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Feb 20, 2023

Tackling High Credit Card Transaction Fees to Enable Micropayments

95% of customers drop off when they hit a subscription paywall and businesses are unable to provide flexible and affordable pay-per-use experiences. And building custom pay-per-use experiences are near impossible for two reasons. One, even with a tech first approach that most businesses adopt these days, it is expensive to build all the components required to provide pay-per-use experiences. Two, and more importantly, because by nature pay-per-use prices are low and typically under a dollar (micropayments), the credit card fees associated with running such transactions is prohibitively expensive. Incurring losses is not a great business strategy.

At UKey, we set out to solve the problem of being able to continue to use credit cards and still process micropayments. After a few months of research and development we are stoked to report that we built a micropayments platform that solves this problem. And no, we don’t use top-up/prepaid cards nor did we introduce crypto currencies. We stuck to fiat. In fact customers are welcome to use their choice of mainstream payment methods like credit cards, debit cards, and bank accounts.

The fundamental component of our invention is a zero trust based payments operating system (OS). It runs machine learning models and optimization engines to enable payment vehicle agnostic micropayments. Complementing the OS is an AI powered dynamic pricing engine that mitigates cognitive transaction costs or mental costs—the process of deciding if a specific digital asset is worth its price? We will dig deeper into our pricing engine and how it solves the mental transaction cost in an upcoming blog post.

The use cases that UKey unlocks are endless. For creators, this means being able to monetize their content from the get-go instead of relying on ads. For publishers, this means providing flexible and affordable pay-per-use and tipping experiences. For SaaS providers, this means enabling their customers to unlock premium features without free trials and gently nudge them to pay for subscriptions. And for retail stores, this means renting out low priced services without incurring high transaction fees. Prior to UKey, businesses typically increased their prices by approximately 1.4% to offset the interchange fees they pay to credit card companies, as this think piece reports. With UKey, businesses can instead give the 1.4% back to their customers and boost loyalty!

The research and development of our micropayments platform has resulted in UKey filing its first patent. And as our technology continues to evolve, we expect to see more businesses provide pay-per-use experiences and realize the true monetization model that was envisioned for the web.

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