Press Releases

August 3, 2004

According to TowerGroup, Micropayment revenues will increase by a compound annual growth rate (CAGR) of 23%, from 2003 to 2009.

Micropayments are transactions that involve small amounts of money, sometimes just a few cents(TowerGroup defines micropayments as transactions under $5.00).

They are practical for the purchase of digital content, as opposed to actual physical products that would then be processed and shipped, because of the need to keep costs down for purchases of only a few dollars or a few cents.

A number of methods have been developed to process micropayments, including compiling the charges in a monthly bill (as is the case for many mobile phone micropayments), aggregating the charges into one charge, pre-paid accounts and directly subtracting the charges from a user's bank account.

While technological advances have encouraged the growth of micropayments, the major change is the rise of popular products that require micropayments. iTunes and other online music services that charge about $1.00 per song rely on micropayment systems, as do the increasing number of news sites selling archived articles. Mobile phones are also a big micropayment market, with users downloading ringtones and games.

TowerGroup expects the micropayment market to experience excellent growth, rising from $2.0 billion in revenues in 2003 to $11.5 billion by 2009.

The bulk of micropayment revenues comes from Internet transactions as opposed to mobile phone micropayments.

Currently, subscription-based payment models dominate the Internet landscape, allowing users to procure online content by paying a fee every month, but by the end of the decade, micropayments should compete with subscription-based services.

Source: eMarketer