While not the first bank to experiment with eBay auctions (see note 1), Zions Direct is the first to open a dedicated site within eBay and the first to sell "new-account vouchers" (see screenshots below).

Apparently the vouchers, listed in the gift certificate category, skirt eBay rules against auctioning financial services. The buyer of the certificate can redeem them for a cash deposit into their Zions Direct brokerage account. Zions Direct also auctions CDs every week directly on its website (see previous coverage here).

Bidding starts at $0.99 for the vouchers which range in value from $500 to $1,000. Bidders can pay via PayPal or check. The amount of the voucher is deposited directly into the buyer's Zions Direct account, which is required to redeem the voucher. So not only are buyers receiving cash at a discount, they also can earn frequent flyer miles and a free grace period if their PayPal account is connected to a rewards credit card. There is no requirement that buyers be new customers, nor are their limits on how many certificates can be purchased. In fact, bidder shecdoggy bought 5 of the vouchers totaling $4,000 at a total discount of $72.50.

So far the bank has sold 16 vouchers worth at total of $12,800 to 9 unique bidders for an average of $12.50 less than face, a discount of 1.6%. And there are currently 10 vouchers up for auction (see screenshot below). As more people have caught on, the spread has been reduced to less than 1% on recent auctions (see past and present listings here, Zions Direct eBay store here).   

Analysis
From a marketing perspective, this is brilliant, at least in the short run. For a cost of $15.95/mo for a basic store, and $30 to $40 per voucher (mostly in eBay/PayPal fees), the bank gets its name on eBay, numerous mentions in blog posts and press stories, a cool ad on its homepage (see screenshot below), positions itself as innovative and provides customers a nice little spiff.

Long-term, however, the terms will have to be adjusted or the bank will just be handing over easy money to the "gamers." The certificates will be purchased at face, or slightly over, by existing customers who rack up frequent flier miles and a do a little interest arbitrage during their credit-card grace period. The bank will need to lower the amount of the vouchers to $100 to $200 to reduce the potential for gaming, or if possible, restrict purchases to one per customer. Another cost reduction tactic would be to disallow PayPal payments, but that would reduce the effectiveness of the promotion. 

Zions Direct Auction Listing

Zions Direct eBay Store

Zions Direct Homepage (18 Jan 2008)

Note:

1.  In the late 1990s PNC Bank was the first to try CD auctions. In 2004, WaMu used eBay technology in a market test (see previous article here).

Given how many times I've had to tell clerks, "no, I really don't care to save $18 on my purchase today" (by adding yet another revolving credit product to my life), the come-on at checkout must work pretty well. Amazon has used this approach at online checkout for years, offering up to $30 in savings if approved for its co-branded credit card.

eBay recently began pitching its eBay MasterCard to bidders in its online auctions. As you can see below, a small "up to $25 back" is presented to users as they consider what bid amount to enter. The card is issued by GE Money and requires a PayPal account. Customers can opt to display their eBay userid on the no-annual-fee card.

Analysis
I also received an email offer last night (7:34 PM Pacific) for the card (see screenshot below). It's an attractive holiday-themed message with the slightly misleading email subject line, "Get 10% off eBay purchases through Dec. 15." I clicked on it wondering why eBay would offer me, a frequent buyer, such a substantial savings. It turns out to only apply to the first $250 spent, for a $25 savings, not so rich compared to other credit card offers I typically receive in the mail. But with the tight integration and 30-second loan application, it should provide a reasonable flow of new applications.  

The online application is simple and fast with pre-populated personal info and a 30-second approval promise. All I had to do on the first page (note 1) was decide whether to put my eBay ID on the plastic and enter my birthdate (see screenshot below). However, the process is marred by the upsell of credit insurance disguised under the seemingly innocuous heading (see closeup below):

Yes, enroll me in the Account Security program.

