Micropayments, as the name suggests, are transactions involving small amounts of money, which ranges from less than a cent to around five to 20 USD, usually done electronically.
Micropayments are a major part of today’s subscription services and in-app payments. It is not a new idea. The concept has existed since the nineties. The first generation micropayments that date back to the mid-late nineties failed to produce any of the tangible results.
Second generation micropayments have evolved since the year 2010 with the advent of online subscription services.
Moreover, several factors, economic and technological, have hindered its widespread adoption. But, the dawn of blockchain technology and the growing adoption of crypto and digital currencies have solved various longstanding issues with the micropayments, leading to its increased acceptance.
Real cases of use of blockchain for micropayments
A new substitution to the subscription model: It makes no matter pf sense to reiterate the economic rationale for the subscription model for the purpose of online content consumption and its success in recent years, be it video content, newspaper, music etc. Moreover this model has multiple advantages, it is far from perfect and still has various caveats.
Digital Copyrights, royalties and references: As in the previous case, it is not that much highly necessary to explain what are royalties, copyrights or references. Micropayments offer a relatively simple mechanism for the immediate settlements that they entail, with virtually no minimum limit on the amount being charged by each and every one, unlike the complicated solutions that exist in today scenario.
IoT Transactions: This use case is very visionary, although it will probably become as trivial and mundane as turning the light switch on or off, sooner rather than later. Till today’s date, Internet of Things has only matured a fraction of its several potentials. One major significant reason for this delay is the lack of a simple and easy to implement monetization model.
Micropayments parts on the blockchain could be the real answer. Just make sure to have a note of about all the data your car can collect, from road conditions to traffic, among others. Sharing a different set of data collected by mass users in real-time could be invaluable for traffic planning and road maintenance. And then why not pay for it? The added value of the blockchain is an improved mechanism to anonymize data and protect user privacy.
Social Impact: This is the simplest use case on this list. Micropayments on the blockchain can even help to revolutionary in two major respects. The first is that donation recipients could easily be able to create accounts to receive funds, which allows them to donate directly to them, thus eliminating all the middlemen and overhead.
That said, it is essential to note that this feature is a double-edged sword that could become your major obstacle. It would be just as easy for the fraudsters to create fake accounts and attract donors. A qualification and audit will also be required, which is much similar to the current online services that rate charities based on multiple criteria in order to make sure and provide better visibility to donations.
The World Bank also used to describes that as low income a country with a per capita gross national income of less than $1025. Furthermore, in other words, this means a daily wage of less than $3. With the data from 2020, there are 27-low income countries. Micropayments could also going to provide with an excellent mechanism, which must be carefully monitored to avoid any fraud, to donate funds to needy people in those countries.