Micropayments are getting traction on the Internet as a way to perform small-ticket transactions such as downloading a song or accessing other online content.

But most micropayment systems require customers to establish prepaid accounts, to get around the hassle and transactional costs of entering card information for each purchase.

Now, however, one player in the micropayments market, Peppercoin Inc., has come up with a system that also facilitates the more familiar way of buying things — by credit or debit card at the time of service.

One early customer is Incredible Technologies Inc., a manufacturer of coin-operated video games like the Golden Tee golf game. It has selected Peppercoin 2.0 to process credit card transactions in its future lineup of games, which will be able to take credit card swipes.

Peppercoin expects customers offering online music and other products will sign up for the service as well, said co-founder Perry Solomon.

The biggest obstacle to using credit cards for micropayments is the cost of transaction processing. Typically, a transaction costs 20 cents to a quarter, plus 2 percent to 3 percent of the price of the item being sold. For very inexpensive products, the transaction expense can wipe out any profit.

Peppercoin 2.0 has reduced the transaction expense to less than 10 cents, Solomon said.

More here.