Granted, the cost is clearly disclosed, however, many applicants will check the box thinking they are protecting themselves from fraud, and only later find out they are paying an extra 1.5% per month (that's $900 per year on a $5,000 balance) for an insurance product they probably don't need. With all the problems its had with phishing and fraud, eBay should NOT trick customers into signing on for credit insurance under the guise of "security." 

Email solicitation from eBay (19 November 2007)

Landing page for email solicitation of eBay MasterCard (19 November 2007) 

Note:

1. I did not proceed past the first page because I could not tell if hitting "continue" at that point would trigger a credit application. They may ask income and employment questions on the next page.  

Several banks, including PNC in the bubble days and WaMu through eBay in early 2004, have tried auctioning certificates of deposit (see Online Banking #104). Those first attempts were aimed at retail depositors, an unlikely audience for a several reasons. First, the demographics of retail CD buyers is decidedly older and they tend to be fiscally conservative, not the right group for a new-fangled way to buy from the bank. On the other hand, CD auctions are a great way to introduce a bit of Web 2.0-style innovation into what is mostly a commodity.    

So Zions Bank, through its Zions Direct division, has chosen a different path. Instead of creating an eBay-like environment for retail investors, it is using its non-bank investment division to sell CDs like the Treasury Dept sell t-bills. The certificates are sold at a discount to par, resulting in an acceptable yield for the bidders. 

Analysis
While PNC and WaMu's efforts were clearly just market tests that were shuttered after a few months, the Zions auction platform is full-featured. It appears to have staying power provided the bank is comfortable with the prices its paying. 

Clearly, this is not a retail playground. There were 20 bidders making a total of 28 bids with a median bid dollar amount of just $10,000. However, there were three huge bidders, all playing with $2 million in cash, that set the final prices. Most likely it was someone in a large company treasury department looking to increase its yield on excess cash by a basis point or two.   

But even though the big money sets the rates, the small depositors can still win since everyone received the same "market-clearing" rate. For example, four of the 14 winning bidders in the March 27 auction were small CDs of less than $5,000:

Winning bidders by size of deposit:

• 4 had $1,000 to $4,000 
• 5 had $8,000 to $20,000
• 2 had $90,000 to $100,000
• 1 had $200,000
• 1 had $536,000 (partial fill of $2 million bid)
• 1 had $1 million (they also had non-winning $2 million bid)

It makes sense to set rates for large deposits this way. It mimics the way the capital markets already function. And it allows motivated smaller depositors to join the "action," receiving what they are likely to perceive as a fair price since it was set on the open market. Some day, the majority of CD dollars will be sold this way.

Finally, an added bonus for the first-mover, it positions Zions as innovative, fair, and looking out for its customers. The word of mouth and press attention should quickly pay back the investment Zions made in the platform.

More information:

• Press release here
• American Banker article here
• Online Banking Report #104 here

-------------------------------------------------------------------------------------------------------------------

Zions March 27 CD Auction Results
(see screenshot right or view archived page here) 

Product: $2,000,000 in 5-month CDs

Bidders: 28 bids from 21 bidders

Final Price: 5.506% rate

Start date: 20 Mar 2007

End date: 27 Mar 2007 (6 PM EDT)

Discussion: Two $2 million bidders tied at the market-clearing rate, one ended up with a partial funding of $537,000 and one ended with zero, so had Zions made more money available, it could received total deposits of $3.6 million at 5.506% rate.

While most banks in the world charge fees for at least some aspect of online banking, the service has been almost entirely fee free in the United States, at least ever since Bank of America rolled out free bill payment in 2002.

At first glance, it seems like a great deal for consumers; however, the lack of direct revenue has hampered investment in the channel and deprived U.S. customers from the more sophisticated services common throughout the world, such as SMS alerts, multi-factor log-in controls, and so on.

We're always on the lookout for fee-based opportunities (see Online Banking Report 122/123 for a laundry list of online fee opportunities), and we are encouraged by eBay's latest innovation, SMS auction alerts with a fee of $0.25 per auction. This is the first time eBay has attempted to charge fees to bidders. The site has offered free email alerts since the beginning.   

