PayPal as an Additional Payment Option
How Merchants Can Benefit
When They Accept PayPal on Their Site
The PayPal Value Proposition




105M PayPal accounts — 47% growth

Significant online payment mark

Adding 8M+ accounts per quarter
PayPal user accounts
47%
YoY
growth
$35B annualized payment volume — 41% growth

10% of US e-commerce

5% of global e-commerce
87
79
72
Accepted in 55 countries & 6 core currencies

14% of payment volume from International

Core currencies: $US, €, ¥, £, $CA, $AUS
Processes 1.2M+ transactions daily
12
8 10
7
5
1 2 3
14
105
96
1719
23
27
32
35
40
64
45
50
Millions
57
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2000
© 2006 PayPal Inc.
2001
2002
2003
2004
2005
2006
PayPal Can Drive Incremental Volume
PayPal Transaction Platform
Transaction Volume
Over
$32 Billion/Year*
Buyer Interest
Merchant Results
1. Customer
Preference &
Convenience
1. Satisfied Customers
2. Safety & Security
3. Increased
Conversion
3. Multiple Methods “Wallet Effect”
2. New Customers
4. Increased Sales
5. Lower Costs
© 2006 PayPal Inc.
*Annualized volume based on Q4 2005 TPV
Offering PayPal Can Drive Incremental Sales

Websites that offer PayPal as a way to pay reach a wider audience
and can provide an uplift in sales on their site.
 For small-to-medium sized businesses, accepting PayPal as a payment
option in addition to credit cards increased sales an average of 14%*
 Over 80% of the surveyed merchants reported a sales increase, and
the increase typically started within two months*
 The increased sales were incremental lift, and did not take away from
current credit card volume*
 According to an Internet Retailer study, 42.2% responded that
accepting alternative payments (such as PayPal) have increased sales+
* Source -- Q1 2006 PayPal phone survey of 110 small and medium
sized business doing a minimum of $120K in annual online sales
+ Internet Retailer, November 2005
%
14
average
sales lift
© 2006 PayPal Inc.
PayPal Drives New Customer Acquisition
“83% of customers paying with PayPal were new
customers to PETCO.com”
Heather Blank
Dir. of Business Development and Marketing, PETCO.com
“30% of PayPal transactions generated new
customers for Go Daddy”
Michael Zimmerman
CFO, Go Daddy
“86.8% of the people who paid with PayPal were
new customers to Tiger Direct…”
Lonny Paul
Director of eCommerce, Tiger Direct
© 2006 PayPal Inc.
PayPal Users Shop More Frequently and Spend More
than Non-Users
Frequency of Purchasing Online
Average Monthly Spending Online
(once per month or more)
$130.00
51%
$125.40
50%
$125.00
$120.00
40%
$115.00
30%
$110.00
$106.20
25%
20%
$105.00
10%
$100.00
0%
$95.00
PayPal Users
PayPal User
Non-PayPal User
Source:
August ’05 IPSOS RDD (random direct dial) survey of 800 past 90-day online shoppers
Knowledge Networks RDD Panel, Dec. ’04; past 90-day online shoppers
© 2006 PayPal Inc.
Non-Users
Major Online Payment Option
PayPal is more popular than debit cards for online payments
© 2006 PayPal Inc.
Online shoppers are concerned about identity theft
% of PayPal shoppers who worry about
…
Identity theft
65%
Bank account info stolen
60%
Credit card info stolen
59%
Spyware on computer
55%
Fraudulent emails
53%
Virus on my computer
49%
Not receiving item purchased
Receiving an item different from expected
Source: PayPal, Q3 2005. Survey of PayPal buyers. N = 584
© 2006 PayPal Inc.
38%
30%
Leading Global Brands Accept PayPal
© 2006 PayPal Inc.
PayPal as an Additional Payment Option now
Integrated with the Payflow Gateway
 Benefits of using the Payflow gateway integration:
Easier integration that leverages Payflow Pro SDK
Consolidated reporting
“Reference Transaction” functionality on credit card payments
“Recurring Billing” functionality on credit card payments
Combination of gateway’s Fraud Protection Service and PayPal’s
internal fraud models
 More options
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 SDKs for additional operating systems and programming languages
 Reporting API for retrieving scheduled and ad hoc reports
© 2006 PayPal Inc.
PayPal Express Checkout Banner in Manager -What a Merchant Sees
© 2006 PayPal Inc.
Adding PayPal as an Additional Payment Option

