ProPay and eBay: Good for ProPay!

This from

How ProPay Plans to Leverage Its Position in eBay Transactions

29, 2008) ProPay Inc., the only third-party payment processor chosen by
eBay Inc. to handle transactions under its new all-electronic payment
policy, says it is looking to the arrangement for big growth but hasn’t
yet worked out any projections for how much volume it will generate.
“We see this as a growth opportunity,” says Greg Pesci, executive vice
president of business strategy for Orem, Utah-based ProPay. “It’s ready
to scale.”

What Pesci
and Bryce Thacker, executive vice president for sales and marketing,
are looking to “scale” is a payment-processing product that will be
integrated into eBay’s checkout process, so that buyers won’t leave the
eBay site. It will offer eBay sellers a merchant account on which they
can accept credit and signature-debit cards, along with an encrypted
card reader that works with ProPay’s virtual terminal for card-present
transactions. Pesci and Thacker say pricing will be a transparent
discount rate plus a transaction fee. Exact pricing, they say, will be
established by late October, when the new eBay policy on electronic
payments goes into effect (Digital Transactions News, Sept. 16).

product will include two levels of service, dubbed eAuction and
eAuction Pro, though eAuction will be offered first, followed by Pro
within a couple of months. The former is aimed at smaller sellers,
includes basic card processing for eBay sales only, and carries a $24
annual fee. Rebate credits are available for sellers whose monthly
volume equals or exceeds $3,000. Pro includes this plus electronic
invoicing, a virtual terminal, and support for phone orders.

Ebay said
in August it would no longer allow sellers to solicit or promote checks
or money orders for payments after late October. In addition, it
announced an electronic-payments program that requires processors to
integrate their products with eBay’s checkout. This summer, it began
talking to processors who are listed in its so-called
acceptable-payments policy about becoming part of the program. This
month, an eBay executive told Digital Transactions News ProPay, which
has been handling eBay transactions for about eight years, and eBay’s
PayPal unit were the only processors that were ready, though eBay is
still talking to other processors and hopes to recruit several more.

Pesci and
Thacker say the development effort to get ready was significant for
ProPay, which is an independent sales organization for Wells Fargo
& Co. Some two dozen staffers out a head count of about 125 worked
on the project after eBay’s call came in July, they say. “We’ve been
handling it internally, and there are still some things ongoing at the
moment,” says Pesci. “It proved to be a significant commitment, but we
feel good about having done it.”

electronic transactions on the giant online marketplace to
itself—except for PayPal—should be worth a hefty boost in volume, but
Pesci and Thacker say they haven’t yet been able to work out a
projection. “It’s tough to tell at this time,” says Thacker. “We’ve had
projections all over the board, though as a private company we probably
wouldn’t release that.” Nor will ProPay reveal how many merchants it
services or the break down in merchants between e-commerce and physical
point of sale, though Thacker says “most of our work is in
card-not-present transactions.”

Still, both
men are mindful that eBay expects to bring on other processors. “That
will be healthy for everyone,” Thacker says, though he adds that ProPay
hopes to have the market to itself “as long as possible.”

What do you think? Will ProPay’s volume increase dramatically? They are certainly in a position to benefit from eBay’s business volume. Will sellers choose ProPay over PayPal as a form of protest to having to pony up more fees to eBay? Or will eBay buyers and sellers jump to a different venue, like OnlineAuction and CraigsList?

I know I will be watching the wires for new developments … and for ProPay’s pricing.

— Karen