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PayPal Inc. this year plans to integrate parent eBay's Inc.'s Bill Me Later system with its existing online payment service. Several merchants support both systems as separate payment options; PayPal wants to combine them into a single payment option, which it expects will encourage more merchants and consumers to use Bill Me Later. EBay acquired Bill Me Later last fall. "When a customer chooses to pay with Bill Me Later, we pay no interchange, and we benefit from the economics of credit," such as larger purchases, Scott Thompson, PayPal president, said during an analyst presentation yesterday . "They can choose to pay immediately with PayPal or pay later with Bill Me Later." PayPal is also taking steps to allow merchants to experiment with the ways they offer its services by letting other companies create applications to accept PayPal payments. "Later this year we're going to open up our development platform," Thompson said. "As a technologist, I can tell you this is a really big deal. … We can decrease our own development costs, and the best part is we can enable millions of developers around the world to build profitable and sustaining businesses with PayPal." PayPal's technology long has focused on traditional retailers that sell on and off eBay, but there is increasing demand for payment systems that can function outside those constraints. An open development platform could prompt a wide variety of new users in new markets creating custom tools to accept transactions through PayPal, Thompson said. Nick Holland, a senior analyst at Aite Group LLC of Boston, says eBay has set realistic goals for PayPal. "They are quite clearly becoming the de facto brand for online payments, … considering how short they've been around. In fact, the reputation they've established is pretty astounding." The Bill Me Later purchase will prove key to PayPal's ability to compete with the entrenched payment brands, Holland says. Bill Me Later "sets them up as a direct threat to credit cards because they're offering credit with that. Essentially … it's become a much more viable alternative," he says.
