The internet is a treasure house of consumer goodies. Now retail behemoth eBay has snapped up the popular bill-paying service, PayPal. Angus Kidman reports.

Published in The Bulletin, July 23 2002

You can find almost anything at an online auction site. Want obscure Smurf figurines, or trim panels for a Pontiac GTO car? No problem. Bidding is the easy part, but paying can be a royal pain. Queueing for a money order or trusting the postal service with cash kills the instant appeal of buying online.

PayPal, an American service that lets individuals and companies send payments to each other using credit cards, plugged this gap -- at least for Americans -- back in 1999, and quickly grew. Today it boasts 16 million regular customers, with 60% of its business coming from eBay. It's no surprise, then, that eBay wanted in on the payment action. Last week, it announced a $US1.5bn ($2.66bn) stock-swap PayPal buyout. Billpoint, eBay's in-house rival, will be shut down following the merger, and PayPal payments will be available directly from auction listings.

It has been possible for Australians to use PayPal with eBay auctions but we've had to jump through more hoops and pay higher fees than the Americans. The merger, which won't go through until the end of the year, won't change any of that. "Initial efforts will focus on the US," says Sharon Scheepers, marketing director for eBay Australia.

Even without PayPal to help it along, eBay is one of the few real dotcom success stories. It has been in the black since 1998, and posted profits of $US54.3m in its most recent quarter. eBay Australia hasn't quite reached those dizzy heights but has passed break-even point, a rare accomplishment for any local internet business.

To move the numbers along, eBay Australia is aggressively promoting local sellers. If you search on the site, the default setting is to only show items located within Australia, rather than drawn from eBay's full global listings. "We're very much an Australian site, and our number one objective is to promote items for an Australian audience," says Scheepers. "If a first-time user did a search and got a lot of items priced in US dollars, that could be offputting. But the option [for global searches] is there if people want it."