Make Money On The Internet | Make Money Online

An Auctytes reader recently wrote to me to say he is saving a lot of money utilizing PayPal micropayments pricing (see also this page). It’s not a new service, but sellers of low-priced items may not comprehend that they can take advantage of micropayments, which many may associate with digital content rather than physical goods.

I conducted an email interview with PayPal’s Anuj Nayar to discover out which sellers could benefit from the program and to nail down the restrictions sellers may face in utilizing a PayPal Micropayments account.

After conducting my interview with Mr. Nayar, Bloomberg reported that PayPal planned to make its micropayments plan even much more attractive by permitting businesses to accumulate micropayments until a certain volume is reached, charging them a single processing fee (see this March 15 article). Anuj said, “PayPal has not announced any new plans for handling micropayments,” so it’s some thing to maintain an eye on, as it would provide further savings to sellers of low-cost items.

AuctionBytes: PayPal introduced “micropayments pricing,” what is it and what kinds of merchants are utilizing it?

Anuj Nayar: Our micropayments pricing is 5 percent plus 5 cents. It’s ideal for merchants who process a high volume of little transactions.

PayPal was the first major payment company to announce micropayments pricing in August 2005. In Q4 2008, we made micropayments pricing available worldwide to any PayPal Business or Premier account holder utilizing one of PayPal’s 24 supported currencies. (See this page for much more information.)

Micropayments are financial transactions involving very little sums of money. PayPal defines a micropayment as a transaction of much less than $12.

For digital goods merchants specifically, we provide ease of integration and a quick way to get up and running, a global marketplace they can immediately tap into, and a competitive discounted rate on micropayments. PayPal’s micropayments discount permits merchants to set sensible costs for their lowest price transactions. We’ve seen substantial usage so far among our merchant base – while we can’t break out any specific numbers, a couple of notable merchants who are utilizing our micropayments pricing are Napster, One True Media, and Spare Change.

AuctionBytes: Is the micropayments account only available for selling digital goods? Can you explain what types of goods can be sold with a micropayments account?

Anuj Nayar: No. It’s available for any on-line merchant, but the economics make it ideal for purchases under $12. To-date, our focus in micropayments has been on pricing method vs. any specific products. The exact product depends on the merchant’s offering, but this pricing is available to any merchant with a Business or Premier account.

AuctionBytes: Can eBay sellers use it, or is it only for merchants with their own web website?

Anuj Nayar: It can be utilized with PayPal’s payment products such as Web site Payments Standard, Web site Payments Pro and for eBay sellers.

AuctionBytes: Does PayPal have a hybrid account where it will charge micropayment fees for low-priced items and regular PayPal fees for higher priced items? This would be particularly helpful for sellers selling in the auction format who may not know the final selling price.

Anuj Nayar: No, we don’t presently support this kind of “hybrid” account. Our experience shows that most merchants either deal in micropayment transactions and benefit from the pricing or they don’t.

AuctionBytes: If you set up two accounts, how do you make sure the buyer uses the correct account?

Anuj Nayar: The seller would have to set up their checkout in a way that the micropayments account is generally associated with the lower-priced items.

AuctionBytes: How many PayPal accounts may users have?

Anuj Nayar: There is no limit to the number of PayPal accounts an on-line merchant is allowed to have.

AuctionBytes: What’s the break-even point where it makes much more sense to use a regular account versus the micropayments account?

Anuj Nayar: The break-even point is $12. For transactions over $12, it makes much more economic sense for the seller to use our regular pricing.

AuctionBytes: Do you have any stats on how a lot this has saved sellers in fees, and how many people are utilizing micropayments accounts?

Anuj Nayar: While we can’t break out any specific numbers, a couple of notable merchants who are utilizing our micropayments pricing are Napster, One True Media and Spare Change.

AuctionBytes: PayPal is performing some integration with web sites like Facebook. Does PayPal micropayments solve certain social networking and virtual goods challenges in ecommerce?

Anuj Nayar: Yes. PayPal has been on Facebook since it first opened up its platform to developers. Developers like Zynga and Playfish brought PayPal onto the Facebook platform as a quick and simple way to purchase virtual goods in games and applications like Mafia Wars, FarmVille or my personal favorite, Fishville.

AuctionBytes: What kinds of buyer/seller protection come with this kind of payment?

Anuj Nayar: Our buyer and seller protections are the exact same. PayPal’s highest priority has generally been the security of our payment service and we have built our security from the ground up. Our fraud models and verification methods are recognized as some of the best in the business. Simply because PayPal by no means shares users’ financial information – security and privacy have built into our service since its inception.

However, we also recognize that digital goods merchants have specific requirements and are committed to continuing to build upon our security features and risk models to fit the requirements of this segment. To discover out much more about how we are helping provide education and resources on fraud and risk prevention go to PayPal.com/digitalgoods and download our “Fraud Prevention Greatest Practices Guide for Digital Goods Merchants.”