Rapidly rising demand for digital content such as music downloads is spurring the development of payment systems for transactions under $5 (£2.70) in the mobile, internet and point-of-sale spaces, industry watchers have observed.
According to research from TowerGroup, so-called 'micropayments' will grow by 23 per cent to over $11bn in the US by 2009, with an emphasis on how to minimise processing and customer service costs to ensure the profitability of very low value transactions.
The analyst firm said that several positive trends are beginning to converge, spurring both the use of and demand for micropayment services.
"As technology has advanced so have customer expectations and networks, and these factors are setting the stage for expanded micropayments growth across the mobile, internet and physical channels," said Ed Kountz, senior analyst at TowerGroup and author of the report, in a statement.
"By 2009, TowerGroup expects the total market for internet and mobile micropayments in the US to increase 23 per cent [compound annual growth rate] to $11.5bn in revenues, up from just over $2bn in 2003."
The research found that the chief micropayments market today is electronic payments for digital content.
In 2003, the total value of internet micropayment transactions in the US was estimated at $1.9bn, driven primarily by media and internet publishing services, digital music services such as iTunes, and other audio services.
"Financial institutions should begin considering how these changes will impact their payment businesses, and determine how to build out alternative payment services as extensions of existing products for certain emerging groups," said Kountz.
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