment features into their websites like a digital tip jar. A great example of this is Helio, a platform that was born on the Solana blockchain.
Helio aims to be a complete Web3 payments platform, making it easy for merchants, creators, and projects to integrate crypto payments in their app or workflow. They harness the power of the blockchain to provide ecommerce, subscriptions, pay links, Discord payments, and more, with transactions costing just a fraction of a cent.
To get started with microtransactions, you need access to Web3. API providers like Blockmate make it easy, providing a Link tool that seamlessly connects any website or app to Web3 wallets. This includes wallets on the Solana blockchain, currently the fastest and most stable option for micropayments.
You can then build comprehensive micropayment apps that offer easy access to payments for content creators. You can allow them to track, analyze and organize their payments in a safe and compliant manner, and help to understand where and how to pay taxes on their earnings.
Wrap up
Micropayments offer fintechs the perfect way to empower content creators to get fair rewards for their work. This is what fintech is all about—cutting out inefficient workflows and middlemen to give users control over their own finances.
As Web3 becomes a part of our daily lives, so will microtransactions. Position yourself accordingly and start building the fintech super-apps of the future!