Microsoft: Any Micropayments System Is Highly Theoretical

Microsoft Corp. is denying reports that have appeared since the weekend that the computing giant is working on an electronic payment system that could handle micropayments for online content and undercut the merchant pricing for such transactions when handled with bank cards. According to widespread press accounts, William H. Gates, chairman of the Redmond, Wash.-based company, touched off speculation about the initiative with remarks at a breakfast meeting at the World Economic Forum in Davos, Switzerland, in which he said he had reviewed a plan to create an online payments system. But a Microsoft spokesperson says in a statement released to Digital Transactions News that any such plan is, if anything, highly theoretical. “Bill was talking in general terms about one of the many ideas he reviewed during this think week [a semi-annual retreat during which Gates mulls over new product ideas],” the statement says. “There are no current plans to discuss regarding online payment systems.” According to press accounts, Gates referred to a system that could handle very small transactions for fees that would fall well under what credit and debit card networks charge. “If you want to charge somebody 10 cents or $1 a month, that will be just a click…you won't have to manage some funny thing or pay some big credit charge, where half of it goes to the clearing,” Gates is quoted as saying in a Dow Jones Newswires account of his remarks. Card interchange?particularly the fixed portion of the fee?is widely seen as a deterrent to the development of micropayments, since it can leave little or no profit for content owners and distributors. Microsoft itself has bypassed the problem in its popular Xbox Live Marketplace for its console game product with a prepaid points system with which players can select and pay for various accessories for game characters. The speculation about Microsoft's entry into the business follows a history of failed efforts by other companies. Most recently, Bitpass Inc., a 3-year-old, San Mateo, Calif.-based company that had developed a processing platform to handle small payments for digital content, announced last week it was ceasing operations and returning unused funds to accountholders (Digital Transactions News, Jan. 22).