Micropayments on the Cheap

December 3, 2011

Dwolla, an online mobile payments platform operated by The Members Group (TMG), is eliminating the 25-cent fee it charges for small-dollar payments - those under $10. TMG - a payments processing firm owned by a credit union group, says the move is intended to make Dwolla more attractive to both merchants that deal in small-dollar products (like coffee and snacks) and to younger consumers.

Dwolla is more than just an online mobile payments platform. Its Wow Factor is its social networking interface. So, for example, someone using Dwolla to purchase a cup of coffee can broadcast that fact via FaceBook, and instantly 100+ friends know all about it. Think of it as free advertising.

So what does this have to do with microfinance? Plenty.

Each new micropayment initiative that hits the market is another opportunity for micro-entrepreneurs to compete with more traditional merchants.

To survive in most businesses these days, you need to be able to accept credit and debit cards. But traditional card acceptance fees are pricey and too confusing for the average small upstart use. Hence the introduction of mobile gadgets like the Square mini-card reader.

Meanwhile, Intuit, which in addition to accounting software also supports electronic payment applications, is planning to roll out a prepaid card account that unbanked merchants can use to deposit funds accepted using Intuit's GoPayment device, according to published reports. GoPayment, like Square, runs off the telephone jack of mobile smart phones.

There are 78 ATMs for every 100,000 adults in the developed world; in developing countries just 23 ATMs are deployed per 100,000 adults 

_{-Financial Access database}