DAVOS, Switzerland -(Dow Jones)- Microsoft Corp. (MSFT) is developing on an online payment system that will be cheaper than credit card transactions, making it possible for companies to charge small fees for Web-based content and services they now offer for free.

Microsoft Chairman Bill Gates told a breakfast meeting here at the World Economic Forum that he reviewed a plan to enter the online payments business during his "think week," a twice-yearly ritual where he usually isolates himself in a backwoods cabin to study new ideas. Over the years, these sessions have propelled products such as Internet Explorer, Microsoft's Tablet PC and an online videogame business.

Microsoft's move into Internet payments could threaten credit card companies' online profits. Gates described a system that would undercut credit card fees, making it profitable for an online newspaper to charge small fees for individual articles, for example.

"If you want to charge somebody $0.10 or $1 a month, that will just be a click...you won't have to manage some funny thing or pay some big credit charge, where half of it goes to the clearing," Gates said.