Here's the companion article from the WSJ. A 3.5% fee seems high for funds transfer.
EBay,.Wells Team up on Web Payments
By GEORGE ANDFM staff Reporter of TnE WALL STREET JouRNAL
EBay Inc. and Wells Fargo & Co. are teaming up on an ambitious plan to let millions of online enthusiasts take credit-card payments when selling items on the Internet.
The joint effort, known as Billpoint, is due to be announced today. It is meant to provide a much faster way for both ebay users and other consumers to do business online. Currently, most-buyers at eBay's auction site must mail money orders or personal checks to sellers. That can stretch out a transaction's conclusions by a week or more. With Billpoint, buyers should be able to enter their credit-card data, click a button on their computer and electronically send money to the seller's checking account within seconds.
EBay's chief executive, officer, Margaret Whitman, said her company will own 65% of Billpoint, while Wells Fargo will own 35%. She said ebay turned to Wells Fargo to help develop Billpoint, which had been 100% owned by ebay, because the San Francisco banking company had much greater expertise in processing credit-card payments. Neither ebay nor Wells Fargo would disclose how much the banking cornpany paid for its stake.
Janet Crane, head of ebay's Billpoint team, predicted that within a year or two, the majority of ebay transactions will be handled via Billpoint. EBay currently has about 10 million registered users, who generated $900 million of transactions in last year's fourth quarter.
EBay, based in San Jose, Calif., and Wells Fargo officials said they hope to market Billpoint to other potential users outside the ebay fold later this year. That might include competing online aucti-qn sites, they said. Richard Kovacevich, CEO of Wells Fargo, predicted that Billpoint could be appealing to, business users as well as the small-stakes consumers that congregate at ebay.
Billpoint's rollout comes into a crowded field. Some fast-,growing start-ups, such as x.com Inc., are offering easy-to-use online checking accounts that also let people send electronic payments to friends or business acquaintances almost instantly. Some of those services are free of charge, while Billpoint plans to charge various fees after letting many people try its service. at no cost for the first three months.
But both Mr. Kovacevich and Ms. Crane contended that Billpoint could thrive without having to match or beat the financial terms offered by other online payment services. "Security and privacy are going to be very important to people," Mr. Kovacevich said, "and those are areas where we feel we excel."
In recent weeks, ebay has been testing a small-scale pilot of Billpoint, making it available to its most-active listers, who sell more than $1,000 a month of goods. That has generated a few hundred Billpoint transactions a day, Ms. Crane said, but it was meant only as a way to try out the system, rather than as a serious launch.
Eventually, sellers will pay any fees associated with Billpoint. For the first three months, Ms. Crane said, purchases made on Visa cards won't generate any fees to sellers. After that, she said, sellers using Billpoint will be charged 3.5% of the transaction amount plus 35 cents. On transactions under $10, she said, the flat rate will be just 35 cents.
Ms. Whitman, the ebay CEO, said Billpoint currently is a slight drain on ebay's earnings, because the project incurs costs and hasn't yet generated meaningful revenue. But she predicted that Billpoint will stop being an earnings drain by the end of this year, and could contribute to next year's ebay earnings.
Paying the Bills
The Billpoint initiative being launched by eB6y and Wells Fargo is meant to make online payments faster and easier. Here's how the new system
would work.
-Before an auction begins, seller agrees to accept credit-card payment via Billpoint. Seller privately submits his or her checking account data to Billpoint.
-Buyer sees only that seller can be paid via Bilipoint; seller's checkingaccount information is hidden.
-Once an auction is over, buyer enters credit-card data. Then buyer's credit card is charged the purchase price.
-An instant later, seller is notified that payment has been routed to his or her checking account, less any fees charged by Billpoint. |
