What are the key requirements for building a micropayments system?

It depends how micro we are talking. Lets say we are going to limit ourselves to the 2 decimal places of the currencies at hand, and sub $1 payments.

So if one were to look at a payment system (and no specific geography in mind) to make payments that are 40 cents or 19 cents or even 1 cent. It is not possible today without the fees being a very small percentage of the payment in itself.

Right now, you can pay 1 cent (or equivalent, 1 penny of the currency of choice). The downside is, the cost of processing that payment in certain countries may be 10,000% higher!

Fundamentally, everyone agrees our payment systems of today are simply not geared to process micro-payments. They just were not designed to process such small value amounts in a cost-efficient manner.

In no particular order, here are a few important requirements for a micropayment system (again, not siding with any specific geography)

• The cost of processing a micropayment must be equally micro. Preferably a small percentage of the payment itself, think 2% or 5%.
• With such small processing fees, you would need an accounting system that can well go beyond two decimal places. We would need to go to at least 4 or 5 decimal places, i.e. 0.0001 or 0.000001
• With such an accounting system, your banking system must also be able to scale to such micro-decimal values.
• All mechanisms of on-loading, off-loading, transfers, debit/credit of micro-payments must follow the same principal of having a fees that is micro in relation to the amounts being processed.

In variably, any system you try to design, these are the core requirements of a micropayment system.