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PayPal to Introduce Cheaper Way to Process Small Transactions – BusinessWeek March 17, 2010

Posted by hruf in Internet & Communities.
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March 15 (Bloomberg) — PayPal Inc., the payment processor owned by EBay Inc., plans to introduce a cheaper way for businesses to handle online transactions that are less than $10, a company executive said.

PayPal will let companies accumulate so-called micropayments until a certain volume is reached, at which point PayPal will charge merchants a single processing fee, Francesco Rovetta, director of the San Jose, California-based company’s mobile unit, said in an interview. The new plan will be rolled out later this year, he said.[…]

PayPal’s standard fee for processing a transaction is about 3 percent of the transaction plus a flat rate of 30 cents. For purchases less than $10, it charges 5 percent plus 5 cents.

That means when a consumer buys a 99-cent song online, the merchant would pay PayPal about 10 cents, or 10 percent of the transaction. Under the aggregation model, PayPal wouldn’t charge the merchant until consumers bought, say, 10 or 20 songs, thereby reducing the percentage of the transaction the merchant is charged.

$30 Billion Market

The company is still working out details on how many goods must be purchased before it charges the merchant and how long it will give the merchant to aggregate purchases before a fee is levied, Rovetta said.[…]

via PayPal to Introduce Cheaper Way to Process Small Transactions – BusinessWeek.