PayPal Introduces New Pricing for Digital Goods

SAN JOSE, Calif. — Payment processor PayPal yesterday introduced a new “micropayment” pricing structure designed to help merchants to sell low-priced goods, including wireless content and ringtones.

“Customers want to be able to pay [for items] as they go,” Peter Ashley, director of PayPal’s micropayment business, said, adding that the new pricing tier will make it easier for merchants to offer goods on an a la carte basis without requiring customers to sign up for subscriptions.

Standard PayPal fees are based on percentages of the price of an item, which can run anywhere from 1.9 to 2.9 percent, plus a fixed transaction fee of 30 cents. The new scheme charges merchants 5 percent and a fixed rate of only 5 cents.

According to Avivah Litan, an analyst with Gartner Research, the lower flat-fee could save merchants 40-60 percent per transaction on average.

Dan Schatt, senior analyst at Boston-based research firm Celent, says that digital content sales are currently dominated by subscription-based services, most notably gambling and adult entertainment sites. The switch, according to Schatt, could have a major impact on the sale of one-off items priced less than $3, such as mobile phone wallpapers and ringtones.

“What PayPal can do by creating this new pricing structure is develop relationships with a lot of small- to mid-sized online merchants that want to ensure that they have as many options as they possibly can to facilitate payments by consumers,” Schatt said.

PayPal in recent years cut off adult transactions through their terms of service agreements. Nevertheless, some online adult companies, particularly those in the amateur market, still use PayPal with the risk of having their accounts closed and funds seized.

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Adult Industry Educational, Networking Platform 'Imperfectly You' Launches

Imperfectly You, an educational and networking platform for adult industry workers, has officially launched.

Segpay to Launch News Network for High-Risk Merchants

Segpay has announced that it will launch the Segpay News Network (SNN) on April 15.

Age Verification Watch: Patching the Holes

This roundup provides an update on the latest news and developments on the age verification front as it impacts the adult industry.

Pineapple Support to Host Autism Spectrum Support Group

Pineapple Support is hosting a free online support group for performers and creators who are, or suspect they may be, on the autism spectrum.

ImLive Launches Revamped Member Loyalty Program

Cam platform ImLive has revamped its member loyalty program.

GoFundMe Set Up for Danny Ferretti's Medical Expenses

A GoFundMe campaign has been set up for Fangear founder Danny Ferretti, who requires extensive lung surgery.

Byborg Acquires Cuties AI

Byborg Enterprises has acquired adult artificial intelligence startup Cuties AI.

Irish Government Releases Report on Sex Work Decriminalization Legislation

The Irish government has released a report reviewing a 2017 law that decriminalized sex work across the country.

Texas Bill Would Require Age Verification for Online Sex Toy Sales

A new bill in the Texas state legislature would require online retailers to implement age verification of purchasers before selling “obscene devices” to anyone in that state.

New York Assemblyman Proposes Banning the Term 'Sex Work'

Republican New York Assembly Member Brian Maher has introduced a bill to prohibit the use of the term "sex work" in government documents.

Show More