Here's how SMS alerts work (see screenshot below):

1. Select "Get SMS alert" (see red circle in screenshot at above, click to enlarge).
2. Select mobile phone provider from drop-down list and enter mobile phone number; currently Cingular, Verizon, Nextel, Alltel, Sprint, and TCRcom participate
3. Check "Watched item ending alert" or "Outbid alert"
4. Click "Continue" which initiates a confirmation message to the user's mobile phone
5. Send a text-message reply from the mobile back to eBay to agree to the charges

SMS-alert users pay $0.25 for each auction entitling them to up to 10 alerts. Each 10 thereafter cost another $0.25. It would be unusual for the number of alerts to exceed 10. After receiving an alert, users can submit a new bid via text message by responding to the text message with their new bid amount. Bidding can be protected with an optional PIN.

Instant messaging alerts work in a similar manner (click on screenshot for closeup):

1. Select "Get IM alert" 
2. Select IM provider; eBay supports the big three: Yahoo, AOL, MSN
3. Check "Watched item-ending alert" or "Outbid alert"

There are no fees for IM alerts. After receiving an IM alert, users can submit a new bid via the provided link.

In addition to SMS-alert links in the main auction listings, successful bidders are also prompted to set up an alert on the bidder's confirmation screen (see below).

What it means for financial institutions
There is no reason why banks cannot charge for triggered alerts. Unlike account access, alerts are a value-added service with no similar "free counterpart" in the offline world. You don't see telecom giants giving away any of their specialized services such as caller-id, custom ringing, call forwarding and so on. Banks should work on developing premium service bundles. For inspiration, take a look at your local phone provider's website (see Qwest screenshot right).

Resources:

• Online Banking Report #109, "Pricing Online Banking Services"
• Online Banking Report #122/123, "2006/2007 Planning Guide"

On the front page of today's American Banker and on the cover of its Retail Delivery pullout section (see inset), there is an eye-catching EBANK logo presented in eBay's distinctive font. It's an intriguing lead-in to an otherwise predictable story on eBay's PayPal unit and the extent to which it competes with banks. (Note: For American Banker, the cover graphic gave it more "street appeal" so that the paper was more likely to be picked up by the thousands of attendees at BAI's big technology conference in Orlando.)

This is an old story. PayPal has offered a suite of consumer banking services for more than four years (click on table below) including debit cards, bill payment, credit card (issuer), consumer finance loans, credit card processing, ACH processing, money market mutual funds, international payments, interbank transfers, fraud protection, and insurance for funds on deposit. The only new service this year is the credit card payments gateway business it purchased from VeriSign earlier this year; though that is more of a line extension than a new business.

Analysis
Yes, PayPal competes with bank, primarily in merchant processing, an area most banks got out of more than a decade ago. And we'll see more ecommerce players, such as domain registration services company GoDaddy, offering integrated PayPal payment options (see inset). However, none of PayPal's other financial service offerings have a measurable market share, and are unlikely to be causing any lost sleep by execs at Bank of America, Citi, or any other financial institution.

The American Banker article speculated on eBay's interest in moving further into banking by buying a charter and opening a full-service Internet bank. But no evidence was presented for either side of that argument, nor did the author find any industry analysts to comment.

It reminds me of the "controversy" in the mid-90s about Microsoft competing against banks. Although it was mostly fodder for the trade press, we debunked the notion In the very first issue of Online Banking Report (April 1995). There was no way that a successful software company, accustomed to 50%+ margins, would invite the regulatory scrutiny and compliance hassles of the relatively low-margin banking business.

Although eBay has done some strange things, such as jumping into the telecom business via its recent Skype acquisition, we seriously doubt that the auction giant has any plans to open or even lend its name to a full-service Internet bank. It doesn't need those regulatory and compliance headaches.

However, the company will continue to exploit areas of ecommerce, like auction payments and auction purchase financing, that are not well-served by existing players. But if you've put together a franchise that can hold its own against BofA/MBNA, ING Direct, and Schwab, you have little to fear from eBay or Microsoft. In fact, there are opportunities to leverage these trusted brand names to INCREASE your revenues. For example, PayPal provides developer tools that would allow a bank to integrate with the online payments provider to facilitate financing for bank customers.

