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RSS feedsMicro-payment vendors admit that widespread adoption of the technology may be five years away because consumers and retailers are confused by the different products available.
Consumers won't trust a technology until it has widespread adoption among retailers, but retailers want to see consumers using a micro-payment product before buying it. Until the impasse is broken, the mass distribution of low-cost digital content online will fail to take off.
US company Qpass is one of the leading vendors, numbering the New York Times and the Wall Street Journal as two of its biggest clients. Consumers top up a Qpass account with credit and then employ a username and password to buy archived articles and daily crosswords from the publications.
Beth Harvey, European marketing manager at Qpass, explained that UK retailers are looking to see what the competition is doing before jumping in. "It's a very wait and see attitude," she said.
This uncertainty will continue until there is greater consolidation and the major players become visible or are acquired. "There will be a shakedown. There is good stuff out there, but not everybody will be around this time next year. There will be two or three major players left," said Harvey.
WorldPay, the UK's main payment service provider, has a micro-payment service that operates in a similar way to Qpass. Phil Battison, the company's European managing director, said that the key to adoption is finding applications and content people will pay for.
"Find the killer application and you will see a natural pull of buyers. Digital content which is protected with security that can be unlocked by payment online will push micro-payment adoption," he maintained, referring to the emerging digital rights management (DRM) market.
Mike Young, head of product development at Mondex, a wholly owned subsidiary of MasterCard International, pointed out that issues with the consumer expectation of 'free' content, broadband connectivity and DRM need to be resolved.
"The development of music and video are interesting entry points for this kind of technology and valuable enough for people to pay for," he said. But he admitted that the take-up of streaming video and music is dependant on the adoption of broadband technology, which could be up to five years away.
Some analysts suggest that Microsoft's Passport 'wallet' technology will be the answer to mass adoption by ebusinesses and merchants. Young is cautious about this, but maintained that you can never rule out the software giant.
"Microsoft might be interested if there is evidence of someone being successful because that's the way it does business," he said.
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