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PayPal plans to launch a micropayment service this fall
Facebook says it will allow consumers to use PayPal’s offering to buy Facebook Credits.
EBay Inc.’s PayPal unit says it plans to launch a new payment offering this fall that will allow consumers to use PayPal to pay for small online purchases of digital goods and content such as news articles, video clips and games.
PayPal says the new service will allow consumers to make payments in as few as two clicks, without having to switch to another web site. PayPal will charge sellers 5% of the transaction price under $12, plus five cents.
“The decision to purchase digital goods and content usually happens on impulse so the act of paying needs to be as quick as that impulse,” says Sam Shrauger, PayPal vice president of global product strategy.
The Financial Times newspaper also will be among the first sites to allow consumers to pay using the PayPal for content on its site.
“Our readers want their news on demand, whether they’re on a laptop, a mobile phone or a tablet,” says Mary Beth Christie, head of product management at the Financial Times, which is based in the United Kingdom. “PayPal helps us provide the experience our customers expect, along with flexibility to experiment with payment mechanisms for subscriptions. This gives our customers the flexibility to pay for what they want, when they want.”
Sheryl Sandberg, Facebook chief operating officer, has said the social network is not focused on building its own payment platform. That means that PayPal doesn’t have to worry about the social networking giant challenging its new service, says Colin Sebastian, a stock analyst with Lazard Capital Markets. It also means that PayPal’s new service could become an increasingly important platform for online transactions and consumer engagement on the social network.
“The increasing utility of Facebook as a platform for digital transactions is a significant opportunity for PayPal,” he says. “Specifically, Facebook will be one of the first web site s to integrate PayPal’s digital goods payment platform and Facebook will also now allow its independent developers to be paid through PayPal.”
Because Facebook says more people are playing games on its site than the top three console platforms combined, that could represent a huge opportunity, he says.