Processor BitPass Looks at Direct Payments for Sub-$5 Digital Goods

BitPass Inc., which has relied on prepaid accounts since it began processing micropayments less than two years ago, is exploring a number of new payment options, including one that would allow users to pay spontaneously rather than from previously funded Bitpass accounts. In an e-mail survey it distributed last week, the Menlo Park, Calif.-based company asks users how likely they would be to use “direct payment” and to rank sources of funds in order of importance, including bank withdrawals, cards, or PayPal, the online payment-processing unit of Internet auctioneer eBay Inc. Interestingly, it also asks users how big a fee they would be willing to pay to be able to make direct payments, with suggested fees ranging from a percentage of the cost to more than 15 cents, and including “zero” as an option. In addition, the survey includes a question asking users whether they would be more likely to fund or reload their BitPass accounts if the company reduced its $3 funding minimum, accommodating buyers, for example, who want to purchase a 99-cent song without commiting several dollars. Currently, BitPass users fund prepaid accounts with cards or PayPal, and then use them to buy digital content from Web-based merchants that accept BitPass. The company refuses to reveal how many buyers use the service. It has enrolled about 2,500 merchants, ranging from radio broadcasters to movie producers to publishers to its own online music store, Mperia. Duane Kuroda, vice president of marketing at BitPass, says the survey will close Sunday, after which the company will begin analyzing results. BitPass, he says, is in the earliest stages of investigating alternative payment strategies in connection with platform changes it plans to roll out by the end of the year, and has made no decisions. “There's a whole host of issues we have to look at,” he says. One such issue is whether either direct payments or lower funding minimums might unleash more volume. “It's a question of customer service,” says Kuroda. “We've gotten a noticeable amount of feedback [before the survey] for direct payment or lower prepays, though not from a huge portion of our business. We don't know to what extent it's holding back people. We're just trying to get better data, then we'll meet with our merchants, and meet internally.” BitPass is one of several processors formed in the past several years to tackle payments for digital products, such as songs, that have grown in popularity with consumers. Such content typically sells for prices ranging from pennies up to $5, the range most experts refer to as micropayments.