Will Micropayments Become a B2B Payments Model?

P2P micropayment systems are among the longest-running web-based payment innovations the corporate payments industry has been following since they started cropping up in the 1990s. Even still, there remains some degree of ambiguity with how a micropayment is defined and how it may ultimately impact B2B transactions.

Essentially, a micropayment is payment method designed for low-value ecommerce transactions, such as mobile in-app purchases and pay-per-download digital content. They facilitate payment amounts that are too small—from a fraction of a cent up to $12, by most accounts—to be feasible for processing through traditional payment channels, like banking systems and credit card networks.

The Staying Power of P2P Micropayments

While micropayments are being leveraged primarily by online content creators to monetize their products, they are becoming more important to the peer-to-peer economy. And they’re getting more attention as people turn to their mobile devices to conduct business, providing an easy and convenient form of payment for consumers buying items from their peers—or to reimburse a friend for part of last night’s dinner check.

Considered within the context of web-based (and now mobile) payment systems, micropayment technology itself is relatively new. The first basic micropayment systems introduced in the 1990s were not widely used, but they did lay the groundwork for the more popular online consumer payment systems like PayPal and even emerging digital currencies like Bitcoin. If the number of daily news headlines about them are any indication, micropayments in some form are here to stay.

Micropayments and the B2C Payments Evolution

When technological innovations make a solid mark on the P2P economy, they tend to catch on in the B2C space. More businesses are getting on board with micropayments not only as a way to manage small transactions with their customers, but also to align with the way people prefer to consume content today. Providers like Netflix and Kindle have used micropayments to replace the traditional subscription model, enabling customers to access the content they want, on-demand, without having to pay a monthly fee.

For more businesses to get on board with micropayments, they need to determine how they can make money on small transactions, not to mention incorporate them into their existing workflows. Organizations need to have confidence in their micropayment system’s reliability, security, scalability, and importantly, its user interface. Can it meet customers’ needs around the clock? Can it accommodate an influx of transactions? Is it vulnerable to cybercrime? Will consumers “buy in” and use the system?

These questions, and many more, need to be carefully explored before businesses can apply the microsystem “concept” to B2B payments. Even if organizations don’t have a business case to invest in systems enabling them to transact small amounts of funds with vendors, the underlying technology is likely to make an impact on their payment practices. Emerging micropayment and virtual money systems are pioneering the use of non-traditional payment channels—those not necessarily tied with bank and credit card systems—and opening the door to new methods of transacting on-demand, real-time payments. And these are becoming a mission-critical focus for organizations seeking a competitive edge in today’s B2B payment industry.