First lets start with the definition of a micropayment. A micropayment as defined today for the most part is a payment that is too small to be affordably processed by a payment gateway. An example would be a $1 payment that for most part comes with a 20 cent fee on top.  When the seller has to pay the fee that represents a 20% cut into revenue. You can easily see how this can add up very quickly in today’s viral Internet (the focus of this post).

Imagine if YouTube wanted to charge you 2 cents to view todays top video(2/6/2008). With 79,758 views at 2 cents per view and a 20 cent fee for the transaction, YouTube could receive $1,595 in payments and end up paying $15,951 in fees. So, the way around that obviously for YouTube is to use a payment gateway that allows the user to make deposits into an account and simply deduct from your balance over time.

So, you aren’t YouTube owned by Google and don’t have your very own payment gateway called Google Checkout? Then what is the lone ranger web application developer to do?

Use A Branded Micropayment Gateway

Content is king, usability is queen and when it comes to users handing over their credit card online the right payment gateway is God. The last thing you want your user to do on the checkout page is question the legitimacy of who they are giving their credit card to.

There are many payment gateways out there, OK tons. But, most are either laying wrapping up one of the branded gateways into their own and adding more fees on the top or more often simply have no brand recognition amongst your user base.

Branded Payment Gateways

Like I said there are many, but I, and most likely you if you are reading this need one that has an API of some sort, and, a simple and quick process for your users. Also, the most important thing for payments less than or equal to $1 is that the fees are as low as you can possibly get.

All of the following assume a “business account” vs. a “personal account” as well as a transaction between 5 cents and $1.

PayPal

PayPal is obviously leader of the pack in brand recognition, but, their fees are atrocious and their audience isn’t necessarily micropayments. For both PayPal to PayPal as well as Credit Card to PayPal payments a simple $1 transaction will cost you 33 cents.

Now, I should simply be done with talking about PayPal in the context of this post, but, if you are fine with that 33cent fee, then right now it’s your best option due to them being the long time leader in this space as well as the sheer number of your customers that are likely to have a PayPal account.

Integration Homepage - Fees

Google Checkout

Same story as PayPal with a difference in fees of 1 cent on a $1 transaction. Also, while Google has a trusting brand for your users it’s adoption is not as wide spread as PayPal.

Integration Homepage - Fees

Amazon FPS (Flexible Payment System)

The clear winner here and the largest brand bar none for your customers. While in a limited beta that I am part of I must say PayPal’s and Google’s API don’t even come close to the functionality you can build into your apps. I wont elaborate on that here but, most importantly is their 10cent fee on a $1 transaction. While 10% is a lot, it’s half of Google and PayPal’s fees and something I can live with and the end user trust is already established.

I highly recommend any social web application developer who wants to integrate micropayments to implement Amazon’s FPS. If you want a simple “buy now” button or something a tad more flexible it’s a breeze, and if you need a flexible two way interface into their gateway that’s where it really shines.

Integration Homepage & Fees

Facebook

This has the potential to be bigger than all other payment gateways. Imagine a teenagers parents give them their allowance on Friday and instead of cash, they transfer from their Facebook Wallet to their kids Facebook Wallet. Now, Facebook Wallet is just a fictitious name as I don’t have any worthy details about this other than their beta invite. But, they have a growing brand and a large user base.

Beta Sign Up (I will update this post when more info is available)

In Summary

As long as Facebook watches their privacy stance (beacon anyone?) the end user trust will be there, in the mean time (tonight) I’m implementing Amazon FPS into my Facebook application Utmost Kudos. Also, with the adoption of Open Social by the recently launched MySpace API you can bank on Facebook’s payment gateway using Open Social as well. The PayPal of social networks will be owned by Facebook, and it will happen in 2008. Well, that’s just my 2 cents anyway.

Update 2-6-2008: Clarissa Filice has decided to work with me on this project and I’m very excited to have her on board and cant wait to see the results!

Utmost Kudos is wrapped up. All that’s left is the integration of the soon to be released Facebook Wallet (or whatever they call it) and a rock solid Illustrator to join my efforts. I posted in Deviant Art about this job. So for all the details please go there, a summary is below.

About The Job

• Are you an Illustrator?
• One that can create original line art?
• One that can take advantage of 70×150 pixels?
• One that can define with their art the constructs of “Generosity”, “Stylish”, “Honesty” and “Crazy” (theres 40 altogether)?
• One that can knows their colors and how they are related to emotions?
• Can actually start work on this right away, this or next week!

Payment

It’s like this, want cash? Great, no problem as I will pay well for good skills, however, don’t expect attribution. Otherwise, attribution and commission will be given. I don’t care either way. What I do care though is that your method of payment that you choose should be the one that motivates you the most to do the best job.

Interested or know someone who is?

