A lot of our growth recently has been on twitter, and we expect even more soon.
We take a 3% cut on cash out. If A gives $1 to B and B gives $1 to C, there is no fee. If C cashes out, we remove our fee and any overhead of moving money in and out of the system. The worst case overhead ends up being a fraction of the overhead of just using paypal.
We have already seen lots of P2P usage of this (paying for coffee or gifting a beer for a friend), and heavy use in microgiving donations to non-profits. As applications build on top of twitter, we expect people to pay for them using us.
Correct me if I am wrong but doesn't tipjoy get 3% and paypal (possibly) another few %? That makes the $1 twit-tip very much less.
I assume they are just doing it for the growing twitter crowd. hell, twitter does not even make much sense to me, so maybe this will work for them! ^^