EcommerceBytes-NewsFlash, Number 2366 - September 09, 2010     2 of 6

PayPal Readies New Micropayments for Digital Goods Plan

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PayPal is launching a new service called Micropayments for Digital Goods that is expected to be formally launched at the Developers Conference at the end of October. The company already offers a micropayments payment option that it launched in 2005, which charges merchants 5 cents plus 5 percent and is geared to merchants who process a high volume of small transactions. The new plan is specifically for digital goods, such as content (articles, for example) and games, and offers integrated website tools to qualifying digital good merchants.

PayPal President Scott Thompson spoke about the new plan in an April interview with the Associated Press after word of the project had leaked out in a March Bloomberg article. PayPal will let companies accumulate micropayments until a certain volume is reached before charging a single processing fee, making it less expensive for merchants to process low-priced transactions.

Osama Bedier, PayPal Vice President of Product Development, went a little further in describing the forthcoming service in this interview last week, where he compared the new service charges to how long-distance phone calls are billed. "It gets tallied up and you get billed at some normal interval." He said PayPal was currently testing the new workflow with a handful of gaming companies and will launch it at the upcoming Innovate conference.

However, new details are found in PayPal's User Agreement that goes into effect on September 22. A new section explains that PayPal may offer buyers an option to pay for digital goods on a later date, at no additional cost, "no more than 21 days following your initial purchase, or when your Digital Goods purchases using the Post Payment Option reach a certain amount."

Merchants must submit an application and be approved in order to participate in the Micropayments for Digital Goods plan - they must also be willing to accept reversals for disputes for Digital Goods purchases of up to a certain amount per reversal ($3.99 if the transaction was in U.S. dollars).

Buyers are limited to a maximum of three such reversals per month for disputes, and then would be required to follow PayPal's standard dispute resolution process for any additional disputes filed.

See the PayPal User Agreement update page, and look for AuctionBytes' coverage of the formal announcement at PayPal's Developers Conference in October.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to

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