Go to my post at Deviant Art and read through what you need to do to apply for this job. I’ve received 5 emails already overnight, many of them have a great portfolio.

I’m not talking about a downloadable installed client software using Internet Protocol, which however is a proven successful business model raking in millions, but instead speaking of games played in a web browser (mobile or not) and specifically how that co-relates to web 2.0’s emphasis on “social”. Too many investments have gone into companies that focus on the quantity of eyeballs using a web site vs. the value the people behind those eyeballs actually get from using it.

It’s my opinion that in the long run you need to have value from the get go otherwise the crowd defines your business, which could leave you with nothing in the end (there are exceptions like Google, however, exceptions are not the norm).

Defining Value is Simple

Take Amazon.com for example. It’s a site that I can use to “buy things”. ebay is a site that I can use to “sell things” (although with much pain and high prices now). But what would you say sites like LinkedIn, MySpace and Facebook allow you to do in very few words? They are sites that I can “communicate with others” or “find others”, or are they more than that?

Now, not everyone wants 100 friends to communicate with, but, given the opportunity to play games with those 100 people and now you have a site whose value is one where you can can “play games”. So, unsubscribe right now to the hype companies or blogs are boasting about as to their X number of members/users because it doesn’t mean squat unless there is true value behind those numbers.

Why Gaming is a Proven Value for the Social Web

It’s all about “attention”. We’ve gone from “hits” in the early days of the web to “page views” to “unique users”.  Now we should be phasing out the current standard “qty of registered users” and phasing in “attention”. This is simply the quantity of time a user spends on your site. Now, if you have a high quantity of members and a high attention, then WHAMO! There’s value somewhere, focus on that value and make it grow and grow and grow. This is where Facebook’s growth should be focused, now feed it Zukerberg.

How does a social site feed attention?

Simply, games! From compete.com’s recent analysis on the top leaders of attention, 50% of them were either games or had some aspect of gaming involved. It’s a shame it’s taken this long for web 2.0 venture capitalist to wake up to this fact.

An analogy to the growth of the PC

Looking at the time frame of 1985 to 1995 I would venture to say, but have nothing to link to as proof that the major reason for PC adoption outside of business use was in fact games on the PC. So, one could easily look at the current growth of the social web and identify who is going to be big players in this space, be it on a PC or other device is doesn’t matter because they are serving up html over http.

In Summary

The semantic web is coined “web 3.0″, and it seems “web 2.5″ is all about data portability, so I’m left with “web 2.9″, and it’s here now in it’s infancy. All it will take is for a good combination of a “gaming platform” and “games” on that platform for widespread growth like the Wii has had. Right now, it’s either the platform that’s great, or the games, but I haven’t seen both under one roof just yet. Will Facebook be the first, doof.com, cafe.com? Have fun playing and developing and no I don’t work for Facebook but I am currently focused on building a Facebook application.

This first venture has two goals. The first is to assist my transition from 7 years as a .net developer to LAMP and the related open source frameworks. It’s been about 5 years since I last touched Linux. The second goal is to learn the Facebook API and develop a facebook application that actually generates revenue without making the user jump through hoops to enjoy my creation.

A Facebook application that generates revenue?

How can that be you ask? With advertisements right? No, god no. Anyone can do that, and, I applaud those that are and are making a profit. It seems Zuckerberg cant figure out how to make money off his own site other than advertisements and the Gifts application. Why haven’t they looked deeply into what Blizzard has done with the 9 million people world wide paying them $10-$15 per month to play World of Warcraft? Facebook is a game, got that Zuckerberg?

Facebook is a game?

My wife has 7 games of scrabulous with just one friend, and many other scrabulous games with others. She thanks me for introducing her. Simply looking at many of the applications on facebook they can be boiled down to games. Whether it be seeing who can create the coolest slide or the coolest wall post it’s a game. However, facebook has only just started to realize this with their Gifts application which has made more than $24 million selling $1 digital gifts. Now, lights should be going off in your head, enough to pay their current 400 employees expanding to 700.

So what’s your game Marc?

Utmost Kudos. It’s 75% complete at this time. Once I’m done I will be either paying for a graphic designer to design the digital assets or giving them a percentage of the revenue. It will be their choice. The other dependency will be my applications implementation of the current beta Facebook Pay Pal like payment gateway. So what is it you ask? An application that creates a competitive atmosphere that has a $0 barrier to entry and fosters honest as well as jokingly pats on the back so to speak. Of course thats the not as high as a birds eye view but you get the point. And, there are other apps vaguely similar, but their implementation is very weak.

So how do I play?

When the application is finished you can simply install the application and start right away. No need to invite friends or fill out stupid surveys for game credits. Now, while it’s not a “game” in it’s traditional definition, it’s a game in the social networking definition. More on that and Utmost Kudos another day.