Microsoft To Set Up Online Payment System

Microsoft has announced it is going to introduce an online payment system that will be cheaper than credit card transactions, making it possible for companies to charge small fees for Web-based content and services they now offer for free.

This a direct challenge both to the banking community and duopoly of Visa/Mastercard, not to mention Paypal. Undoubtedly the brand power of Microsoft could make a big impact on the market – but as I mentioned in this post, it’s all about the network effect and barriers to entry.

For most merchants, I suspect there will be no hesitation in signing up provided the pricing is not too different. But for consumers, one of the key issues will be is it available to use on services like eBay. And the probable answer will be no!

Astonishing, eBay has gotten away with allowing only 3 payment processors be used on its site, one being the in-house Paypal. If Microsoft doesn’t get access to this, this may be a considerable deterrent to customers. For this reason, I suspect Microsoft may take steps to press for admittance either by direct agreement or lobbying the competition authorities.

Comment posted by Adam
at 1/29/2007 3:30:00 PM
I’m not so certain. Microsoft and eBay have a joint enemy in Google. They might find a way to play nice, all in the name of squeezing out The Goog.

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