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Traditional payment methods such as credit cards are not suitable for small amount payment because the transaction may cost certain commission comparable to the small amount payment. When we buy a cheap item at real shop, we pay by cash. But, how about online shopping where you cannot pay by cash? There are a ton of contents online having potential value to sell but not as expensive as credit card payment fits - such as multimedia clips. How an online shopper can buy them? A widely used solution is aggregation: online merchants bundle several (sometimes unnecessary) items together to multiply the price. Another solution is having payment method suitable for small amount, aka micropayment. There has been many research-level micropayment schemes developed, using cryptographic schemes to eliminate the need to access central server for authorization purposes - what researchers claim costly operation. Such schemes with "off-line" verification enable banks or other participants to trace back to a crook that cheats by double spending. However, such schemes cannot stop double spending itself and thus a crook can run away before they become aware of the cheat[?].
Toru Egashira and Jonathan M. Smith, "On-Line Payment Method for Small Amount Transactions Using Hierarchical Prepaid Cards", . January 2002.
Date Posted: 20 June 2007