Phone Micropayment

It is now very common to pay for internet acquired oods and services by credit card. But are grave problems in scaling this method to small payments, or 'micropayments', which may be of the order of a few pence. Such payments will be required for such items as single tracks from record companies, etc. The credit card system is too cumbersome to deal with large volume, small value transactions such as these. An additional problem is that those too young to posess a credit card are excluded, thus a large potential market is lost. There is, I imagine, much head scratching amongst putative vendors on this subject.

But wait! Under our very noses, a large scale, easy to use, accessible to all micropayment system has been deployed, and is now fully operational! It is none other than our friend the mobile phone network. Granted, at the moment, the payments are largely internal to the network, being used for call charges, text message charges and the like. But you can already buy ringtones, which presumably originate from third parties. I imagine that only a small amount of twiddling would be required to make this a more general system.

I envisage it working as follows: You connect to a record company website, and want to micro-buy a track, costing, say 10p. Rather than a creadit card number, you enter your mobile number, together with a password. You have previously acquired this password from the phone company, who text it to your phone. To protect the buyer, the password may be restricted in time (say valid for 1 week), value (no more than £10 worth of transactions), and maximum transaction value (single transaction not exceeding 20p). Vendor server contacts phone company server and validates transaction. Product delivered, money changes hands, everybody's happy.

What could be simpler? No new tricks for the consumer to learn. No new equipment needed. Kids can use it. The phone comany would, of course, want their cut. They could either skim per transaction, or charge per password.