Previous articles:

• Online Banking Report #113, PayPal Offers Preapproved Credit Lines to Users, Dec. 16, 2004
• Glenbrook Partners, Beware the Doves: Reflections on the PayPal/GE Consumer Finance Alliance, by Scott Loftesness, June 2004

--JB

Looking for a way to boost your market share in direct vehicle lending? Consider setting up an online used car emporium either using eBay as the transactional platform (recommended) or programming the site yourself.

Even though you could do it yourself, it would be difficult to match the auction giant's powerful set of FREE buyer protections including (click on inset) including:

• Purchase Protection: Reimburses up to $20,000 for fraud and material misrepresentation after a $100 deductible
• 30-day, 1000-mile Service Agreement: Provides a 30-day warranty on major breakdowns on most cars under nine years old after $500 deductible
• Ebay Feedback Rating: Prospective buyers can review the seller's track record via the eBay feedback system

In addition, users can review the vehicle's history by searching Experian VIN # records via an online link. Cost is $7.99 for a single VIN # search, or $14.99 for up to 10 searches. Finally, buyers can order a pre-purchase inspection of the vehicle for $100.

Financial Institution Opportunities
Here's how a financial institution virtual vehicle site could work:

1. Using eBay programming tools (eg. APIs), create a website that aggregates local vehicles listed on eBay.
2. Buyers would handle the transaction through normal eBay channels, but you would have the first chance to make the loan. In order to maximize the returns, it's recommended that you allow buyers to make purchases from anyone. As you'll see later, the eBay fraud protection programs mitigate much of your risk in making "person-to-person" auto loans.
3. To further boost volume, consider helping sellers market their vehicles in any of the following ways:

• create downloadable FOR SALE signs complete with purchase details and/or referring potential buyers to the online auction (see inset for a version recently distributed by eBay in a direct mail program)
• provide a customizable template for users to create their online auto listing
• integrate customer listings with your own inventory of repossessed autos for sale
• provide "incentive financing" programs that sellers could use
• offer a wide variety of loan options for cars sold through the site

Analysis
The virtual auto emporium would have several marketing and promotional benefits:

1. Creates interest and publicity about your website
2. Drives traffic to your lending area
3. Increases vehicle loan volume
4. Creates an interesting program that could be featured in website, statement, and direct marketing campaigns (see eBay DM samples below)

Addendum: Ebay Direct Mail
Here are close-up views of the recent eBay direct mail received in early July. We may have been targeted due to recent activity, our second eBay Motors vehicle purchase.

This 9x12 inch cardboard sign looks very similar to a sign you might purchase at the local drugstore to stick inside the window to advertise a car for sale. The FOR SALE is in bright orange and includes references to the FREE $20,000 purchase protection and FREE 1,000 mile service agreement (not visible in this scan).

This eBay version is intended to be displayed within the car and highlights the eBay listing number for more information. The back of the sign (click on the image below for a close-up), lists the features and benefits of selling your car through the auction site. It also includes an offer to return the $40 listing fee if the vehicle doesn't sell. Sellers also pay a $40 flat transaction fee ($80 in total) if the vehicle sells.

--JB

Here's a little technique we haven't seen before, helper bubbles that popup to highlight new and/or underutilized features.

For example, in My eBay, this yellow bubble appeared on the screen pointing to a relatively new feature on the site, a drop-down box that allows the user to take various actions on items they are tracking.

Note: eBay allows you to turn off the bubble with a "Don't show me this again" link.

Analysis
A great way to highlight important features of online banking.

--JB

Ebay has been on the forefront of fighting online fraud, introducing Account Guard on its toolbar in Feb. 2004 (see Online Banking Report, #105/106 and #85), as well as a number of safeguards into its service delivery over the years.

