Apple's iPhone Offers the Ideal Micropayments Platform

I was playing Texas Hold’em on the iPhone the other day when it struck me: If Apple allowed one-touch financial transactions inside apps — in the case of Texas Hold’em, for example, to buy $1,000 of poker chips for $1 — the consequences could be huge. Social networks like Facebook and MySpace, games, location-based services and pure-play commerce apps could see instant windfalls with the right functionality.

Apple is in the catbird seat to dominate micropayments. Their “batch and bill” implementation in iTunes, which boasts perhaps the smoothest online purchasing UI ever, now serves as a foundation for the App Store, creating a whole new genre of software that I call “impulseware” — cheap enough and easy enough to buy on a whim. I’ve already spent a total of $22.99 on apps for the iPhone — some useful, some not — since the App Store launched in the summer. Just getting people to spend on software is a feat; I, for one, haven’t spent money on software anywhere else.

I would be spending a lot more if Apple extended the API to allow for the ability to transact within apps. It would give real viability to virtual gifts, currencies and goods across the myriad of apps out there by allowing pennies and dollars to change hands in a frictionless way. As both a developer and a consumer, that is exciting.

There is potentially a lot at stake here. As we shift toward the mobile web, we are seeing a repudiation of the browser as the single, ├╝ber app. Apple has already re-inspired (and perhaps revitalized) the vibrant shareware industry; it now has a chance to legitimize new online business models. Such a move would allow those of us in the tech industry to move away from our uncomfortable dependence on the “media model” that has informed web development for the last 15 years or so. And by offering new options for generating revenue, Apple would get a leg up on Android in the battle for developer mindshare.

The carriers have had ample opportunity to spread their own payment platform, but instead their various handsets and typically unfriendly strategies toward developers have opened the door for Apple. The company, after upstaging the music industry titans, stands poised to extend their revolution of content delivery to that of application delivery — and in the process, to sell even more devices.

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