PayPal’s popularity is growing, and many Rhode Island small businesses are using the service to bring portions of their retail operations online.
With more than 12 million registered users, the Palo Alto, Calif.-based company is the leading online money transferring service. Signing up for a PayPal account is much like adding a bank account—online. Members can transfer money to each other’s accounts with credit cards they have on file with the company. But the majority of PayPal’s customers use the service for online auction payments.
PayPal brought to an end the long dry spell for Internet initial public offerings when the company went public earlier this month.
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As of this writing, as many as 19,349 items listed on the auction site eBay from the Rhode Island area were for sale through PayPal.
Jennifer Daltry, co-owner of Providence’s What Cheer Antiques, said she and her husband Chris split what is sometimes referred to as "bricks and clicks" sales duties. Chris minds the store, the bricks component, and Jen posts items on eBay that the couple thinks will fetch better prices online than in the store.
The couple has made over 200 transactions on eBay, and Jennifer Daltry said PayPal has been a great help in drawing buyers who might not want to go through the trouble of buying and sending money orders, but there are drawbacks.
"It’s definitely the easiest system, but if I knew of a service with a better rate, I would use that," she said. "If you sell something for $100 or more, you realize how much of a fee is taken out."
PayPal takes about three percent of each transaction from the seller, which is where it makes its money, but Daltry said it is actually cheaper to use the service than have people phone in credit cards, which What Cheer was doing before they used the service.
As far as other services competing with PayPal to offer a better rate, Daltry’s wish just might come true. In its S-1 filing with the Securities and Exchange Commission, PayPal listed several competitors as risk factors to investors.
"The market for our product is emerging, intensely competitive and characterized by rapid technological change," said the report.
PayPal competes with eBay’s own pay service, eBay Online Payments, which is a joint venture between eBay and Wells Fargo. Other competitors include Yahoo! PayDirect, c2it offered by Citigroup, e-mail payment services offered by the U.S. Postal Service through CheckFree and MoneyZap and BidPay offered by Western Union.
Donna Frezza puts only a select amount of merchandise from her Cumberland-based Donna’s Toys & Gifts on eBay, but she has already acquired positive feedback from almost 1,300 users.
"I love PayPal and eBay," she said. "My business has doubled since I’ve been with eBay, which is about two years, and I have been with PayPal one year.
"I can process payments through my store but PayPal does make it easier for me," she said.
Frezza primarily sells karaoke CDs on the auction site, but said she is thinking of expanding her sales to Beanie Babies and Pokémon items.
Not all Rhode Islanders who use PayPal on eBay have retail locations. Elisabeth Simek Pannozzi sells her jewelry exclusively on the auction site. With almost 300 transactions behind her and another 78 sales pending at press time, Pannozzi said she has only been using PayPal for less than a year.
"I’m doing pretty good with PayPal," she said. "They are pretty good because their fees are not that high."
And it’s not just auctioneers that use the service in Rhode Island. Ben McOsker uses PayPal for his record label, Load Records on its Web site. He said the service is helpful in making sales to more impulsive buyers who might not send in a check or a money order. He also said that because the number of members is growing worldwide, he stands to get even more sales from being a member.
"PayPal rocks. I make a good amount of money weekly from it," he said. "It’s easy to transfer money to accounts, and a lot of people use it too."
Daltry has a PayPal credit card she uses for shipping the items she sells online.
"It’s really like its own separate bank account in some ways," she said.
