![]() Customers can purchase these cards and enter special codes on the back of the card online to have their account credited for the amount they paid. An alternate form of prepay eliminates the online transaction and instead places gift cards in brick and mortar stores. That currency can then be used to purchase whatever that particular merchant is offering online. With the prepay model, a customer authorizes the merchant to charge their card for a certain amount, which is usually converted into a virtual currency. Not having a user pay a sum up front does not create a merchant-customer bond that can encourage the user to come back to finish off their prepaid amount and end up spending more.Retailers must face the burden of high transaction costs when processing the micropayments, making some micropayments not even worth processing.When credit card information is stored with the merchant, the low price of individual micropayments may encourage the user to partake in “impulse” buying, similar to how retailers put low cost candy bars, magazines, etc.The merchant can market low cost virtual goods to a user who may otherwise balk at paying a higher price for bulk access.They only purchase what they want, and they pay when they want to. Allows the user a pure à la carte experience.This means that as soon as the user wants to purchase access to an article or some other virtual good, their credit card will be charged for the amount of the transaction. With the pay-as-you-go model, Internet users are charged on the fly for purchases that they would like to make. Each has its advantages and disadvantages, with none of the models being absolutely perfect. This model does not work due to many reasons, so instead, two other models are introduced that attempt to solve the shortcomings of pay-as-you-go. One of the models, called pay-as-you-go, is what one might consider "classic micropayments": a user's credit card is charged on the fly. In today's online world, there are three different common models of managing micropayments. ![]() Micropayments: A Viable Business Model? Solutions
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