eBay Discontinues Bill-Paying Service

The company cites lagging popularity of the PayPal feature.
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eBay's

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growing PayPal online payment service has discontinued the bill-pay service it offered customers, even as the company seeks to push PayPal beyond the eBay marketplace platform to more users.

PayPal suspended the BillPay function on Aug. 1 after notifying users to find alternative means to pay their bills. "We found it wasn't as popular as other features the people were using," said Sara Bettencourt, a PayPal spokesperson. "We decided our resources would be better used on more popular programs" such as buyer protection programs, which are a bigger concern for users.

Feedback received during eBay's recent eBay Live jamboree, where sellers on its marketplace gather once a year, and from other users, indicated low interest for BillPay. Web sites run by banks and other companies offer bill-paying services, but charge a monthly fee that often exceeds the cost of postage when the checks are sent by mail.

PayPal has been a strong engine of revenue growth for eBay. PayPal's revenue grew 49% to $237 million in the company's recent second quarter, nearly double the 28% growth rate of eBay's core U.S. marketplace operations. eBay executives tied the PayPal growth in good part to its efforts to push the service beyond the eBay platform for a wider acceptance of merchants, both online and off.

eBay is working to shape PayPal into a method of online payment that it hopes will be as common, if not more common, than credit cards. While the service aims to offer less risk and lower cost for buyers and sellers, some users have complained of what they consider sluggish customer support and often inflexible terms, while other users receive emails purporting to be from PayPal that instead fraudulently fish for their passwords.

While seeking to push PayPal into an all-in-one payment for shopping, the removal of the BillPay feature appears to be a step away from that goal.

"This isn't to say we wouldn't consider it again," said Bettencourt. "We might think about it again down the road if there are a large number of people who want it."

Shares of eBay were recently off 70 cents, or 1.6%, to $43.85.