January 27, 2004, 12:00 AM

Q4 revenue up 77.5%; yearly revenue up 85% at PayPal

PayPal, the payment transactions unit of eBay Inc., reported Q4 revenue of $132.6 million, up 77.5% from $74.7 million in the year-earlier period.

Kurt Peters

Executive Editor

PayPal, the payment transactions unit of eBay Inc., reported revenue of $132.6 million for the fourth-quarter ended Dec. 31, up 77.5% from $74.7 million in the year-earlier period. For the full year, PayPal had revenue of $436.7 million, up 85% from $236.6 million in 2002.

PayPal’s revenue increase includes a 49% year-to-year rise in revenue from payment transactions processed for merchants other than eBay.com, a spokeswoman says. PayPal now provides payment services for more than 1 million merchants worldwide, the company reports.

Most of PayPal’s revenue is from the fees it charges merchants for payment transactions. PayPal collects payments directly from consumers through payment cards, checks or wire transfers on behalf of merchants, then forwards funds to merchants minus its transaction fees.

But PayPal also earns a small percentage of its revenue through partnerships with financial institutions. Of its $132.6 million Q4 revenue, for example, $130.6 million was in payment transaction fees. The remaining $2 million came from third-party advertising fees.

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