The auction giant recently elevated the personalization in its emails, incorporating name and eBay username, in an effort to help users recognize genuine messages.

View closeup of personalization

--JB 

If you'd like to learn more about the future of financial email messaging, check out Email Marketing in Financial Services: Leveraging the Inbox from our sister publication, the Online Banking Report.

Every Internet threat begets an equal opportunity. In the case of phishing, we've seen the toolbar creators fight back with buttons that identify safe and not-so-safe websites. eBay and Earthlink both fight phishing via their toolbars. Google and Yahoo's toolbars block popups and Yahoo has a beta version attacking spyware.

The latest entrant is SpoofStick from CoreStreet. The Internet Explorer plug-in displays the underlying URL in bold letters below the regular browser toolbars. For example, users at a legitimate Citibank site would see, "You're on Citibank.com." Users who've clicked through a phishing message will see something like, "You are at 12.13.92.3.com" which will hopefully prevent users from entering confidential banking information.

Financial institutions should consider making the generic Spoofstick available for downloading from their security areas, or even better, private branded a version that shows the financial institution's own URL in a unique color.

We’ve been a proponent of increasing your presence on the desktop through browser toolbars, pushed content, and other means . We were looking at it from a usability and marketing standpoint. It turns out there’s another use, as a security enhancement.

Leave it to eBay to come up with the first proactive anti-phishing system. Ebay toolbar users received the Account Guard upgrade in February. It has two functions. First, whenever a user visits a valid eBay URL, the background color of the account-alert section of the toolbar changes to green. It’s a subtle but effective technique – quite noticeable when a spot on the top browser controls suddenly changes color, and much more effective than a locked or unlocked padlock in the lower corner. Second, an optional feature launches an alert box whenever you type your eBay username into a non-eBay URL.

It’s not a foolproof system. It only protects against browser-based phishing. It wouldn’t guard against phishing attacks that ask users to update their account within the body of a phony HTML email. We’ve also heard that it’s possible to spoof the toolbar itself, pasting a phony one at the top of a fake browser.                            

Washington Mutual testing the waters by selling CDs with eBay.

In January, Washington Mutual became the first bank to test selling certificates of deposit with eBay. The test was conducted on a standalone co-branded site, rather than being integrated with eBay. Users were required to register to participate in the CD auction. EBay credentials were not accepted nor did the certificates turn up on regular eBay searches

Although not the first to try retail CD auctions, Washington Mutual (Seattle, WA; $289 billion) is the first bank to team with eBay to add legitimacy to the unusual deposit-gathering scheme at  http://www.wamucdauction.com/  a co-branded site, hosted by eBay. The Bid Your Rate test is scheduled to run from Jan. 15 through February, with one-hundred $1000, 6-month CDs auctioned per week, for a total of 600. Apparently WAMU approached eBay with the idea and paid an undisclosed fee for the development and limited marketing to eBay users.

Auctioning CDs was tried by several banks in the late 90s, most notably by PNC Bank which ran auctions on its website for about a year beginning in Sept. 1999. Several other smaller banks, including the now-defunct USA Bancshares, gave it try but it never caught on. But that was also before eBay became a cultural icon.

How it Works

It’s much like an eBay auction but the bidding runs in reverse. The auction begins with a high interest rate and is bid down in increments of 5 basis points. In our tests we found the reserve to be 10% and proxy bidding, as is customary on eBay, was not used. Your bid was automatically entered at the lowest rate you selected.

From our observations, the bank needn’t have worried about using a 10% reserve price since all the CDs were quickly bid down to competitive levels. For example, at mid-day Feb. 9, the 12 CDs closing later that day had all been bid down to 2.05% or 2.10% rates. In comparison, that day http://www.bankrate.com/  pegged the average U.S. 6-month CD rate at 1.23%, with Stonebridge Bank offering the highest at 2%. You could also get 2% with a savings account at ING Direct. In Washington state, Washington Mutual’s website offered a 0.95% rate on 6-month CDs. That CD featured the option of adding to it at any time during the term for the same rate.

