PayPal software to let users pay with their phones

By Dow Jones Newswires
Posted Oct. 26, 2010 at 12:56 p.m.

EBay Inc.’s  online payments unit PayPal on Tuesday unveiled new software that will let people to use their phones to make payments, as well as a new platform that will make it easier for consumers to pay for digital media, music and games.

PayPal’s push into digital goods payments and mobile commerce comes as eBay increasingly leans on the payment unit to fuel growth while it turns around its auction-and-sales business. Last year, PayPal contributed 32 percent of eBay’s $8.7 billion in annual revenue, a share that is seen increasing as the payment unit looks to new users and markets.

The online payments leader said its digital goods software will allow consumers to make purchases in as little as two clicks without having to leave a gaming, video, news or music site. The system will maintain PayPal’s pricing for micropayments, which is 5 cents plus 5 percent of every transaction.

PayPal also unveiled software designed to transform mobile phones and other devices into “digital wallets” that consumers can use to buy merchandise, keep coupons and store loyalty program data.

A key goal is to let phone subscribers buy goods from mobile Web sites over their handsets. But PayPal has also said it wants to encourage people using their phones at stores as more point-of-sale devices in retail outlets are connected to the Internet. That would give PayPal a foothold in a $2.4 trillion market dominated by credit-card companies including MasterCard Inc. and Visa Inc.

In early-afternoon trading, eBay shares were up 3.8 percent, at $29.

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