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PayPal Opening Micropayments Service

October 27, 2010

PayPal is making it easier to buy digital goods by providing a new micropayment service and integration with social networking giant Facebook.

PayPal said the new service “lets consumers pay for digital goods and content in as little as two clicks, without ever having to leave a publisher’s game, news, music, video or media site.”

PayPal has described the new service as the “online equivalent of dropping a quarter in the slot to buy a newspaper or play a videogame.”

“PayPal’s new solution solves a key problem for the digital goods industry by offering a faster, safer and more cost-effective way to send and receive micropayments globally,” the online payment giant said.

“Every time a customer purchases content, publishers and merchants get paid quickly, giving them fast access to their funds,” PayPal said in a statement released at its two-day developers’ conference.

The company said its fee structure for micropayments was five percent plus five cents for purchases under $12, which is “lower than the fees typically charged by payment processors in the digital goods industry.”

Facebook chief operating officer Sheryl Sandberg said the social network will integrate PayPal’s new service to make purchases on Facebook.

PayPal said a number of companies have also signed up for the service including Autosport.com, FT.com, GigaOM, Justin.tv and Ustream.

“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,” Sam Shrauger, PayPal’s vice president of global product strategy, told AFP News.

“PayPal for digital goods is an ideal solution for game developers, newspapers, bloggers, media companies, and anyone who is looking to monetize premium digital content around the globe,” Shrauger said.

John Danhoe, eBay’s chief executive, said in an interview with CNBC that he expected PayPal to eventually be a bigger business than eBay.

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