(October 21, 2005) PayPal Inc. may be trying to process more transactions for e-commerce sites independent of its parent company, giant online auctioneer eBay Inc., but its latest quarterly figures indicate it still depends on eBay's auction activity for 69% of its transaction volume, a ratio that has remained virtually unchanged for months. PayPal this summer introduced a new product aimed at small online merchants that includes merchant accounts for credit card processing and streamlined clickthrough for PayPal accountholders. Last year, it began a push to sell larger online merchants on accepting PayPal, an effort supported by an application programming interface designed to simplify integration of the payment mark. Both efforts have been aimed at growing PayPal's off-eBay activity.

At the same time, PayPal saw its overall transaction volume balloon 41% in the third quarter, to 117.4 million, over the year-ago period, in part fueled by a like increase in active accounts, to 24.5 million. The 7-year-old company now boasts a total of 86.6 million accountholders, up almost 30 million in the past year, according to figures released this week by eBay as part of its quarterly report. Dollar volume processed, meanwhile, grew 44%, to $6.7 billion, yielding an average ticket of just under $57, up about a dollar from a year ago.

The spread between the company's transaction revenue rate (3.6%) and its expense rate (1.11%) improved in the quarter to 2.49%, compared to 2.29% in last year's third quarter, owing mainly to the fact that transactions are becoming cheaper. Its expense rate a year ago was 1.3% while its revenue rate has changed little. Its loss rate came in at 0.24%, up five basis points from the second quarter but little changed from a year ago.