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Will Micropayments Yield Maxi Profits?

Will Micropayments Yield Maxi Profits?

December 24, 2012
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" Mobile billing and payments has become a crucial part of NETbilling’s merchant transaction processing over the past several years. -Mitch Farber, Netbilling "

Some porn pros liken it to iTunes where a song can be bought for 99 cents and the consumer’s happy. And mobile micropayments have even been bandied about as being a panacea for those battling free porn, believing that a small price won’t matter if the content is superior to what’s free.

Add the advent of cheap apps — now a common practice with mobile users — and micropayments appeal to be an attractive and viable option for the porn consumer despite the mountains of free scenes.

And who knows better than the billing companies themselves? NETbilling President Mitch Farber says that mobile billing and payments has become a crucial part of NETbilling’s merchant transaction processing over the past several years and many merchants have created dedicated mobile sites, tours, and simplified payment forms to be able to focus and monetize those purchasing from their mobile phones and tablets — some adopting the micropayment model.

“Many of our live cam and pay-per-download clients allow customers to bank funds in an account and use those funds in a micropayment scenario as needed,” Farber says.

The executive notes that his merchant clients have also expressed interest in utilizing mobile swipe for card present or keyed transactions. “NETbilling offers a free iPhone compatible virtual terminal app that links directly to a merchants NETbilling account online,” Farber says.

He explains that the mobile swipe works nicely for micropayments and is a completely separate offering as part of the company’s services. What’s more, the affordability of the swipe terminal that accept card present transactions costs U.s. merchants only 2.69 percent with no other application or set-up fees.

“All it takes is a three-minute online application and the free phone swipe will be shipped the next day,” Farber says.

London-based spankmo’s Graeme Kingshott has been taking advantage of the micropayment option by rolling out small period sMs based memberships. He explains that in italy for example, the company provides access to mobile sites for two hours at a time. “Basically the surfer period is lower value, limited by what we are able to bill them. We’ve done this for Nigeria, Kazakhstan and more. I anticipate this will be popular with developing market traffic, as the price is more affordable,” Kingshott says.

Although he’s embracing the idea of mobile micropayments, Kingshott doesn’t believe they’re being utilized enough.

“I guess the industry is still focused on the $30 monthly price point, which is good for U.s. and parts of Western Europe, but not really appropriate for most of the world. We are seeing huge traffic numbers in mobile from non-traditional adult markets, and so it makes sense to offer access to the sites at an affordable price, using a payment method that works for the surfers, and where we get paid as well. We’re competing against free, pirated content in these markets, so we have to offer reasonable price and easy to pay,” Kingshott point out.

What the executive does like are small value sMs payments — a payment mechanism that consumers understand, with an infrastructure in place for merchants to collect revenues. Kingshott notes that he’s seeing some traction in Ukash and other prepaid vouchers also, that although requires the surfer to have a credit balance, it’s likely on their mobile devices anyway.

But Kingshott stresses hat there are still many regulatory restrictions. “The content grade that we can charge for by sMs is restricted to soft in many countries, and the approval process for launching is painfully slow. But it’s worth it in the long term, as there is a large audience out there.”

Kingshott laments that the U.s. carriers need to “wake up” to the 21st century and begin accepting payments, even if begins with softcore sites only.

Although Wolf Kring, cEo of international billing provider 2000charge agrees with Kingshott’s assessment that micropayments will continue to be a challenge because single micropayments remain cost prohibitive for many existing solutions, he does feel that by providing a simple, effective and affordable payment solution that functions as an extension of a bank account, combined with trust, familiarity and convenience, the model could work.

That optimism is in line with .xxx registry CEO Stuart Lawley’s idea revealed last June that mapped out an iTunes-like platform for porn clips for 99 cents as a way to save the beleaguered adult industry from the blight of free porn.

And if a savvy businessman who spearheaded, and more importantly cashed in on his efforts to create an entirely new top level domain for the adult industry sees huge potential in the micropayment model, then mobile webmasters would be wise to take notice.


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