Wells Fargo & Co. has a new service that processes Internet credit card transactions in four different foreign currencies, and it said the first customer is PayPal Inc. - once a rival to the Billpoint service in which Wells had a stake.
The San Francisco company said it began handling Internet transactions in euros and pounds sterling for PayPal in October. The next two currencies - Canadian dollars and Japanese yen - went live in mid-November.
PayPal, the person-to-person Internet payment provider, is now a subsidiary of the online auctioneer eBay Inc., but until recently it was an independent company that competed with Billpoint, a defunct eBay/Wells Fargo venture. PayPal has been trying to grow internationally, but the processing of currency conversions has been a bit of a sticking point.
PayPal announced its multiple-currencies capability last month. Its customers now can send, receive, and hold funds in euros, pounds, or U.S. dollars. Before that, all PayPal transactions were conducted in dollars, even though PayPal has members in 38 nations.
Debra Rossi, the executive vice president of Wells Fargo's business Internet services, said Wells' multicurrency service, unveiled this month, "continues our strategy of being the No. 1 payment provider on the Internet. For some of those Internet companies that haven't been doing international, maybe this will give them the confidence."
It primarily targets middle-market companies that do some business online but that lack the global reach to require full-blown foreign exchange services.
Ms. Rossi said Wells could deliver economies of scale to online merchants, reducing their cost of handling crossborder sales. She also cited the heightened risk of credit card fraud in international transactions.
"Anybody can do the payment piece," she said. "You want to make sure you do it securely."
Wells says that it processes 95% to 99% of Internet person-to-person payments - largely because of its role as PayPal's payment processor - and that it has an 11% share of online consumer transactions processed in the United States. That market share has enabled the company to build an enormous online-transactions database that it can use as a selling point with businesses. "We can manage [fraud] for the merchant," Ms. Rossi said.
Wells plans to add debit payments to the service. Ms. Rossi said she could not say when it would do so.
Sravanthi Agrawal, a spokeswoman for Mountain View, Calif.-based PayPal, called the Wells service a boon to her company. "You want to transact in your local currency," she said.
Until now, participants in online auctions, for instance, could only settle their transactions in dollars, even if the buyer was in Germany and the seller in France, Ms. Agrawal said: "It just makes things easier for them."
PayPal announced its service Oct. 22. Now, 60% of its British users are doing transactions in pounds, and 40% of users in the 12 euro-zone nations are transacting in euros, Ms. Agrawal said.
James Van Dyke, the founder and principal of Javelin Strategy and Research in Pleasanton, Calif., said Wells' service could simplify life for retailers wishing to do international online transactions.
"While there are ways that merchants can do that today, it is either so expensive or so complex," he said. "People either choose not to do it or they incur a lot of costs. This service allows buyers to shop online using their local currency and payment method, with minimal cost or complexity to the merchant."
