Empirical Cost Analysis of Sub-Dollar Digital Payments: Comparing Legacy Fee Architectures with Byte-Denominated Simplified Payment Verification

Designing payment infrastructure for sub-dollar transactions requires architectures that minimise value-dependent cost overhead. This study comparatively evaluates five payment providers — PayPal, Stripe, Visa, Mastercard, and a blockchain-based Simplified Payment Verification (SPV) implementation — across 55,000 fee evaluations spanning US$0.01–5.00. A two-part cost model distinguishes fixed-plus-percentage (value-denominated) from byte-denominated fee architectures; hierarchical regression with provider-specific interaction terms quantifies the structural differences (log-level R² = 0.997). The central finding is structural: value-denominated pricing produces hyperbolic cost profiles imposing an uneconomic interval below a provider-specific threshold, whereas byte-denominated pricing yields near-zero absolute fees irrespective of transaction value. In the US$0.01–0.49 band, mean legacy effective fees range from 38.43% (Mastercard) to 237.88% (PayPal); SPV averages 0.06%. Break-even analysis shows legacy providers require US$1.42–14.29 to achieve a 5% effective fee target; SPV achieves this at US$0.002. Sensitivity analysis confirms robustness to fee multipliers (2×–10×), legacy discounts (25–50%), EU interchange caps, and transaction-size variation. Four engineering evaluation metrics — fee prediction variance, independent verifiability cost, adaptive fee response, and confirmation reliability — provide a reusable assessment framework. The results identify byte-denominated fee design as a structural solution to the micropayment cost barrier. Keywords: micropayments; transaction fees; payment architecture; blockchain; simplified payment verification; comparative systems evaluation