Can Tipjoy Make Micropayments Into Megabucks?

I’ve been interested in the micropayment space for a long time now. I think it’s a promising market, and one that is just waiting to be addressed well. A while back I discovered a service called Tipjoy, which started as a Y Combinator funded project. I liked it the first time I saw it, and I like it even more now.

The most recent development from them is a tight integration with Twitter which lets people use a syntax similar to Twitter’s direct message function to send payments to other Twitter users. For example:

p @peter $0.25 because he finds cool new websites

This would create a promise of paying me $0.25 via Tipjoy. One can use any combination of p or pay, an @username, and a dollar amount prefixed by $ to send money to a Twitter user. Of course, one can also send money to people via an email address or URL, as explained on Tipjoy’s FAQ page.

Perhaps my favorite part of Tipjoy, aside from the ease with which one can send micropayments, is the built in tendency toward viral growth. You see, Tipjoy doesn’t require the recipient of a tip to be a member before they can receive money from someone. When you send money to someone who’s not already using Tipjoy, they get a message from Tipjoy (via Twitter, email, or some other means) telling them that they’ve received money. Therein lies the beauty.

Who wouldn’t want to claim money that’s been sent to them by an admirer or a debtor? It’s a great incentive to get people to sign up for Tipjoy. The big question is whether that, along with its ease of use, will get enough people using Tipjoy to make them profitable. Tipjoy takes a 3% cut of all payments sent via their service, but only takes that money when a user cashes out his/her funds.

I’m very curious to see if Tipjoy’s tight integration with Twitter (as well as their other easy-to-use methods) will get enough early adopters using it. If so, it could catch on among mainstream users, and from there it’s quite conceivable that Tipjoy could see the same kind of hockey stick growth that Twitter has recently enjoyed.

Frankly, I’m a little surprised Twitter hasn’t come out with a micropayment solution of their own yet. They seem to be playing along with Tipjoy, so it’s possible (if unlikely) that they’re getting some sort of benefit from the deal, but Twitter is perfectly positioned to add new features like this to begin monetizing their service. Of course, I have a ton of ideas on how Twitter could begin to monetize their service, but that’s another post just waiting to be written!