Bill Gates has done a lot of thinking about the online payments market.
At Microsoft’s “Think Week,” a development plan was set for an online payment system “that will be cheaper than credit card transactions, making it possible for companies to charge small fees for Web-based content and services they now offer for free,” according to Dow Jones reports.
Speaking at the Davos World Economic Forum, Gates said:
If you want to charge somebody $0.10 or $1 a month, that will just be a click...you won't have to manage some funny thing or pay some big credit charge, where half of it goes to the clearing.
By undercutting credit card fees, the Microsoft offering would enable an online newspaper to profitably charge small fees for individual articles, Gates put forth as an example.
A new universal Microsoft online micro payments system could attract the legions of independent Web publishers, blogs and small ecommerce plays, with the potential to be a significant rival to eBay’s PayPal.
Google Checkout is not a competitor to PayPal; Google invests in the Google-centric formula as part of a strategy to continually increase monetization of AdWords. Google positions Google Checkout as undercutting credit card transaction fees but in reality it pays for them on behalf of merchants. It also subsidizes the consumer transaction.
As Google is losing money on its Checkout offering, it is not sustainable as a stand alone micro payments service, or for mass distribution on the Google publisher network. Google Checkout currently has no raison d'etre without its AdWords tie-in.
Google's AdSense business could potentially be disrupted by a well thought out Microsoft micro payments offering. In lieu of monetization by content "enhanced" by Google's "Sponsored Links," Websites could monetize their own content directly.
Direct monetization would enable Web publishers to keep users at their sites, without revenue sharing with Google and without need for the ubiqutous "Ads by Goooooogle."
Microsoft vs. Google in Website monetization options could test Google's assertion that Google ads enhance third-party Website content, rather than detract from it.