The Associated Press is reporting this morning that online payment service PayPal "plans to roll out a payment product by the end of the year" that will make micropayments - transactions involving small amounts of money - quicker and more seamless. The company has already dabbled in making micropayments possible with lower transaction fees, but a more seamless integration with other services could really make the micropayment model - which has gained little traction in many realms - potentially viable.

There are a couple of problems with selling ultra-cheap goods online. First, on the consumer end, the time it takes to fill out an online form credit card details and billing information can be worth more than what you're buying - especially if it's something like a single article or a song. On the merchant end, the transaction fees paid to online payment systems can cut such a large chunk out of the sale that it makes it not worth their while. Services like PayPal have worked to solve these issues, offering quick checkouts and lowered fees for smaller transactions, but a bigger problem still exists - the consumer is often pulled out of what they're doing to complete the transaction.

PayPal vice president Scott Thompson told the Associated Press that this would be the main issue the service hopes to tackle with a new micropayment offering - a more seamless integration.

"The whole intent is to keep you in the experience, don't force you to do anything else ... and keep it economical for all parties," he said.

The micropayment space has been heating up lately, as virtual goods such as online media and in-game items continue to gain popularity and old media look for new ways to make money online. In June, we reported on NewsPass, Google's entry into micropayments for media websites. Another company, Flattr, has made a splash recently, offering a micropayment system that allows users to designate a starting amount and then divide that among any number of content creators - an interesting idea that may take hold in some circles, but certainly not in others. Even Facebook has been getting into the action with its Facebook Credits, which the company has been working to redefine lately.

The big deal here, of course, is that PayPal is a name that has become synonymous with online payments, and if it can succeed in making micropayments more viable, then we could see a lot change in how media outlets and other content creators offer their wares online. Rather than putting content in walled gardens behind paywalls, we may begin to see feature articles and other media offered on an a-la carte basis.

The key to PayPal's plan is to make it so that the consumer doesn't have to leave what they're doing in order to make purchases by "compiling consumers' transactions." That is, the service would allow users to purchase up to a certain amount, $10 for example, before settling up and sending them a bill. Many systems already offer services like this, but when you buy $10 of credits with that company, you're stuck spending it there. With PayPal and other similar services, the benefit would be that consumers could spend the money on any site that accepts PayPal.