Apparently the test was promoted on a limited basis with banners and links on eBay, although we never saw one. However, there is no integration with the eBay search engine. We tested various search terms and found no mention of the WAMU CDs. Washington Mutual issued a press release on January 14, but is not widely promoting the service. We found no mention of it on the bank’s website (Feb. 9) nor did it appear in site search results.

Here’s what you see after entering a successful bid (in this case 10%) that’s met the reserve and taken the lead, at least for the moment. Final winning bid was approximately 2%.

Analysis

At this point, CD purchasing on eBay may be too small a niche for a large bank to profitably serve. However, it might be a good way to attract hot money, without repricing your current deposit base, or to create some interest in your deposit and/or online services. Long-term, we are more optimistic and expect deposit auctions to eventually become a common practice; after all retail investors already purchase T-bills directly from the U.S. government in a similar fashion.

Contacts

Doug Marshall is SVP Deposit Strategy and Product Management at WAMU; Gary Dillabough is VP Strategic Partnerships at eBay.

One of the more promising new developments for companies with extensive Web offerings are custom toolbars, now relatively easy to build with Internet Explorer 5+ extensions. Several top Internet companies have already deployed toolbars including Google, eBay, Yahoo, and Ask Jeeves. Many more are in the planning stages. Also, numerous companies have deployed the toolbars internally to better navigate company intranets.

Our first practical experience with a custom toolbar began last year when we downloaded Google’s version (above). Since then we’ve used it thousands of times and have found it to be a great time saver. Instead of going to its Web site, you simply enter your search term directly into the Google search box embedded in the browser. The toolbar also has a number of other features that we rarely use, such as page rank and site info. It’s currently available in 15 languages, with more in the works.

Ebay is the newest entrant, officially launching its toolbar a month ago following a six-month beta. It was officially launched July 11, but it’s still not widely promoted on the site http://pages.ebay.com/ebay_toolbar . Ebay spokesperson Kevin Purseglove declined to provide usage figures but told us that initial feedback was very positive and the company was thinking about promotional ideas to get the word out. With 43 million users, eBay is rolling out the service slowly so as not to overwhelm its resources.

Like Google, the key feature is the embedded search box. But for power users, that’s just the beginning; you can elect to receive popup alerts whenever a flagged auction is about to end. Users needn’t even be online to receive alerts, they are triggered by the auction end-time. Assuming its acquisition goes through, it shouldn’t be long before PayPal is incorporated into eBay’s toolbar.

The eBay toolbar is the result of a yearlong project by @Hoc  (pronounced at hoc), the Burlingame, CA-based company that has also built toolbars for Wired Magazine, Dreyfus Brokerage, HSBC’s Bourse, Multex Investors and a couple dozen others.

Privately held @Hoc  www.athoc.com  was founded in mid-1999. At that time a number of other companies were building proprietary toolbars they hoped would attract end users and ultimately advertisers to pay the freight. By the time @Hoc launched its product in mid-2001, those efforts had gone by the wayside, victims of the Internet advertising downturn. @Hoc has survived by focusing on private-branded toolbars for company intranets.

Initially the company targeted financial services, experiencing an early win with Dreyfus Brokerage Services. But the Dreyfus toolbar is gone, a casualty of its acquisition by Brown & Company. Other promising discussions with banks such as Wells Fargo, Bank of America, and Bank One were scuttled post-911.

@Hoc believes the best opportunities in banking are on the commercial and small business side. Co-founder Ly Tran sees little need for a consumer-oriented banking toolbar. While we agree the B2B application makes sense, we think a consumer toolbar is just as useful, especially if combined with popular search applications such as Google .

