Imagine this scenario- you’re a software developer who releases a great little utility, but you don’t charge $10 per license- you charge 10 cents.’ You want to donate money to a political candidate, but don’t want the commitment of a $50 pledge, or the hassle of verifying your credit card for a $5 charge- you do neither, instead donating a quarter. You are raising money to fight a rare disease and are accepting donations. You raise the $50,000 you need, only three quarters of that money was in payments of 30 cents or less.’ In less than a decade, the world of micropayments will change the way we move money around in ways that are difficult to comprehend at this early stage.’ I do know, however, that these changes will be nothing less than revolutionary.
The word micropayment refers to very small payments, as small as a tenth of a cent.’ Today, it is unheard of to pay half a cent for any service, for the obvious reason that a half cent coin doesn’t exist and the credit card processing costs are many times that amount.’ As more and more of our services are no longer purchased at physical locations and most of our entertainment lives digitally, online payments increasingly dominate.’
Paying in very small amounts doesn’t make sense when we look at the price of goods in brick and mortar stores.’ There is a definite limitation to the amount of foot traffic a retail location will get, and that limits retail’s ability to make money by volume.’ These constraints exist even less with online-only fronts, including Amazon.com, and entirely disappear in such industries as music, movies, and software.’ By setting up an online distribution system, literally hundreds of millions of people can browse and purchase products without barely any overhead costs.’ Making profits on volume sales, in this paradigm, makes much more sense than jacking up prices and limiting your audience.’ It’s much more cost effective that a hundred million people buy a movie for $5 than if fifteen million people buy the same movie for $15.
The implications for social and political causes are extraordinary.’ The population of the US is going to surpass 300 million this month, and the aggregate power of our populace, even at one cent a piece, is phenomenal.’ If every registered Democrat (72 million) donated a dime for their candidates, that would equal 7 million dollars.’ If every Democrat donated a dollar to their candidate, that candidate would have 72 million dollars to campaign with- that’s a lot more money than the oil and pharmaceutical industries give to presidential candidates in order to influence policy.’ Now just imagine if every concerned voter found it in his or her heart to donate $5 to not only major candidates, but minor candidates as well.’ Well-funded grassroots movements can spring up all over the country, with the fund raising power of the Republican machine.
In this new globalist paradigm that we all operate in, the focus is on the individual as an agent of change more so than the state.’ There is currently a crisis in Darfur, and governments are doing little to stop it.’ More money is needed for African Union troops to complete their mission, the world’s leaders agree, but the money is short in coming.’ Micropayments might one day allow for all the world’s citizens to put their money where their mouth is.’ One dollar multiplied by one billion citizens is certainly enough money to provide equipment for this force in need.
What is the time line for all of this?’ My best guess is 5 years at the earliest, 10 years at the latest.’ This is the democratization of finance, a term Tom Friedman might use, and we will all benefit as a result.
