A Brief History of Internet Payment Business Models

You’ve probably hit an 404 error—page not found—while surfing the web. But have you heard of HTTP 402, "Payment Required"? It’s a browser code for native payments that’s been gathering dust since the ‘90s. Why? No Internet-native payment system ever won out—neutral enough, broad enough—to serve everyone. Visa and MasterCard filled the gap instead.

Now, with Bitcoin, the Lightning Network, and blockchains, we might finally have the tech for seamless, browser-built-in payments. But what would that look like? Everything we’ve built so far orbits those two big credit card networks and business models have adapted to them. Let’s take a quick look through the history of exchanging money on the net since the ‘90s—and imagine what’s next.

You’ve got mail! - AOL brings the world online

Before we dive into internet-native payment models, let’s rewind to how we even got online in the ‘90s. The OG AOL mailed out those iconic discs to install its software—your ticket to the Internet. But how did you pay for it? Debit cards were just catching on, and typing your credit card online? No one trusted that yet. Instead, you’d pick up the phone, call AOL, and read your card number aloud to a rep.

Evolution of Models: An Overview

The payment methods that have dominated the last 30 years.

• One-Time Payments: Kicked off with Amazon in ‘95. Buy a book, pay once, get it shipped. Simple.

• Subscriptions: Blew up with Netflix’s mail-in service & World of Warcraft.

• Ad-Supported Models: Launched with a banner ad in ‘95, then soared with Google AdSense in 2003—free stuff, paid by ads.

• Freemium: Give a slimmed-down version free, upsell later. Coined by Fred Wilson in ‘06.

• Micro-Payments: iTunes and Steam in 2003 made small buys work for digital goods. Kinda.

Let’s trace the path and see how new networks might shake things up