What are micropayments and where are they used

Micropayment

Micropayments are payments of small amounts up to 5 euros. In principle, it does not matter whether they are real goods, such as ice cream, or virtual goods, such as a mobile phone game.

Not only small payments are called micropayments, a German company has now also had the name protected and acts as a payment service provider.

Advantages of micropayment

Micropayments are paid for quickly and contactlessly using mobile payment in particular. This saves you having to rummage around for change. All you have to do is hold your cell phone or a card up to the reader at the cash desk and the amount will be debited.

Would you like a little less? Nanopayment and Co.

Sometimes sums under one euro are not referred to as micropayments, but as nanopayments, picopayments or millipayments. In contrast, sums of 5 euros or more are called macropayments. But the boundaries and names are not used consistently.

Billing of micropayments

There are basically three forms of settlement of micropayments:

  • Cellular-based systems: Payment is made via mobile payment providers such as Apple Pay or Google Pay.

  • Prepaid systems / prepaid: An account or card is topped up here beforehand.

  • Billing / collection systems: Here, the individual payments are added up to form a total invoice and usually settled monthly, similar to a credit card statement.

Micropayment on the rise

So far, offsetting small amounts has been a problem, as the costs for processing payments with credit cards or direct debits are higher than the value of the goods. As a result, any payment other than cash was unprofitable for the dealer. The new billing options, such as by wallet, eliminate these problems.