PayPal knows how to make payments easier for its key market segment, eBay users. After winning an auction, users can call up the winning lot number in their browser and click on the yellow-and-red “Pay Now! with PayPal” button at the bottom of the auction listing.

Clicking on the button causes a PayPal window to open containing a “bill” created on the fly on behalf of the seller. Users merely supply their PayPal password, add shipping to the total if the seller had not provided a fixed amount, and press enter. 

Amazingly, this is done through clever programming without the cooperation of eBay, which would prefer everyone use its in-house system, BillPoint.

PayPal’s “Smart Logo” changes from a referral button (left) to a payment button (right) immediately after the auction closes. Sellers have the option of letting PayPal automatically add the buttons to all the seller’s auctions.

PayPal (Palo Alto, CA) continues to innovate at an unprecedented pace, at least for the payments business. Its venture-funded Silicon Valley roots help; so does it lack of regulatory oversight, so far.

The two latest developments are the launch of a limited-merchant “pay anyone” bill payment service and Auction FastPay, a new feature that allows users to automatically pay for eBay purchases from a single PayPal screen.¹ The Best of the Web award is for the screen-scraping process used to present “bills” using Auction FastPay or Smart Logo (see Table 21).

¹Auction FastPay was pulled off the site after a few days. Due to the quiet period surrounding the company’s impending IPO, it’s difficult to get an official response, but the Biz Dev analyst that answered my email said the new feature was “temporarily” offline.

Table 1
PayPal Screen-Scraping Billing & Payment Tools¹

(1) Tools are optional for buyers and sellers

(2) Temporarily unavailable as of Feb. 14, 2002 (see footnote 1 at left)

PayPal has been using screen-scraping techniques for more than a year, primarily with tools aiding the seller. The Smart Logo works much like the ill-fated wallet schemes promoted by a number of companies during the past few years. Users clicking on the Pay Now! button launch a script that screen scrapes the eBay auction grabbing the relevant information and presenting it in a “bill” for the user to pay with a single click (login required). The drawback to this system is that it requires users to visit each winning lot on eBay to find the PayPal button.

Auction FastPay eliminates this problem by automating the process even further. Under the new system, after a one-time registration of their eBay username and password, eBay buyers simply log in to PayPal and select Auction FastPay.

PayPal then logs into eBay on behalf of the user, scrapes information on recent winning bids, matches them with seller information, and presents a bill for each item. The user need only confirm the information, choose a funding source (if different than their default), and press enter to pay their eBay obligations in a matter of seconds.

Email confirmations keep buyers and sellers apprised of the transaction. Someday, all bills will be this easy to pay.

PayPal provides a full-range of funding sources including all major U.S. credit cards, ACH (electronic) transfers from any deposit account, or from a prepaid PayPal balance.

PayPal also added free bill payment to its program on Feb. 1. It becomes one of the few major companies to buck the industry trend of offering “pay anyone” bill payment. PayPal opted for a much simpler closed-merchant system offering payment to 1,000 fully electronic payees that are paid through MasterCard’s RPPS. Bill Pay payments must be funded with a PayPal balance or ACH from a bank account; credit card funds cannot be used.

Billers not on the RPPS list can still be paid through the normal PayPal system (e.g., email payment). The downside to this option is the cost, nearly 3% of the transaction charged to the recipient of the payment.

Because PayPal’s BillPay uses only preset merchants, adding new ones is a breeze. Users simply search the biller database, select a new biller, and add their account number. (see “biller add” screen below).