- The Washington Times - Wednesday, August 13, 2003

A barrier to doing business over the Internet has been the lack of a satisfactory way of paying small amounts for things.

Various approaches have been tried, but few have been successful. A new service, BitPass.com, hopes to change this. If it works, it will allow owners of Web sites to charge a per-use fee for access.

Who would want to accept payments of a few cents? Probably a whole lot of people, for things nobody has thought of yet. In particular, sites that sell information or, as we say in computerspeak, “content.” A few examples:

Sites offering seldom-used but important reference works. If you want to use the Oxford English Dictionary (www.oed.com), it’s online but costs $550 a year for a subscription. Few need the OED enough to pay so much. Yet millions of students and researchers might pay 10 cents per word or a dollar for 20 minutes of access.

Newspapers and magazines. Today, if you want to read the Wall Street Journal online, you can buy an online subscription with a credit card for $79. But if you are traveling in Japan and want to read them without paying for an entire online subscription, how do you do it?

Non-mainstream journalism. On the Web, one finds many sites offering political commentary of interest to specialized readerships (e.g., lewrockwell.com, for libertarians). If these tried to charge for a year’s subscription, most people would shy away. But if readers could get a day’s access for a nickel, by clicking once, they would probably think twice.

Ten-thousand nickels start being real money. Here is a commercial potential of the Internet that has only begun to be exploited: If the cost of providing content is low (a dictionary already in existence, downloadable music, a column written in spare time), then very small payments from a tiny proportion of Internet users around the world can add up.

So why is there no good way to charge for information? Because the existing methods are too awkward or have excessive transaction costs. Credit cards work fine over the Internet nowadays, but for transactions of a few cents, they don’t make sense.

So how do you transfer small amounts of money by computer easily without transaction costs eating up the profit?

PayPal.com comes to mind. With it, you sign up online and type in your credit-card information. Thereafter, you can send money to and receive money from any other PayPal user. It’s fairly leasy to use, but not easy enough for micropayments.

One problem is that PayPal charges 30 cents per transaction plus a percentage of the total amount. Further, you can’t use it to control access to a Web site, making it useless for small payments.

Enter BitPass.com. It is a promising attempt to allow payments of a few cents. Just now, it is in beta — which, in computer talk, means the company thinks it’s close enough to working to let the public test it. It’s not final, and I don’t know how good it is.

If you want to use BitPass to pay for things, you go to the BitPass Web site and, using PayPal or your credit card, deposit money (as little as $3) with BitPass. Thereafter, as you make purchases, the amount of the purchase is debited. The selling site has to have a BitPass account, which the company hopes will become common.

As BitPass explains it, when you want to peruse the Daily Bugle, you go to the Bugle’s site and click on a BitPass-enabled link. BitPass in conjunction with software that the Bugle installs on its server identifies you as having paid, and lets you read the paper.

Says BitPass, “There are no setup or monthly fees. For items priced $0.01-$5.00, the transaction fee is 15 percent. For items priced $5.00 and higher, the transaction fee is 5 percent + $0.50.”

Bingo. Tiny payments. Slick, if it works.

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