Micropayments are typically little, tiny payments charged for low-cost transactions on the web. Think in terms of wanting a one-day online subscription to USA Today or the Wall Street Journal online. The US$0.50 to US$1.00 charge (depending on the paper) could easily be charged to your credit card. However, many credit card clearing houses have a 'floor charge' of US$0.25-0.35 per transaction, which might make the whole deal unprofitable for the provider.
Enter a Next-Generation Web way of solving this micropayment problem: virtual world currency that's convertable to real dough. I'd had some thoughts about this some time ago, but never any evidence that it was actually going on. Now, I do. The O'Reilly Radar posts “Lindens as Micropayments”.
Lindens are the “local” currency of Second Life, a massively-muliplayer virtual world. There is even a Lindex (requires Second Life membership and login), giving the current exchange rate.
BusinessWeek had an article a few weeks back: “My Virtual Life” where real developers are buying and reselling virtual property.