Paystone Hits Pay Dirt

As consumers increase acceptance for paid online content, technology companies such as Paystone create the engines for growth.

But the technology to make these microcent transactions was not fully established until recently when companies such as Paystone stepped in. Paystone, with offices in Vancouver, Canada and San Jose, California, successfully launched their micropayment solutions in New York at the Internet World show in early October 2002.

The products were three years in the making and spun off from a debit card system designed for consumers who didn't have access to bank accounts. Then further refinements enabled consumers to move money form one card to another and gradually Internet payment systems were incorporated.

"The decline in online advertising revenues over the last three years has forced many Web sites to seek revenues from other sources," said Brian Roberts, Paystone's VP of Sales and Marketing. "The Internet is growing up and starting to follow standard business models … the drop in dot.com world has led to real world applications to driving revenues from your content."

Content providers can now potentially turn website hits into millions of dollars; even the small and medium sized companies are getting in on the action.

"At smaller sites the novelty has worn off…. sites that were built as an interesting project are drawing in more and more members making it more expensive to maintain. As the sites changes from a hobby to a business, micropayments allow you to generate the revenues back and recoup the (associated) costs," added Roberts.

For a $50 dollar start-up fee and paylinks that take as little as 15 minutes to set up, online entrepreneurs can start earning money for their content. And Paystone has eliminated the risk factor by only charging a transaction fee only when the merchant conducts his or her own business transaction. Omitting charge backs from the merchant equation allows further protection.

While Roberts realizes that it's difficult to get people to pay for online content, particularly content that was once free, consumer attitudes are quickly changing. Recent research by the Online Publishers Association in December '02 is particularly encouraging:

• Through the first three quarters of 2002, US consumer spending for paid online content totaled nearly a billion dollars, up from the full-year 2001 total of less than $700 million.
• The number of US consumers paying for online content in Q3 2002 nearly doubled to 14.8 million from 7.9 million in Q3 2001.
• More than 1 in 10 online users in the US paid for content in Q3 2002.

But the most telling numbers says Roberts is that "micropayments brought in $3.1 million in Q302, a more than ten-fold year-over-year growth rate."

While one-year old Paystone is just out of the gates, the company is moving forward at a feverish pace, notes Roberts. Distribution and strategic partnerships are forthcoming as is expansion internationally. The little engine that could rings true.