Cellphone: The micropayment killer app

Posted on March 26, 2005 
Filed Under Uncategorized

Back in the 90s, micropayment was a buzzword and touted as the key to e-commerce riches. The mistaken belief was that end-users, already used to getting everything free online, would pay tiny fees in exchange for, say, a daily dose of their favourite column, song, comic strip or porn.

Virtual currencies such as Flooz, Beenz, CyberCash and DigiCash came and went and are now being still persevered by players like BitPass and Peppercoin.

Micropayment’s failure on the PC then was a combination of:
2.volume of product and;

Even security was the least of consumers’ worries.

Apple’s iTunes has proven that given the right software/hardware platform and volume of songs available, and the one-click convenience of purchase, that buying digital content a la carte can work.

iTunes’ runaway success hasn’t yet been replicated by others because the per transaction processing would be a nightmare for banks and credit card merchants outside the US.

However, we needn’t look far for the killer app that makes micropayment catch on in the rest of the world.

It is already here – in the form of the ubiquitous cellphone.

The cellphone is already become the “e-wallet” the experts have talked about for years. Kids and tweens use prepaid cellphones to download ringtones, games and multimedia pictures. They vote on Idol-type TV programmes, buy concert tickets and watch videoclips. They’ve even started to “pay” each other owed money by the new convenience of transferring prepaid minutes between cellphones.

A recent issue of The Economist states that sales of cellphones already exceed PDAs, and cameraphones far outsell digital cameras. Music playback is the next app that’s going into cellphones that’s cementing the post-PC era. The cellphone is already being touted as an “iPod killer”. Samsung has a phone that combines the camera with OCR and makes it a business-card scanner. The Japanese arm of Amazon has a service that allows you to snap a barcode while browsing in stores and have it instantly tell you whether the product’s cheaper on Amazon. One article asks “Will the mobile phone become the device that ate everything?”

Undoubtedly, there will always be a market for single-use, dedicated digital products, but the hybrid cellphone – coupled with its convenience of one-click payment – will be what everyone wants.

Casting bluejacking and security issues aside, cellphones will take on all-comers, and manufacturers will fall over themselves to put more speed, memory and hard disk space into them.

Like the early Internet days, this m-commerce charge is already being led by pornmeisters and 24-hour gambling promoters.

Strategic Analytics came out with the figures recently that cellphone users around the world spent US$400 million on pornographic pictures and video in 2004, an amount that is expected to rise to US$5 billion by 2010. Juniper Research earlier suggested mobile gambling revenues will exceed US$19.3 billion by 2009.

The micropayment killer app is already here. Thy name is cellphone.


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