One limitation of customer toolbars and buttons is that most users do not want to hassle with changing browser settings. And for those that attempt to make changes, your tech support lines may be overloaded with questions from novice users. A less labor-intensive, but more expensive, approach to keep your name on the desktop is to ride on the coattails of the Web’s sixth most popular site, WeatherBug. This turnkey program requires little user involvement, reducing confusion and tech

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).

number of eBay auction lots mentioning each payment alternative

Source: Online Banking Report searches of eBay auction listings, 11/99 to 11/00;             n.m. = not measured;    n/a = not available;    e = OBR estimate

No activity on, Pay2Card.com, Yapstone, ePreview, BuyAssured.com, InternetClearing.com, and Remit.com

¹Number of eBay auction listings mentioning the payment alternative; many listings contain multiple payment options and many sellers have multiple listings; search strings exclude “.com” except for X.com; the percentage listed is the percentage of total lots that includes at least one of the payment options listed. ²Beginning March 31, we began adding the wildcard “*” after the search term, for example, X.com*, increasing the number of hits by approximately 10%. ³Prior to April 17, we obtained total eBay listings from the totals posted on its home page; beginning June 30, we derive the total from the category listings on the Browse page. ⁴BillPoint is eBay’s in-house system which rolled out to the entire eBay base in April after six months of testing with selected high-volume merchants; on 2/29/00, Wells Fargo purchased a 35% share of BillPoint from eBay; we did not measure BillPoint volume prior to Feb.; beginning on Apr. 17, we began counting BillPoint lots using the special BillPoint search tool on eBay. ⁵Beginning March 16, we began searching “i-escrow” with and without the hyphen, adding about 15% to its hit count. ⁶In April, Payme.com merged with PayMyBills.com, which in turn merged with PayTrust. ⁷The name was changed from dotbank to PayDirect on searches beginning Aug. 31; dotbank was purchased by Yahoo! on March 23 and relaunched as Yahoo! PayDirect. ⁸Many sellers offer multiple payment methods, so we have estimated the total number of unique lots offering at least one alternative payment method, +/- 10%. ⁹Source: PCData Online, <pcdataonline.com>, 12/00; unique users as measured by PC Data’s 100,000+ member panel . ¹⁰Beginning 7/31/00 also searched on Pay Pal (with a space between); this increased total hits by approximately 5%. ¹¹Beginning 9/30/00 we dropped the wildcard (*) off X.com searches, because it primarily finds “X.com’s PayPal” which are already included in the PayPal total.¹²PayPlace shuttered its P2P business in Dec. 1, 2000, refunding account balances to subscribers

number of eBay auction lots mentioning each payment alternative

Source: Online Banking Report searches of eBay auction listings, 11/99 to 6/00;               n.m. = not measured;    n/a = not available;    e = OBR estimate

No activity on, Pay2Card.com, Yapstone, ePreview, BuyAssured.com, InternetClearing.com, Remit.com, and c2it.com (on 11/25/00, C2it was mentioned in 237 auction listings)

¹Number of eBay auction listings mentioning the payment alternative; many listings contain multiple payment options and many sellers have multiple listings; search strings exclude “.com” except for x.com; the percentage listed is the percentage of total lots that includes at least one of the payment options listed. ²Beginning March 31, we began adding the wildcard “*” after the search term, for example, x.com*, increasing the number of hits by approximately 10%. ³Prior to April 17, we obtained total eBay listings from the totals posted on its home page; beginning June 30, we derive the total from the category listings on the Browse page. ⁴BillPoint is eBay’s in-house system which rolled out to the entire eBay base in April after six months of testing with selected high-volume merchants; on 2/29/00, Wells Fargo purchased a 35% share of BillPoint from eBay; we did not measure BillPoint volume prior to Feb.; beginning on Apr. 17, we began counting BillPoint lots using the special BillPoint search tool on eBay. ⁵Beginning March 16, we began searching “i-escrow” with and without the hyphen, adding about 15% to its hit count. ⁶In April, Payme.com agreed to merge with Paymybills.com. ⁷The name was changed from dotbank to PayDirect on searches beginning Aug. 31; dotbank was purchased by Yahoo! on March 23 and relaunched as Yahoo! PayDirect. ⁸Many sellers offer multiple payment methods, so we have estimated the total number of unique lots offering at least one alternative payment method, +/- 10%. ⁹Source: PCData Online, www.pcdataonline.com , 8/00; unique users as measured by PC Data’s 100,000+ member panel. ¹⁰Beginning 7/31/00 also searched on Pay Pal (with a space between); this increased total hits by approximately 5%. ¹¹Beginning 9/30/00 we dropped the wildcard (*) off X.com searches, because it primarily finds “X.com’s PayPal” which are already included in the PayPal total.

