Are microtransactions the next big thing in digital payments?

Are microtransactions the next big thing in digital payments?

Microtransactions have established themselves within the mainstream of the video gaming world with up to 20% of gaming communities using them and 41% of players making an in-game purchase at least once a week.

Microtransactions are small, quick payments usually used to purchase virtual items within a video game. Anything from in-game wearables to extra playing time or bonus content can be bought via a microtransaction. Publishers offer these transactions to enhance the gaming experience and improve customer loyalty.

Publishers have discovered a lucrative revenue stream in microtransactions with those businesses producing “free-to-play” games most likely to benefit. By the end of 2021, it was estimated that the global online microtransaction market was worth more than USD$47 billion.

Yet the potential of microtransactions is extending beyond the video games space and could potentially transform news, content delivery, virtual communications and even the purchase of physical goods.

Now is the time to prepare.

Online payments from automotive to athletics

One German manufacturer of luxury vehicles is already offering a range of features that can be purchased and activated via in-car microtransactions. Music, news and weather forecasts can be unlocked at any point in the car’s lifespan, keeping the car up to date for the long-term through fresh content.

Sports media platforms are also starting to get in on the action. Looking to solve the drop off in Gen Z views, a notable sports streaming service is changing the traditional view of broadcasting, instead delivering personalized feeds to fans.⁵

Using a combination of microtransactions and AI, viewers can enjoy a viewing experience tailored to their individual preferences with alerts informing them when an exciting moment is happening for a favorite team and offering a micropayment option to watch the content if it falls outside their existing subscriptions.

A major sporting association has also recently announced the addition of microtransactions to its existing basket of payment options, allowing fans to use micropayments to watch the fourth quarter of a live, in-progress game for a fraction of the cost of a monthly subscription or pay-per-game option.

As businesses catch onto the benefits of micropayments, and as consumers increasingly seek out content that can be consumed wherever and whenever they want it, the opportunities will likely grow. Micropayments can help to deliver more choice for customers, create new revenue opportunities for businesses and improve customer loyalty.

Microtransactions, subscriptions and the world of digital wallets

Currently, close to eight in 10 Americans source their news from digital devices. With customers already spending $133 billion on in-app purchases (IAPs) in 2021, there’s an opportunity to create new ways of paying for and consuming content.

For example, instead of providing subscriptions, media outlets could allow people to micro-purchase content as they consume it. While our recent Power Your Payments report found that subscriptions are on track to reach a value of $344 billion by 2024, we may also see people investing in content creators by buying access to individual articles, videos and podcasts.

However, for this to be successful, a seamless payments process needs to be established. With 60% of people choosing the channel that’s most convenient to them, users won’t appreciate having to input card details every time they wish to make a micro-purchase, and this may discourage them from proceeding.

If we look to the model used by video gaming companies, news sites and content platforms could set up account-based wallets, giving people instant access to credit to spend on-site.

Will seamless payments tempt people away from free content?

Paying for ad-free access to content has shown signs of increased popularity. In the early months of 2021, applications saw an 11% drop in advertising revenues and a 15% increase in in-app purchase revenues.

Commentators suggest this may be because people became more engaged with apps and became less tolerant of ads during the pandemic. The same source indicates that global app downloads are beginning to plateau, suggesting in-app purchases and subscriptions may become a key revenue stream for existing apps and platforms. With the emerging metaverse looking likely to be the next big trend, these behaviors may continue to evolve, and keeping up with them will be crucial.

Prepare your business for a future powered by microtransactions

For business with an eye on the future, prevailing trends are suggesting that microtransactions will likely play a central role in all of our lives. If you’re looking to capture a piece of this new opportunity, be sure to implement a payments technology that enables seamless, simple, secure transactions.

You may wish to take advantage of wide-ranging APM support from Worldpay to give your customers a comprehensive choice. You could also leverage the Account Updater tool to ensure that customer payment details are up to date whenever they want to pay for their next digital item or piece of content.

Talk to Worldpay today to learn how we can help your business improve its payments infrastructure for this exciting future.