eBay, Inc. (Nasdaq: EBAY) and Wells Fargo (NYSE: WFC) announced Wednesday that they have partnered to expand online payment processing company Billpoint, thereby enabling eBay’s 10 million users to make payments to one another by credit card. Until now, most buyers at eBay’s auction site were forced to mail money orders or checks to sellers when they made a purchase on the popular Internet auction site.
eBay originally bought the Billpoint service in May of 1999, and has had it under development over the last 10 months. Wells Fargo, the seventh-largest bank in the U.S., was brought in to provide back end support and will receive a 35 percent equity interest.
“Partnering with Wells Fargo enhances trading velocity and efficiency of eBay sellers,” said Meg Whitman, eBay president and chief executive officer. “eBay and Wells Fargo investors are also well served because we are both able to leverage our respective strengths and scale economies in penetrating this market faster and more efficiently that going it alone.”
Aiming for Higher Volume
When eBay users go to complete a transaction, Billpoint will transfer the credit card payment to a checking account set up by the seller. By enabling credit card transactions, eBay hopes to speed up the rate of transactions on its site and convert potential buyers who stop short because of concerns about sending checks or money orders through the mail to unknown sellers.
eBay has been testing Billpoint on a limited basis over the past several weeks, making it available to listers who sell more than $1,000 (US$) a month in goods.
While the service will add convenience to buying on eBay, it will come at the seller’s expense. After a 90-day introductory period, Billpoint plans to charge sellers 3.5 percent per transaction, plus 35 cents (US$) for transactions over $10 and just 35 cents for transactions under $10.
Billpoint Jumping into Crowded Field
Billpoint said it also plans to offer its payment services to consumers in general and to other sites. While it will have a virtual monopoly on eBay, it will run into considerable competition in the general area of consumer online bill payments.
Consumer financial software leader Intuit recently reached an agreement with America Online to provide online bill payment services through the View and Pay Bills feature of the Quicken.com Web site. When the deal was made in November 1999, the firms said the capability would be rolled out to AOL’s members early in 2000.
Online bill payment leader Checkfree.com also merged recently in a deal valued at $1 billion with Transpoint, which claims such investors as Microsoft, First Data Corp. and Citibank.