The Potential for Embedded Browser Payment Systems

Verum Capital is currently exploring use cases that involve online pay-per-use business models for digital content and services. In this article we describe the potential that embedded browser payment systems can offer and how making a payment with a cryptocurrency can support new revenue models.

Buying products: Retail vs. online

When you walk into your local shop and decide to buy a product, the purchasing process is simple: you pick up the product – let’s say a book or a magazine – from the shelves, walk to the cashier, and then you can pay with cash. This is a one-time, anonymous, peer-to-peer cash payment (shown below as Option 1). There is no intermediary, no requirement to provide your personal information, and no tracking of your data or consumer behaviour. And of course, you don’t have to leave behind a credit card, just in case you come back for next month’s edition.

When you purchase a product online the experience is much different. Service providers on the internet had to find a way to circumvent cash payments because they were incredibly inconvenient to process online. That’s how advertising, subscription models, and freemium models were introduced and became popular. So, to buy a foreign magazine or a rare book that isn’t available in your favourite local shop, the online purchasing process is much different. The first two steps are similar, you select your product, and then you proceed to check out. Here is where the process diverges, in an online checkout system you will be required to give several details – at the very least your name and address, but possibly also your phone number. You will also need to provide a credit card or payment option, and you may not have a choice as to how this payment data is stored or for how long. (This process is shown as Option 2.)

In many cases, web shops allow payment through a third-party provider like PayPal. This reduces the number of times that credit card details are collected but adds another intermediary and the obligation to create another user account. (This process is visualized as option 3.)

Option 2 and 3 work well but come with disadvantages. Before people register for premium services, they must be convinced of the added value that the product offers, which is why so many services start by providing something for free. The missed revenues are compensated through advertising revenues and by collecting and even selling user data. Over time, each user creates numerous user logins, even for one-time visits, leaving digital footprints that include valuable personal data. The obvious information at stake is name, country, date of birth, and credit card number. In addition, user behavior is collected, which can be used for targeted marketing and social engineering.

Making anonymous purchases online through browser payments

Since the arrival of cryptocurrencies like Bitcoin and Ethereum, we have had the ability to make cash payments in a web browser. We call this browser payments and it can drastically improve transactions for pay-per-use services that do not need a registration. One of the providers of such a service is Metamask (Shown as Option 4). Metamask offers customers a wallet that doesn’t hold a traditional currency like USD, rather a cryptocurrency called Ether. The wallet is directly supported by the Ethereum blockchain, making it more secure than centralized services. The payment process functions like Paypal, but without intermediary or logins.

To use it, a user’s digital wallet simply pops up in the browser when websites ask for it. Then the user authorizes a payment. It is quick and immediate and doesn’t require private information to be given to the website. The two things that are required to finalize a payment are a Metamask browser wallet and Ether in the Metamask account. The recipient of the payment can choose to convert the Ether to any traditional currency.

The Metamask browser wallet is an extension of the Chrome or Brave browser. Once installed, users need to create a new account and note a passphrase to recover the wallet in case of loss. This is a decentralized service that doesn’t have a helpdesk for customer issues. If you lose your unique passphrase, your funds are irrecoverable. Once the wallet is created, it needs to be funded with Ether, this is the cryptocurrency on the Ethereum blockchain. Ether can be bought from other users, on exchanges, or by credit card.

The advantages of browser payments

The advantages of browser payments are numerous, both from a user perspective and from a business perspective:

1. Users have no login details, because the webservice connects to your wallet it’s like a cash payment.

2. No advertising, because the service is paid, so it doesn’t need hidden sources for revenues.

3. No transmitting of credit card details, because it just takes a click to connect to the browser wallet.

4. Safer than credit cards, because the transaction signatures in Metamask are only valid for one transaction.

5. No automatic subscription renewals.

6. No watermarks or limitations of the services.

7. Immediate access, because payment takes seconds at most.

8. Immediate income for the service provider.

9. No credit card fees or other third-party fees.

Examples

Verum Capital has created a donation button on our website to show how a brower payment using Metamask works. (Click here to access the donation page.) Any donations made will go directly to a charity called givedirectly.org, without any intervention by Verum Capital. The button is programmed for a donation of 0.01 Ether, which is currently equivalent to USD 2.00. In addition, there a transaction fee of approximately 0.000063 ether, which is approximately USD 0.02.

