PayPal Expands Services, Releases API

Thursday Jun 30th 2005 by Dan Muse
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On Monday, the online payment processor will announce its first non-hosted product as well as an express checkout service and support for purchases by phone, fax or mail.

Looking to offer small e-commerce shops a wider range of options, online payment processor PayPal recently announced Website Payments Pro. The new product suite features express checkout purchases, offers an application programming interface (API) for implementing PayPal services and support for phone, fax and mail orders.

The first leg of the three-legged announcement from the eBay subsidiary is Express Checkout. Stephanie Tilenius vice president, merchant services, said the new service is designed to streamline the buying process. "Three clicks and you're out, she said.

Using Express Checkout, Tilenius said, buyers never have to enter financial or personal information (which is stored with PayPal and sent to the merchant's site). Tilenius said that Express Checkout is good for buyers because the checkout is fast, and they don't have to be concerned over being asked to enter personal data. It's also good for buyers, she said, because the sales conversion process is quick. That is, buyers have fewer opportunities to change their minds. (Shopping cart abandonment is a recurring issue with e-commerce companies.)

The most interesting aspect of the announcement is the release of the PayPal Direct Payment API. "This is PayPal first non-hosted product," Tilenius said. Using the API, merchants can process credit card payments directly on their Web sites.

Buyers can choose to pay with PayPal or by credit card (buyers don't need to have a PayPal account). While the payment is being processed, PayPal is invisible to the user. Tilenius did say that implementing the service using the programming interface is considerably more demanding technically than using the hosted version of PayPal.

The advantage, Tilenius said, is that merchants control the process and do not have to brand the checkout process as being PayPal service.

The new service allows PayPal to better reach a new market segment, Tilenius said. To date, most of PayPal business has come from sole proprietors doing up to $200,000 in annual revenue. "We have 27 percent market share there," Tilenius said. Now PayPal hopes to attract small e-commerce business doing between $200,000 and $10 million in revenue."

Part of the strategy will be to work with e-commerce storefront providers. Tilenius said PayPal hopes to have 60 shopping cart vendors integrate with its Direct Payment API. This is a key element of the program as many small e-commerce businesses choose to work with providers that supply hosting, site-building and shopping-cart services. Third-party shopping carts supported at launch include CityMax, CoolCart Pro, eMartCart, iBuilder, Mal's E-commerce, My eBiz, 1ShoppingCart and LaGarde StoreFront, according to PayPal.

The third part of Monday's announcement is Virtual Terminal. Designed for merchants who need to accept payments from customers not placing orders online, it supports sales made by phone, fax and mail (or even in-person). Businesses, Tilenius said, don't need to maintain a separate merchant service account. After the order is made, merchants process the sale using a PayPal-hosted payment form.

Tilenius said that about 72 million people have PayPal accounts and that there is about $1 billion on account at any time. "These people are buyers."

Website Payments Pro costs $20 per month. Transaction fees range from 2.2 to 2.9 percent plus 30 cents. The company plans to waive the $20 monthly until later this year.

Adapted from ECommerce-Guide.com, part of Internet.com Small Business Channel.

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