Coinbase Out to Solve Micro Payments with Transactionless Transfers

Coinbase has announced on its blog that it is bringing ‘zero fee’ transfers of micro-payments between account holders.  The result is that users can send as little as a Satoshi (.00000001 BTC) to each other without incurring any fees.  According to the firm, they are able to do such by keeping micro-payments (anything under $1) off the blockchain.

In regards to the importance, Coinbase believes that such a feature will provide greater efficiency for micro-payments, which include such items as iTunes and apps purchases, online tipping, and paying for single article reads on sites with pay walls.  According to the firm, currently, such offerings aren’t cost effective as the require merchants to pay credit card processors minimum fess plus 2-3% of the sale.  As such, for a $0.99 app purchase, nearly 25% of the sale will go towards fees.  By processing the transaction as an account to account micro-payment bitcoin transfer, the seller would be allowed to hold onto the entire value of the sale.

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In terms of where they see things going, Coinbase specifically mentioned that such no-fee micro-payments fit well with the direction of mobile payments.  As phones become more of a normal method of conducting business, it is leading to business models based on smaller purchase types, where the use of bitcoin micro-payments are an effective solution.  In its list of potential ideas where the no-fee payments would work, Coinbase listed these examples:

• Read the rest of a New York Times article for a few cents using BitWall, instead of signing up for a full monthly subscription

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• Buy in-game credits without paying 30% in fees to the platform or payment processors

• Pay for wifi internet metered by the minute (or second!) if you just need to check one email

• Support your favorite artists or coders with a tip

• And many more ideas.