number of eBay auction lots mentioning each payment alternative
 

Source: Online Banking Report searches of eBay auction listings, 11/99 to 6/00;               nm = not measured;    n/a = not available;    e = OBR estimate

No activity on eCharge, Pay2Card.com, Yapstone, ACHex, ePreview, BuyAssured.com, InternetClearing.com, Remit.com

¹Number of eBay auction listings mentioning the payment alternative; many listings contain multiple payment options and many sellers have multiple listings; search strings exclude “.com” except for x.com; the percentage listed is the percent of total lots that includes at least one of the payment options listed.

²Beginning March 31, we began adding the wildcard “*” after the search term, for example, x.com*, increasing the number of hits by approximately 10%.

³Prior to April 17, we obtained total eBay listings the total posted on its home page, beginning June 30, we derive the total from the category listings on the Browse page.

⁴BillPoint is eBay’s in-house system which rolled out to the entire eBay base in April after six months of testing with selected high-volume merchants; on 2/29/00, Wells Fargo purchased a 35% share of BillPoint from eBay; we did not measure BillPoint volume prior to Feb.; beginning on Apr. 17, we began counting BillPoint lots using the special Billpoint search tool on eBay

⁵Beginning March 16, we began searching “i-escrow” with and without the hyphen, adding about 15% to its hit count

⁶In April, Payme.com agreed to merge with Paymybills.com

⁷The name was changed from dotbank to PayDirect on searches beginning Aug. 31; dotbank was purchased by Yahoo! on March 23 and relaunched as Yahoo! PayDirect.

⁸Many sellers offer multiple payment methods, so we have estimated the total number of unique lots offering at least one alternative payment method, +/- 10%

⁹Source: PCData Online, www.pcdataonline.com , 8/00; unique users as measured by PC Data’s 100,000+ member panel

¹⁰Beginning 7/31/00 also searched on Pay Pal (with a space between); this increased total hits by approximately 5%

number of eBay auction lots mentioning each payment alternative

Source: Online Banking Report searches of eBay auction listings, 11/99 to 6/00;               nm = not measured;    n/a = not available;    e = OBR estimate

¹Number of eBay auction listings mentioning the payment alternative; many listings contain multiple payment options and many sellers have multiple listings; search strings exclude “.com” except for x.com; the percentage listed is the percent of total lots that includes at least one of the payment options listed.

²Beginning March 31, we began adding the wildcard “*” after the search term, for example, x.com*, for most terms it increased the number of hits by approximately 10%. The exception was X.com, which doubled after adding the wild card.

³As of April 17, eBay stopped reporting on its home page the total number of lots up for auction; so we began estimating the total number; but as of June 30, we derive the total number of lots from the sub-totals provided on the Browse page.

⁴BillPoint is eBay’s in-house system which rolled out to the entire eBay base in April after six months of testing with selected high-volume merchants; on 2/29/00, Wells Fargo purchased a 35% share of BillPoint from eBay; we did not measure BillPoint volume prior to Feb.; beginning on Apr. 17, we began counting BillPoint lots using the special Billpoint search tool on eBay

⁵Beginning March 16, began searching “i-escrow” without hyphen, adding about 15%; currently offering escrow transactions of under $1,000 for free.

⁶In April, Payme.com agreed to merge with Paymybills.com

⁷dotbank was purchased by Yahoo! on March 23 and will be relaunched later this year as Yahoo PayDirect.

⁸Many sellers offer multiple payment methods, so we have estimated the total number of unique lots offering at least one alternative payment method, +/- 10%