The steps to execute this donation are:

1. Click on the button “Pay with Metamask”.

2. Enter the password to unlock the wallet and login.

3. Allow Verum Capital to connect to the Metamask wallet.

4. Confirm transaction.

The transaction will be completed in a few seconds and the progress can directly be followed on the Ethereum blockchain.

Current providers

There are currently only a few providers where you can pay using Metamask. The ones existing are focusing on services for people that own cryptocurrencies such as:

Decentraland.org – a virtual, city-building video game owned by its users. People can create an avatar that is connected to their digital wallet, buy parcels, and build their own virtual city.

Blockimmo.ch – a platform where users can create their own real estate portfolio. To login for their services, people don’t create a user account, but simply connect their Metamask wallet.

Cryptokitties.co – one of the world’s first blockchain games which went viral at the end of 2017. It is a platform where people can connect their Metamask wallet to buy unique digital cats.

If you have Metamask installed, you will see that you don’t need to create an account to make a transaction on each of these websites.

Why now?

As the digital economy develops, digital marketplaces are becoming more common and digital footprints are becoming a greater source for concern. With many users deploying ad blockers, service providers need to experiment with aggressive ways to make revenues. According to a study in 2018 by Adweek, more than half of respondents think that websites should have fewer ads. Additionally, 42% of people are annoyed by pop-ups that interrupt their browsing experience. However, there is no foreseeable decrease in online advertisements, the spending on advertising is forecast to increase from USD 283bn in 2018 to USD 517bn in 2023. As the amount of advertising increases, chances are high that dissatisfaction with online user experience will grow.

These are important signals that there might be an opportunity for alternatives to enter the market. Browser payments allows online service providers to set at a fair price for their offering without any advertising. We predict that if the service doesn’t waste a user’s time during registration, doesn’t distract with advertising, and is safer than free services, adoption is very likely.

What about mobile?

For mobile phones, browser payments are also possible. However, instead of adding a wallet to a browser, the browser is added to the wallet. Metamask released a beta version of their mobile wallet in July 2019, which offers a convenient customer experience. Desktop Metamask wallets can be synchronized with mobile Metamask wallets. To test the Metamask mobile beta version, click here. The Verum Capital donation example will also work on mobile. Here is a preview of the process.

Next steps

We believe that browser payments can drive the widespread adoption of cryptocurrencies. If you are a current Metamask user, try our browser payment donation tool so that you are aware of the alternatives to current payment options.

If you’re a service provider, you could consider a pilot project for browser payments to show your users that you are open to providing them trustworthy, progressive payment options.

For news providers, browser payments could allow you to experiment with premium content and a pay per use model. For video game publishers, you could create a video in return for a small payment. If you’re a gaming website, you could sell play time for a small payment.

Helping you with integration

Integration of Metamask is simple, because it only requires the implementation of a few lines of code. However, all the Metamask integration tutorials we found on the internet were outdated. Therefore, if you need any help to integrate browser payments on your website, Verum Capital would be happy to help.

Please contact us to discuss what an integration of Metamask could look like for your platform: [email protected].

Additionally, Verum Capital is currently assessing interest for workshops and resources that support first time Metamask users to set up their own account. If this would be of interest to you, please let us know. We are eager to hear from you.

Links and sources

https://verum.capital/browserpayments/

https://metamask.io/

https://www.adweek.com/digital/new-study-highlights-how-much-people-dislike-digital-ads/

https://www.emarketer.com/content/global-digital-ad-spending-2019

https://mobile.metamask.io/