Google rumours hit new PayPal service

PayPal has unveiled an enhanced payment service designed to appeal to online retailers.

The service aims to increase the ease of use for shoppers, who will no longer have to leave the merchant's website to process their payment via PayPal.

For merchants the offering increases control over checkout procedures by processing payments while passing on the shipping information.

PayPal, a subsidiary of eBay, launched Website Payments Pro on the eve of the eBay developer conference scheduled to kick off on Tuesday in San José, California. The event is followed by Ebay Live 2005 on Thursday.

The new service is more expensive than PayPal's current professional offering, but could have an appeal to merchants seeking to process credit card payments without signing up for special merchant accounts with credit card providers.

In addition to processing online credit card payments, PayPal also offers accounts to consumers. Using an email address as an account number, the service lets individuals transfer money between accounts across the world.

PayPal handled $6.2bn in online payments in the first quarter of this year for its 71.6 million account holders.

The service is predominantly used to pay for items bought on eBay. The transaction fees accounted for $233.1m, 23 per cent of eBay's revenues for the first quarter.

The market for online payment providers suffered a frenzy of speculation last week when rumours emerged that Google is contemplating the launch of its own service.

Such a move was discussed at a conference for investors organised by investment firm Piper Jaffray. Google did not make a presentation at the event and declined to comment on the rumours.

Sources familiar with the matter acknowledged Google's plans to The New York Times and the Wall Street Journal.

The rumours failed to address the type of service that Google is considering. The offering could be limited to an online vault where users store credit card and bank account numbers, or could expand to actually handling payments for organisations.