Micropayments involve the transfer of very small amounts of money, often measured in fractions of a cent. The ability to collect and process micropayments in a cost-effective way could open up new business models in which online services charge customers very small fees for access to some content or service that is valuable to them. Such offerings have proven difficult to implement, however, as services have been obliged to charge relatively large fees to cover the overheads imposed by traditional payment methods. The fee structures for credit card and bank account payment systems are simply not designed to make small transactions cost-effective.
To help resolve this issue, FPS offers two specialized payment mechanisms for funding micropayment transactions: the prepaid and postpaid payment instruments. Payments drawn from these instruments incur the same low fees as Amazon Payments balance transfers, which are low enough to make small transactions feasible. The prepaid and postpaid instruments can be thought of as a kind of Amazon Payments balance, with the following key differences:
The instrument can only be used to send payments to a specific recipient.
The customer can fund the instrument using any payment method, including a credit card. This means that customers do not need to have an enhanced Amazon Payments account to perform micropayments.
The instrument helps maintain a unique, ongoing relationship between the sender and the recipient.
These alternative ...