This chapter is essentially a continuation of the previous one, which introduced Express Checkout. However, whereas the previous chapter established the fundamentals of Express Checkout and implemented a routine checkout for the Tweet Relevance reference application that’s featured in Appendix A, this chapter works through the implementation details of a much more highly specialized checkout that can be used for situations involving “in-app” purchases of digital goods such as electronic documents, audio files, videos, or—you guessed it—items such as login tokens for Tweet Relevance using a derivative of Express Checkout called Express Checkout for Digital Goods. Of all of the PayPal products featured in this book, Express Checkout for Digital Goods is possibly the best fit for processing Tweet Relevance payments since Tweet Relevance is inherently a digital good. (Processing digital goods transactions with Adaptive Payments is probably the other best option.)
PayPal’s official documentation for Express Checkout for Digital Goods is available online: Express Checkout for Digital Goods Developer Guide.
The sample code for this chapter builds upon the sample project from the previous chapter involving a traditional Express Checkout. It is highly recommended that you read that chapter first and be familiar with the implementation details in PaymentHandler.py.
It hasn’t always been the case that a Digital Goods option for Express Checkout has existed. In fact, it’s a fairly new evolution of the Express Checkout product that was unveiled at PayPal’s X.commerce Innovate 2010 Conference in San Francisco along with a number of other new offerings. Perhaps the most convincing reason that a specialized digital goods offering as part of the Express Checkout product makes a lot of sense is that nowadays users expect that they should be able to perform a payment without leaving their book, game, video, or application. Additionally, besides the incurred latency and inconvenience of leaving the context that can hurt conversion rates, the implementation burden that an “out and back” redirect sometimes creates for developers of context-sensitive applications such as games can be complex enough that it’s nearly unbearable—at least unbearable enough that they’d rather deal with the overhead of implementing an alternative in-house payment solution than overcome the logistical barriers in interfacing with PayPal. Thus, a digital goods option serves developers and end users alike by providing the kind of in-context payment solution that users expect while minimizing the implementation burden so that developers can focus on the details of their application instead of getting derailed by the details involved in online commerce.
It’s also worth calling out that digital goods are usually delivered instantly by a common form of electronic communication, and as such, there’s much lower overhead incurred by suppliers, and cost savings are passed on to buyers. If you stop to think about it for a moment, you’ll observe that many digital products such as books, songs, and access to “premium features” are usually priced such that they are relatively low dollar amounts. In fact, it’s often the case that smart merchants will aggressively price digital goods according to common sweet spots on the spectrum of impulsive purchasing, such as $0.99, $1.99, or $2.99, in much the same way that fast-food chains price a la carte menu items at these very same price points. As such, PayPal offers a special micropayment transaction fee of $0.05 plus 5% for digital goods purchases up to $12.00, at which point, standard rates become more economical and apply. For example, on a $1.00 digital goods purchase, micropayment pricing incurs a fee of $0.10 as compared to the standard fee of $0.33 ($0.30 plus $2.9%), which is a savings of 70% on a $1.00 transaction! Table 3-1 shows the relative savings for micropayment rates versus standard transaction rates.
Digital goods purchases are by their very nature “instant,” and as such require instant payment methods. Purchasers must use funds available from their PayPal account or use a credit card to make digital goods purchases. eChecks are not an option since they can take days to clear. See Instant Payments versus eChecks for a brief overview of eChecks.
Table 3-1. Standard versus micropayment rates and associated savings as of December 2011.
| Transaction Amount | Standard Rate | Micropayment Rate | Savings |
|---|---|---|---|
| $1.00 | $0.33 | $0.10 | $0.23 |
| $2.00 | $0.36 | $0.15 | $0.21 |
| $3.00 | $0.39 | $0.20 | $0.19 |
| $4.00 | $0.42 | $0.25 | $0.17 |
| $5.00 | $0.45 | $0.30 | $0.15 |
| $6.00 | $0.47 | $0.35 | $0.12 |
| $7.00 | $0.50 | $0.40 | $0.10 |
| $8.00 | $0.53 | $0.45 | $0.08 |
| $9.00 | $0.56 | $0.50 | $0.06 |
| $10.00 | $0.59 | $0.55 | $0.04 |
| $11.00 | $0.62 | $0.60 | $0.02 |
| $12.00 | $0.65 | $0.65 | $0.00 |
To sum it all up, it would appear that everyone wins in an Express Checkout for Digital Goods: the user’s experience is much improved, the seller stands to save money, and the implementation burden for the developer is significantly reduced in certain circumstances such as in-game purchases.