• Associated Press, Friday, August 13, 2010 2:15 PM

Web-centric media companies have long viewed micropayments as the business model of the future. Bringing that dream to life, PayPal plans to roll out a payment product by the end of the year that helps businesses collect "micropayments" online, reports the Associated Press.

Presently, if consumers want to buy, say, a virtual good in an online game, they need to first purchase a chunk of credit, which they can then spend over time. The problem is the costs associated with credit card transactions, which quickly eat away at the profit a merchant can make. PayPal thinks it can make the system work by compiling consumers' transactions. "Someone might buy $10 worth of news articles, or goods in an online game, before getting billed by PayPal," writes AP. "PayPal thinks this will appeal more to consumers while benefiting merchants and PayPal, too." PayPal is already involved in the digital payment space. Last year, $2 billion of its total $71 billion in payment volume came from digital goods such as downloads of music, videos and software people bought online, according to the AP. In the first half of this year, meanwhile, the company reports processing $1.3 billion in digital goods payments.

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