Paymentech Merchants Will Get PayPal

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Online merchants handling sales through electronic payment processor Paymentech could see a significant boost, thanks to a new deal with PayPal. As a result of that agreement, Paymentech starting in early 2005 will be able to offer its merchants the ability to accept and process transactions that use PayPal, the eBay-owned giant of alternative payments.

Through the deal, Paymentech will resell and fully integrate PayPal's online payment service onto its proprietary processing platform. Its merchants will be able to consolidate PayPal transactions into their existing settlement and reporting processes -- in other words, they won't have to radically revamp their systems or sites to accept the alternative currency.

Paymentech, which by some estimates handles upwards of a half of all Web-based e-commerce transactions, is already a key player in processing online transactions -- and the move is likely to only increase its standing. For one thing, the agreement with eBay and PayPal serves to make Paymentech more enticing to online merchants, beefing up its existing payment options, which include credit cards, electronic checks and ACH/EFT.

Most importantly, merchants who use Paymentech also stand to benefit. The sheer scale of PayPal's operation -- boasting more than 56 million accounts in service -- make it an important alternative currency to support.

"PayPal has more than 56 million accounts around the world, which translates to new buyers and incremental sales for Internet merchants," said Scott Cruickshank, Paymentech's chief marketing officer. "Our goal is to offer merchants the broadest range of payment methods, and through this agreement, that's exactly what we are doing." Also, adding new forms of payments to your site is seen as a way to better your conversion rates. Recent research suggests that accepting multiple payment or currency types can help in converting visitors to buyers.

In addition to standard one-time transactions, Paymentech's platform also support gift certificates, "Bill Me Later" functionally, and recurring payments (useful for subscriptions.)

The deal with PayPal comes amid online payment processors' efforts to improve offerings for Web merchants. CyberSource recently added "Bill Me Later" functionality to its own lineup, helping e-commerce sellers reach buyers who may not have credit cards, but who seek ways to purchase higher-priced goods and services.