Blog Post

Micropayments to Grow To $11 Billion By 2009

The market for online and mobile micropayments will have a compounded annual growth rate of 23 percent until 2009 and will total $11.5 billion in revenues by then, up from just over $2 billion in 2003, according to a new research by TowerGroup.

According to the research, in 2003, the total value of Internet micropayment transactions in the US was $1.9 billion — driven primarily by media and Internet publishing services, and digital music (e.g., iTunes), and other audio services. Mobile micropayments sales in the US (such as for content like ringtones) accounted for $0.15 billion in 2003.

Also, despite emerging demand, micropayments today are still characterized by a large number of competing transaction types. Fee models for processing micropayments include: direct-to-bill (mainly seen in mobile telecom); merchant aggregation (where small charges are grouped and submitted as a single transaction); prepaid accounts (pre-funded by a customer); and direct transfer (where a user’s bank or other account is directly accessed to pull necessary funds). Each of these face the current incumbent in digital content distribution: the flat-fee subscription model.