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PayPal is soon realizing that it is missing out on a great opportunity offered by micro-transactions particularly for the virtual goods. With that in mind, the payment provider owned by eBay now wants to launch cheaper fees for small transactions so as to encourage uptake of its service in the profitable and fast growing market. Principally, PayPal will enable vendors to mint several payments under the $10 mark and just pay a collective fee.

This payment plan would be rolled later some in 2010. Under the new terms, sites or services that incorporate PayPal would get much better terms than what they have been used to by now. The main change is that vendors would be permitted to make a number of transactions with different users with certain limit, which is yet to be determined.

Only then would the companies executing PayPal be charged a single bulk fee that actually should be notably smaller than the one paid for per transactions. At present, PayPal takes 5 percent of the transaction amount, in addition to a 5 cent fixed fee for transactions below $10. And now for smaller purchases, the fees would add up to quite a bit, for instance for 99-cent transactions, the fee would be 10 cents. For transactions over $10, PayPal charges a 30-cent fixed fee and 3 percent of the transaction amount.

The company is still working out details on how many goods must be purchased before it charges the merchant and how long it will give the merchant to aggregate purchases before a fee is levied. By reducing the cost of microtransactions for businesses, PayPal aims to help the $30 billion market for digital goods expand more quickly.

Source – Businessweek

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