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IBM Micropayments

IBM Micropayments was developed by IBM Research and aims to efficiently support small-value transaction payments over the Internet. IBM Micropayments essentially implement the techniques introduced in MiniPay [5].

In IBM Micropayments, each entity (e.g., financial institution or Internet- service provider) manages their own risk by operating their own billing service. Recently, these entities can also offer billing support as a service to consumers and merchants. IBM Micropayments supports interoperability between different types of billing systems—which led to a widespread adoption of this system.


Similar to IBM Micropayments, Peppercoin [24] is another prominent micropayment system based on a research paper [25] that has found its way into the industrial world. Peppercoin shares similar design principles as Minipay, as discussed in the previous paragraphs.


M-Pesa enables mobile phone-based money transfer and microfinancing. M-Pesa was launched in 2007 by the largest mobile network operators in Kenya and Tanzania and has since expanded to many other countries (such as Afghanistan, South Africa, and India).

M-Pesa allows users to withdraw, transfer, and receive funds, as well as perform purchases of goods/services. In particular, the service allows users to deposit money into an account stored on their cell phones. Payments are performed by requiring users to send (PIN-secured) SMS text messages to merchants. To redeem the received payments, these recipients are required to provide the correct PIN. M-Pesa profits from a small fee for each payment/money deposit that takes place through the service [26].

Given that M-Pesa was mainly introduced in countries where the banking network is poorly connected, the system was mainly designed to act as a branchless banking service. Namely, M-Pesa customers can deposit and withdraw money from a network of agents that includes resellers and retail outlets that act as their banking agents.


Both M-Pesa and IBM Micropayments are systems that (functionality-wise) support micropayments. However, despite low operational costs, M-Pesa transaction fees are high when compared to the transaction value. This indicates the need in these countries for cheaper ways of micropayments. Privacy is not considered here, while it assumes that trusted hardware and software, such as mobile phone application, is in place.

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