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PayPal Unveils Online Micropayments

Facebook and FT.com have signed up to let subscribers make small purchases online via PayPal.

How to get consumers to pay for content on the web has long been a challenge for publishers, game developers and the like. PayPal today announced a payment solution will that let consumers pay for digital goods and content in as little as two clicks, without leaving a publisher's game, news, music, video or media site. The online equivalent of dropping a quarter in the slot to buy a newspaper or play a video game, PayPal is offering a way to send and receive micropayments globally.

The new solution offers PayPal's fee structure for micropayments, with pricing at 5 percent plus 5 cents for purchases under $12, which according to PayPal is lower than the fees typically charged by payment processors in the digital goods industry. Every time a customer purchases content, publishers and merchants get paid quickly, giving them fast access to their funds, PayPal says.

The micropayment service for digital goods will be available late fall this year. Facebook will integrate with it to let people make purchases on Facebook using PayPal. Several additional companies, including Autosport.com, FT.com, GigaOM, Justin.tv, Ooyala, Plimus, Tagged, Tyler Projects and Ustream announced that they are also using PayPal to monetize the growing opportunity in digital goods.

"Our readers want their news on demand, whether they're on a laptop, a mobile phone or a tablet," said Mary Beth Christie, head of product management at FT.com. "PayPal helps us provide the experience our customers expect, along with flexibility to experiment with payment mechanisms for subscriptions. This gives our customers the flexibility to pay for what they want, when they want."

"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," said Sam Shrauger, PayPal's vice president of global product strategy. "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."

Because PayPal for digital goods is built on PayPal's fraud prevention engine, developers don't have to worry about building the systems required to protect customers' sensitive financial information, PayPal says. The company already serves 90 million accounts in 190 markets around the world. The company closed out 2009 with $2 billion of total payment volume for digital goods and reached $1.3 billion in the first half of 2010.

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