Digital Transactions Authoritative, insightful and timely information for payments professionals
PayPal Inc. saw the volume of transactions it handled in the fourth quarter last year soar 46%, to 99.6 million, over the same period in 2003, while dollar volume climbed fully 51% to $5.6 billion, according to data released this week by the online transaction processor's parent company, eBay Inc. San Jose, Calif.-based PayPal also reached 63.8 million accounts, up 58% from the end of 2003. Of these, 20.2 million are active, or accounts that sent or received at least one payment during the quarter, an increase of 53% over the number of active PayPal accounts at year-end 2003. Accountholders include both buyers and sellers. Holiday spending online may have been kind to PayPal, but the company's operating statistics also reveal that some 71% of the company's fourth-quarter dollar volume was derived from auction activity, primarily on eBay. This number has remained steady for months, despite PayPal's decision last year to begin broadening its reach beyond auction transactions to spontaneous retailing on the Web (Digital Transactions News, Sept. 30, 2004).But the 6-year-old processor's core business is proving lucrative, with transactions generating an average revenue of 3.57% of total payments in the critical fourth quarter, little changed from previous periods. This compares with an expense rate of 1.27%, also virtually static across recent quarters. PayPal's loss rate, meanwhile, jumped somewhat in the last three months of 2004, to 0.31% of payments, up from 0.22% in the third quarter but equal to the rate it experienced in the year-ago quarter. For the year, PayPal handled a total of 339.6 million transactions worth $18.9 billion, for an average ticket of $55.70.
