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.

The payment methods that have dominated the last 30 years.

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

Here’s my take: we weren’t fully “digital” until people trusted credit cards online—late ‘90s to early 2000s. AOL’s phone payments were a weird in-between phase.

Internet-native business models began with one-time payments. Amazon and eBay/PayPal led the way. By the late ‘90s, security improved, trust grew, and people started buying at scale—goods delivered to your door. The value was clear: pay a set amount, get a set thing.

Next up. Subscriptions and Ad-Supported models flourish in tandem.

The subscription business model is led by Netflix & World of Warcraft. With a monthly cost pulled from your credit card, you would gain access to a vast array of movies not at your local blockbuster or an amazing world to run around with your friend Leeroy Jenkins. The market also ran heavily with free trials to reduce the initial friction, which is how most SaaS software is sold today.

Simultaneously, Google Ad Sense explodes on the scene. Both by being the number one search engine and serving ads, as well as letting people monetize there websites and blogs with banner ads. The models are either: Pay for what you want, or get it free with some ads.

This set up the next big shift.

Freemium

The freemium model is straightforward. Give away some piece of your product for free, and upsell to your heaviest users or those who want more advanced features.
The early trailblazers here were Skype with their free calling over the internet, and Dropbox with the original 2gb free tier that was unheard of at the time.

all of these models use a credit card as their mode of capturing and exchanign value.
Which leaves micropayments in a weird place. Because Visa takes a decent free for each swipe. Charging 50c for something was never economical. But we have some that have tried.

Enter iTunes - A precursor to micropayments

Its hard to remember just how transformative iTunes was on the music industry. At the time you had two dominant ways to get music. Your local music shop where you would buy a full album, or you would download songs for free from Napster/Limewire. Legally buying just the song you heard on the radio wasn’t an option.

With fees at 15-20c per transaction, the margins were very slim for Apple to charge a customer for each purchase. So what they ended up doing is batching a bunch of small purchases into one larger purchase, minimizing the hit on fees.

Gaming is another example of micropayments, kind of. The dominant way today is to purchase a bundle of credits and then you can buy small value items from your in-game balance.

No one has cracked micropayments that settle in real-time.

Here’s my hope: Bitcoin, stablecoins, and new payment rails could revive HTTP 402. Unlike credit cards, they settle in minutes, not days, with tiny fees. Imagine a blog charging 5¢ per post

The last 30 years built a digital economy on Visa and MasterCard. Blockchains could flip that script, making payments as native as clicking a link. I’ve got more to say on this—Im putting together a database of my research on this topic and who is doing it well.
Subscribers of this newsletter will be the first to have access.

Till next time. Keep building the future.
- Jacob