Transaction-volume growth slowed somewhat in the second quarter at online processor PayPal Inc., according to statistics released today by parent company eBay Inc., with the number of payments processed reaching 113.2 million, up 2.5% from the first quarter. This follows two consecutive quarters of double-digit growth, but improves on a negative 2% slump the 7-year-old company sustained in the same quarter of 2004. Also revealed in the numbers, released as part of online auctioneer eBay's second-quarter financial filing, is PayPal's steady growth in both total and active accounts. The processor now boasts 78.9 million total accounts, up 7.3 million from the first quarter and 28.5 million from the year-ago period. Active accounts, which are those accounts involved in at least one transaction during a quarter, grew by 1.8 million to 22.9 million, up from 15.5 million a year ago. PayPal logged $6.47 billion in payment volume in the April through June period, up 4% over the first quarter and 49% over 2004's second quarter. As a result, the company's average ticket inched up to $57.16 from $55.98 a year ago. But volume stemming from eBay's massive auction community as a fraction of PayPal's overall activity remained steady at 70%. There has been little change in this percentage even though PayPal has launched several marketing and processing initiatives in the past nine months to gain more business among e-commerce merchants off eBay, the most recent being a new set of services offering merchant accounts, virtual terminals, and other products to small and medium-size online merchants (Digital Transactions News, June 28). PayPal's loss rate dipped dramatically in the second quarter, to 0.19% from 0.30% in the first quarter. At the same time, its increasing volume brought processing efficiencies that showed up in the numbers. Its revenue as a fraction of dollar volume was 3.67%, while its processing costs were 1.08%, for a spread of 259 basis points. The comparable spread a year ago was 230 points.
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