A financial transaction made online on a merchandise site which involves very small transactions even as small as a dollar or even a cent are micropayments and the platforms which make these transactions successful are called micropayment platforms. The first generation of micropayment systems was developed during the 1990s followed by a second generation in the 2010s. These days micropayment platforms have become very popular like PayPal, M-Coin, Swish, Flattr, etc.
Why micropayment platforms?
Well, there are numerous reasons to be using micropayments for making even the smallest of transactions for buying your favorite merchandise, products or services online. The following are some of the top advantages of micropayments:
1. With micropayment services, you can now own your chosen products and services even if they are at very low prices online. As the name says, you can efficiently make micropayments of as small as a fraction of a cent using these platforms.
2. Using virtual wallets and credits, the chances of theft and credit and debit card frauds can be greatly reduced and avoided by reducing the number of online transfers required to purchase virtual or real goods online every now and then. With micropayment platforms, you could just use the prepaid virtual wallets to make any kind of transaction.
3. Micropayment platforms also help in purchasing services very quickly, efficiently, conveniently and securely.
4. These third-party platforms have provided another safer alternative for making transactions online with higher flexibility and anonymity.
5. An added advantage for the merchants is that now they can expand their lower-priced products and services to the customers without losing the profit margins.
Micropayment platforms are usually classified by three types of models:
1. Prepaid model: In this kind of model, as the name suggests, the customer is charged a certain amount of money which is then converted into virtual currency to be utilized for making microtransactions as and when required.
2. Pay-As-You-Go: In this model you pay as you go i.e. whenever you try to purchase an article, product or service, your credit is charged with that amount of online transaction.
3. Postpaid model: This is one of the most effective but less common modes of micropayment platforms wherein your micro transactions are combined together and after a period of time the transactions are billed as one single amount which may be paid by the end of the month or as required.