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SunTrust Banks on Tuesday revealed an agreement with Peppercoin Inc. to incorporate Peppercoin's micropayments software into its bundle of merchant processing services. Chase Merchant Services, a joint venture of First Data Corp. and J.P. Morgan Chase & Co., inked a similar agreement with Peppercoin last month.
The SunTrust and Chase Merchant Services deals highlight the coming of age of small-value transactions. Some 14 million Americans made digital-content purchases of $2 or less in 2004, up from 10 million in 2003, according to market-research firm Ipsos-Insight. In addition to buying digital content through services such as Apple Computer's iTunes, consumers are showing an increased predilection for making electronic purchases at vending machines, fast-food restaurants, and video-game arcades.
Peppercoin has been marketing its micropayments "gateway" directly to merchants since its launch two years ago. Merchants use such gateways to connect to card networks--American Express, Discover, MasterCard and Visa--which authorize and settle transactions. Gateways are typically provided to merchants by banks but can be obtained directly from independent software vendors.