Microsoft plans on challenging the high credit card fees

Microsoft could be a threat to credit cards and the saviour of small businesses, if Bill Gates' vision of an online payment system comes to fruition.

by Helen Leggatt

The transaction fees charged by credit card companies are limiting some online retailers, with rates averaging around 2.75% per transaction. Being able to take small, or micro-payments, would enable companies to more easily charge for content and services that some currently offer for free, such as newspaper articles or information retrieval. It would also have a serious effect on credit card company profits.

"If you want to charge somebody $0.10 or $1 a month, that will just be a click...you won't have to manage some funny thing or pay some big credit charge, where half of it goes to the clearing," said Bill Gates, speaking at a breakfast meeting at the recent World Economic Forum.

Specific details on how Microsoft will proceed are not available but some speculators believe they will implement Microsoft Points. Whatever the methodology, Microsoft needs to be able to get their payment system on to such sites as eBay, which uses its in-house system PayPal. That could be a substantial hurdle for Microsoft.

Tags: eBay, Microsoft, online sales, online transactions, PayPal, small business