BitPass Gets Set for Prime Time

In an eventful week in the micropayments market, Palo Alto, Calif.-based startup BitPass Inc. emerged from its beta test and opened its service to all Internet merchants interested in using the BitPass system for payments. The company now has more than 300 content sellers enrolled, up from about 200 in late October. “We've been pretty cautious about who we let in,” says Matthew C. Graves, chief operating officer, who adds the company has been approached by thousands of interested online merchants. Although BitPass has relied on prepaid accounts funded by purchasers' credit cards, its strategy now includes talking to banks about cobranding their checking accounts with the micropayments company. This would allow online buyers to send check routing and payment data to BitPass for use in funding their accounts. “It would be a nice complement to the checking product,” says Graves. Consumers, he says, would also feel more comfortable sending their checking data to BitPass than to multiple online merchants. BitPass has appealed mostly to small sellers of content like photos, comics, and news articles, often at prices under $5. To attract merchants in bulk, BitPass is continuing its efforts to get Web-hosting companies to promote the micropayments service. BitPass, which incorporated only 12 months ago, charges Internet sellers 15% of each transaction amount for all payments under $5, and 5% plus 50 cents on transactions above $5. Users make payments out of a prepaid BitPass account, so the company avoids high interchange and processing costs on each small transaction. Earlier this week, PayPal, the 5-year-old payments unit of online auctioneer eBay Inc., said it is immediately and drastically cutting its fees for downloads of songs from increasingly popular online music stores. These purchases are typically priced at 99 cents. Waltham, Mass.-based micropayments company Peppercoin Inc. also introduced a commercial product this week. And Yaga Inc., a San Francisco-based provider of back-office, fulfillment, and payments services for online publishers and other content merchants, announced it had signed a deal to provide e-commerce service to the Internet division of the Milwaukee Journal Sentinel. Yaga's clients include Hearst Newspapers and Time Inc.