Two Integration Options
1. PayPal Express Checkout
2. PayPal Standard Checkout
© 2006 PayPal Inc.
PayPal Express Checkout
 PayPal’s Express Checkout lets your customers pay quickly
and conveniently.
 With PayPal Express Checkout, your customers get the fastest,
most streamlined PayPal checkout experience. PayPal Express
Checkout is highly recommended for merchants familiar with
API programming.
 Your customers select items to purchase and proceed to check
out. When your customers choose to pay with PayPal, they are
securely transferred to PayPal.
 Your customers also have the option of using your existing
checkout for credit card payments.
© 2006 PayPal Inc.
PayPal Express Checkout



With PayPal Express Checkout, customers who choose to pay with
PayPal are sent to secure PayPal-hosted pages to approve using
PayPal to pay. The PayPal-hosted pages can be customized to
match the look and feel of your website.
Once your customers approve the use of PayPal, they are
automatically returned to your website to complete their order and
pay. PayPal accepts, authorizes, and processes the payment
instantaneously.
Once the payment is successfully processed, the funds are
deposited directly into their PayPal account and can be withdrawn
or transferred to their bank account easily.
© 2006 PayPal Inc.
Benefits of using PayPal Express Checkout
 Can be used as additional payment method with an existing
merchant account, and as a stand alone solution for
merchants without a merchant account
 Available for domestic and international merchants (7/06) to
sell in US, Canadian, Australian, Euros, Pounds, and Yen.
 Economical pay as you use it model
 Instant processing and there is no approval process
 Integrated to the Payflow Pro gateway
 Merchant owns more of the check out and confirmation
pages
© 2006 PayPal Inc.
PayPal Express Checkout Flow
API
API
API
© 2006 PayPal Inc.
PayPal Express Checkout – Merchant Placement Options
PayPal placed before shipping and billing address.
Checkout
CHECKOUT
Shipping
Billing
CONT
PayPal
Login
LOGIN
Review
Order
Order
Done
ORDER
PayPal
Review
CONTINU
E
Payment
request
made to
PayPal.
PayPal placed with other payment methods.
Checkout
CHECKOUT
Shipping
CONT
PayPal
Login
LOGIN
© 2006 PayPal Inc.
Billing
CONT
PayPal
Review
CONTINU
E
Review
Order
ORDER
Payment
request
made to
PayPal.
Order
Done
Example: PayPal Express Checkout
• In Express Checkout,
PayPal as an
Additional Payment
Option can be placed
before the shipping
and billing address
information is
collected.
• The buyer uses the
shipping address and
financial info stored in
PayPal and PayPal
passes the shipping
address to the
merchant.
© 2006 PayPal Inc.
PayPal Express Checkout Flow
© 2006 PayPal Inc.
PayPal Standard Checkout Flow
HTML
© 2006 PayPal Inc.
HTML
PayPal Standard Checkout
• PayPal Standard
Checkout is when PayPal
is listed with other
payment options.
• It can be with option
buttons, sectioned off, or
in a drop-down list.
© 2006 PayPal Inc.
Summary: PayPal as an Additional Payment Option -Benefits to Your Merchants
 Increase Acquisition & Drive Incremental Sales
Offer a global and trusted payment solution
Access PayPal’s growing user base worldwide
Benefit from strong brand association initiatives
Attract customers who do not have a credit card or are located
internationally
 Increase incremental sales by offering PayPal as a way to pay
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Increase Conversion Rates
 Fast and Easy Payment Flow
 Address users’ security concerns
 Customers shop without sharing financial information
 Reduce costs of Service
 Reduce charge-backs
 Reduce fraud
 Reduce Customer Support requirements
© 2006 PayPal Inc.