PayPal gets friendlier with small businesses

PayPal Inc., the payment processor owned by eBay Inc., plans to introduce a cheaper way for businesses to handle online transactions that are less than $10, a company executive said. PayPal will let companies accumulate so-called micropayments until a certain volume is reached, at which point PayPal will charge merchants a single processing fee, Francesco Rovetta, director of the San Jose, Calif.-based company s mobile unit, said in an interview. The new plan will be rolled out later this year, he said.

The popularity of digital music, videos, and e-books has exploded in the past decade as consumers migrate to the Web. But merchants have been reluctant to accept credit card payments for some of these items, which sell for as low as 79 cents, because fees make up a high percentage of the value of the transaction, reducing profit.

Changing the fee structure will allow merchants to sell these goods more profitably, Rovetta said.

PayPal s standard fee for processing a transaction is about 3 percent of the transaction plus a flat rate of 30 cents. For purchases less than $10, it charges 5 percent, plus 5 cents.