RE: [ga] More thoughts on the ID-by-check-cashing idea

["Roeland M.J. Meyer" <rmeyer@mhsc.com>]

> From: owner-ga@dnso.org [mailto:owner-ga@dnso.org]On Behalf Of Ellen
> Rony
> Sent: Tuesday, December 07, 1999 9:09 AM

> Then, as an alternative, I also suggested a nominal fee,
> under $10, for two

>  My personal experience with trying to convert across-border
> payments from
> Europe and Australia has been abyssmal.  Both the payor and
> payee are hit
> with conversion and transaction fees.  I cannot believe that
> there is no
> financial institution on the Internet prepared to accept
> small payments
> worldwide in the local currency, without imposing a
> horrendous fee..   One

Dear Ellen,

The whole problem of micro-payments is a serious eCommerce problem. Even in
the USA, one can not profitably charge much less than $20US for a
transaction. A large percentage of which is eaten by fixed size transaction
fees. The best is www.cardservice.com and www.cybersource.com. Even so, the
transaction processing fee makes a $4US payment a negative transaction. In
addition you have the [typically] 3% fee imposed on the merchant by the
credit card company.

Those advocating a $1US fee do not realize that, even in the USA, this could
cost many times that amount to process the transaction.

US Banks actually lose money on small checks, due to processing costs. They
often charge monthly fees to partially offset this cost. This cost was once
estimated at $25US per check, years ago. That estimate wouldn't be that far
off today.

Service firms get around this problem by aggregating micro-charges in 30 or
60 day periods. Alternatively, they make the customer establish a credit
account with an upfront payment and draw from that as needed. Those selling
goods, make sure that the good have a sufficiently high value that the
transaction costs are less than 5% of the COGS.