The eBay subsidiary says its new micropayments pricing scheme is designed to enable customers to purchase low cost digital items without having to sign up for annual subscriptions or pre-funded payment accounts.
The new pricing is designed especially for payments less than $2. Under the new payments structure merchants will be able to process payments at a rate of five per cent plus five cents per transaction. PayPal says the new fees mean that merchants will pay 40% to 60% when processing low-cost payments, compared to the industry's current payment processing rates of two per cent plus 20 to 30 cents per transaction.
Peter Ashley, director of PayPal's micropayments business, comments: "With our new pricing tier for digital goods, merchants can affordably provide customers with what they are demanding - the opportunity to purchase the content they want without the need to sign up for subscriptions or pre-payments."
Merchants can opt for the new pricing structure or stay with PayPal's existing system. The firm's standard, volume-based transaction fees range from 1.9 to 2.9%, plus 30 cents per transaction.
More than 14 million US consumers purchased digital content costing less than $2 in 2004, an increase of over 10 million from 2003, according to research by micropayments firm Peppercoin and Ipsos-Insight released late last year.