The App Store Effect
The proliferation of mobile apps and app stores over the past few years has led to a downward trend in the perceived value of digital content. Whether that’s for good or bad is for another post entirely, and the 2 elements I’m the most interested in are paying for microcontent with micropayment, and accelerating the checkout into a 1 or 2 click process.
Micropayments used to be a big thing in the early days, when everybody was talking about how one day we’d routinely be making 1-cent transactions over the Internet. Pretty much every serious attempt to make micropayments practical has flopped or withered away for a simple reason: it’s kinda expensive to process payments.
One of the micropayment models that works is the third-party “wallet” model where people pre-fund an account balance (Cleeng) or buy credits of some sort (Fraxion, BitCoin, Flattr) that can then be spent at a site that accepts payments in those forms. The problem with the wallet model is that you still have to sign up with a third party, and you can only spend it at one of the few places that actively support those wallets. Otherwise, somebody else is essentially holding your money hostage and placing limits on where you can spend it. That makes third party wallets singularly unattractive.
Not so incidentally, PayPal has 2 pricing schedules: the normal 2.9% plus 30 cents, and the 5% plus 5 cents pricing for micropayments. The normal pricing schedule is very unfriendly towards small transactions, eating about 43 cents out of a $1 transaction. The micropayment schedule only takes a 10-cent bite out of a $1 transaction. So, the most practical way to sell micropriced content is through a PayPal account configured for micropayments–this would allow people to check out normally without having to sign up with yet another unknown quantity, and the seller can price things at app store levels without losing their shirt.
The best part of this is you can support both regular checkouts and a store wallet in a transparent fashion–implementing your own store wallet means you can set up your own rapid checkout system, and it would work seamlessly with the existing PayPal checkout system. You wouldn’t have to present a “this or that” choice, the cart would intelligently handle that under the hood. If you had enough money in your wallet to cover the cart, checkout would be a quick 1 or 2 click affair. If you had less than the cart total, it would discount your order accordingly before handing you over to PayPal to pay the difference. If you had a zero balance, you’d go straight to PayPal to pay in full.
I was making a payment on a cruise when I realized that even though I’d input the zip code, I had to input the state. Totally redundant. You may well be on to something, but, I’m afraid programmers and managers all too often regard the customer’s time and effort as having zero value. Then, they wonder why they’re losing customers. You’re on to something.
Ooops. I’m anonymous up there.
OK, now I’m book shopping and I have to login again after every “add to cart.” Mr. Roe, get your programming done stat!
I don’t like the fact that after you approve a payment in PayPal, the business can go back and add charges to your PayPal account without asking permission.
I have had this happen a number of times. Sometimes it was an honest mistake when they calculated the amount wrong the first time, but they will send the new charge without asking permission and PayPal will just send more funds.
I have also had this happen with a few merchants in China on E Bay.
I approve a charge and a few days later an additional $3 handling fee from them shows up that I didn’t authorizes.
User accounts are a real pain in the @$$ for me… I’ve been dissuaded several times from making a purchase because the webstore wanted a complete ancestral history [/sarcasm]. If I don’t plan to make regular purchases from a particular seller, I don’t see the point of creating a user account – I’m totally with you on that point.
Someone once told me that websites mine their user account data for sales and demographic info… this, too, makes me not want to engage in e-commerce. The comparison you made between e-commerce and walking into a store really struck a chord: I don’t want to give a company anything other than my money in exchange for their product.
I like all of your points, really. How soon can we begin to force webstores to implement them? 😉
Being an international student what I hate is that I can not use my U.S. Paypal in the U.K. as it refuses to ship to my U.K. address. I would have to create a brand new PayPal in the U.K. with a different history. Why should I need two accounts, I’m assuming it is some stupid Homeland Security law to stop funding terrorism. I don’t know a lot of Terrorists that play GURPS, 40K, and make paper models. Well I don’t know any terrorists so perhaps I’m wrong.
Only 4 people participating in this discussion so far? I guess it’s still too early for The Revolution. 😆
I’m finding online shopping pretty good at the moment. Having said that, I always use paypal and rarely buy anything I can’t download. An exchange rate of $1.4/£1 may have something to do with my positive attitude.
Well, I’d like to have at least the CHOICE if I want to create an account or not. Filling out all the forms just for ordering one item – is that really necessary? :-/
Concerning your approach, Christopher, I find it quite interesting. Would be nice to try that 😉
Yeah, I’m planning to do a little testbed and see how it handles in practice. A lot of it is made possible by PayPal’s various APIs, especially the combination of Express Checkout with Digital Goods. Their documentation makes my head hurt, but I gotta stay sharp. 🙂