Paypal, Google Checkout, Amazon Flexible Payment Service, all of these services make their money by charging fees to consumers and vendors. Bundled in these fees, are the fees that are charged by the credit card companies, if they're involved in the transaction. If you've ever received a Paypal payment, you know that they take a sizable chunk out for themselves. Amazon Flexible Payment and Google Checkout haven't been able to take a significant share of the online payment market because they subscribe to a similar business plan.

$5 Billion was spent last year towards online transaction fees in the U.S. alone.

Noca, a new company founded by ex-Visa employees, is trying to turn the practice of payments on its ear by completely eliminating online transaction fees. Noca is hoping that vendors, with already slim profit margins, will be eager to keep that extra 3-5% of a transaction, and customers will be eager for the same when sending payments back and forth to one another. Currently Noca is focusing on micropayments through Facebook. Its launched 2 applications called "OneCLick Pay" and "HelpYourWorld". They're starting with these to help test their system, which is in beta.

OneClickPay

The idea, is to send someone a digital check. In the facebook application, to send money, you enter your checking account and routing number into a secure "check-like" form. This bypasses the credit card system all-together. "Owe your friends $10 for drinks last night? Pay them with a simple click: the money goes from your bank account to theirs with no added fees." Unlike Paypal, the recipient gets the ENTIRE $10.

HelpYourWorld

The application helps you solicit $1 donations for different social causes. The beauty is that there are no transaction fees, to anyone on either side of the transaction. Paypal would normally eat $0.30 of that $1.00. Noca has an open platform for software developers to build applications using Noca's micropayment system, so it's likely that this service is going to grown in popularity. Especially on social networking sites like Facebook, where word of mouth is a powerful thing.

So Noca is Doing This for Free?

Well, free to you, sort of. One part of Noca's business model is to collect user purchase data and leverage that data for very targeted advertising. Much in the same way that Google uses content that you view to target advertising. If Noca's data collection policy sounds a bit scary for you, you might be surprised how much information Google is able to collect on you, but that's another article! Also, Noca plans on providing it's customers with credit through partnerships through banks. There is plenty of money to be made there.

So do I want Paypal to be wiped off the face of the earth? Of course not.......... ok sometimes I do. Especially when I've had to deal with their absolutely atrocious customer service over the phone. But they're able to have such poor customer service because there is no real competition out there right now. Hopefully Noca can help change that. Am I rooting for Noca? Yes. Am I rooting against Paypal? Nope. Ultimately, I'd like both companies to do well enough to really compete against one another, because if that happens, then consumers truly win.

I've recently signed up for their Private Beta, so once I've had a chance to use it, I'll be posting a review.