The growing trend for processing transactions is in micropayments. Apple has been doing this for awhile with iTunes , billing customers weekly for the bulk of transactions that have been queued up. By tranditional definition, a micropayment is something that is 1/1000th of a dollar, but the term has come to mean much more than that - what seems to be any amount less than $5. The ideal transaction processing system would authorize many micropayments, queue them up and process them in bulk at a regular interval - say daily, or weekly. This is important, because there is overhead for processing credit card transactions. You can’t really ask your users to absorb that cost themselves, especially if the overhead for your product is a very high percentage.

If Visa charges 10cents per transaction, and you charge your customers 1 dollar for a song or video that represents a 10% overhead cost / song. That number ads up quickly, especially if you buy 100 songs a week. What you do instead is collect all those transactions every day or week, add them up then process one transaction. 100 songs then cost $100.10, instead of $110.

Of course, this type of system requires additional fraud protection to ensure that users aren’t buying thousands of dollars of dollars of songs on an invalid credit-card. One way to get around this problem, is to use a different kind of money, and that’s where Scrips come in.

Scrips are alternate currencies which hold value in proportion to universally accepted currencies such as the Euro, Dollar. and the Yen. Example scrips are Microsoft Points, World of Warcraft Gold, and my favourite Canadian Tire Money. Scrips are neat because they eliminate a lot of the overhead for micropayments by putting the control of points into a system you control - eliminating the per click costs (but not the costs altogether). They also reduce the possibility of fraud, by settling and trading your currency up front.

A lot of companies are taking this approach, but what seems to be missing is a universal scrip system or provider. The revenue model needs to be worked out though. Because the system relies on efficiency, you could charge 1c/transaction and rely on volume to generate your revenue stream, or you could have a tiered subscription model. 1-100 users costs a store 20 dollars a month, 100-1000 costs 50 dollars a month, 1000-10000 250, etc.

Scrips aren’t much different than Prepaid cards, only the value can be translated into any arbitrary percentage. You could make 10 dollars worth 1000 points, or 1 ‘brick of gold’. Wide adoption of this system makes the introduction of online or virtual currency exchanges more lucrative as well, as well as creating alternative or universal currency systems. There are companies that trade gift cards like PlasticJungle and SwapaGift.

If you created a system that was easy to use and integrate, then stores, virtual worlds, and probably even Canadian Tire could use you to track all of their virtual cash - then all of your internal tools could apply. Reporting systems, Store plugins, transaction monitoring and processing, secure storage, etc. I’m a big fan of taking tools and knowledge you have and applying it to interesting problems and markets.