Giving the U.S. Postal Service a run for its money, Pitney Bowes is providing its Internet postage technology to eBay and PayPal.
The Stamford, Conn.-based mail services provider this week said it will integrate its browser-based product with eBay's platform so that customers of both eBay and its person-to-person payment subsidiary will be able to calculate the shipping cost of an item with the U.S. Postal Service, pay for it and print a label from the computer.
"This is a next-generation product," said Rudy Chang, vice president of technology integration for Pitney Bowes. "This offers the seamless experience of never having too leave the PayPal or eBay Web site."
The system eliminates the need for special software or to create a unique registration. Once the label is purchased, both the buyer and seller can track the delivery status of the package online.
Pitney Bowes Direct, a division that serves the small business market, developed the back-end service for eBay, combining it with the PayPal service so that sellers can pay for the postage through their PayPal accounts.
"eBay customers now have an industrial-strength application," Chang said. " We eliminated all the barriers: there's no registration required, no software download, no prepaid account. We have resolved the issue of having to go to the post office."
"Shipping is a crucial piece of the transactional process," said eBay spokesperson Jennifer Caukin, who noted that customer feedback identified it as a top issue. "With online postage, we are able to reduce the number of steps it takes to handle shipping."
The service went live on eBay on February 12, offering priority and express mail services; more services are expected to go live within a week. Caukin said that adoption has been strong, with several hundred thousand labels printed already. The San Jose, Calif.-based e-commerce and auction platform also offers users the ability to ship via UPS.
Chang said the service took a year and a half to build and integrate with eBay's infrastructure. While Pitney Bowes is the exclusive provider of eBay's online connection to the USPS, Chang said his company plans to aggressively market the product to a variety of other customers.
Behind the happy news is a history of contention. In June 2002, before it was acquired by eBay, PayPal allegedly signed a deal with Stamps.com for a similar service. According to a lawsuit filed in 2003, new parent eBay dragged its feet and never implemented Stamps.com's software. Pitney Bowes and Santa Monica, Calif.-based Stamps.com already were feuding and had slammed each other with patent infringement suits. All their suits were settled in 2003 with five-year cross-licensing agreements, but Chang said that the eBay system uses only Pitney Bowes' patented tech.
Pitney Bowes' customer win of the world's largest e-commerce business is a huge loss for Stamps.com.
PayPal Fails to Deliver
In related news, New York attorney general Eliot Spitzer has slapped a $150,000 fine on eBay-owned PayPal for misrepresenting the rights of account holders when an affiliated merchant fails to deliver merchandise.
Following an investigation, Spitzer's office found that PayPal's user agreement misrepresented the protections consumers enjoyed while using the Web-based payments platform.
PayPal's user agreement included a statement that it provided "the rights and privileges expected of a credit card transaction." But in practice, the New York AG found that "consumers were often denied these rights both by PayPal and by the credit issuers American Express and Discover."
In addition to the $150,000 penalty, PayPal must also tweak its user agreement to "clearly describe" account holder rights, including any conditions or limitations to those rights, and reversal or refund policies ¡ a move that should make all e-commerce businesses take note of their customer agreements.
"Protecting consumers' rights in online transactions is the best way to establish and maintain confidence in electronic commerce," Spitzer said in a statement announcing the agreement. "As with any new industry, it is essential that consumers making e-payments receive full disclosure of their rights and liabilities."
Spitzer has been busy tackling complaints from consumers about denied billing credits or "chargebacks" when merchandise ordered through PayPal, and funding with American Express of Discover cards, where not received as promised.
In 2003, the New York attorney general also reached agreements with American Express and Discover to begin issuing "chargeback" credits to consumers who did not receive goods ordered through a PayPal merchant.
"The agreements, taken together, close a loophole that, if left uncorrected, would have effectively exempted credit card purchases made through e-payment systems from the rigorous protections of the federal Fair Credit Billing Act and similar state laws," Spitzer said, noting that PayPal is by far the largest such system in the U.S.
Adapted from internetnews.com.