Facebook’s stunning achievement this past week with its $19 billion purchase of WhatsApp is more astounding in its beginning of a new business model in consumer technology – away from advertisements and towards direct-to-consumer monetization through micropayments.
This is the key not only for Facebook and its WhatsApp and Instagram business but resonates throughout the technology of micropayments from the consumer into the new financial model that it established. Enter the features that are advantageous in use of Bitcoin.
The old school model of advertising has been used the past twenty five years despite the totally new development of what computer technology has brought into this new age. Old financial structures forced the model to provide advertisers with data, so they could sell to the consumer user of an online media service. The consumer was not served.
Pay Pal charges a 30-cent fixed fee per transaction, and that fee is standard for all the ‘traditional’ payment processors. Vision for the future in digital currency has been embraced by eBay. It is developing the use of Bitcoin as confirmed by CEO John Donahoe. The company is building a digital wallet for PayPal that can take multiple currencies. It is the future and only requires time to develop it in the Pay Pal business model.
If you are a developer and use Apple you pay 30% of app sales, and it’s likely that’s what Apple charges WhatsApp on every 99 cent purchase of the application. Of this 30%, a significant portion (around 20%) goes towards credit-card processing fees. The old financial structure of merchant fee processing is killing opportunity to make a profit and grow. Apple makes money and the credit card processing companies make money but the developer struggles. There are many more struggling developers than there is a WhatsApp success.
Bitcoin removes the money bite associated with online payments. Transactions on the Bitcoin network are instant, irreversible, and almost free of charge, making micropayment business models much more economical for merchants, who are long tired of excessive fees. If they do not have volume they die financially.
Bitcoin also allows consumers to make payments more user friendly, and companies like Coinbase offer two-click checkout, and Oath (an open standard for authorization) features, which make the online payment experience seamless and effortless.
The first newspaper to run a trial test with Bitcoin for payment is the Chicago Sun-Times. The Sun-Times has already been experimenting with bitcoin-enabled micropayments for effortless online payment, and the early results have been promising.
To view other articles on Bitcoin see the Author’s suggestions and view the video atop this article on Pay Pal preparing to use Bitcoin
Follow me on twitter @VictoriaWagner