Bill Me Later suffers losses. eBay stays calm

Credit losses at Bill Me Later online payment processor have been announced to have reached 8.75% for the fourth quarter of 2008 by eBay released statistics. As the credit loss for the period has become the highest rate recorded during the year, some analysts have doubted eBay’s benefit from the purchasing of the former for $820 million. 

However, Bob Swan, chief financial officer at San Jose, eBay, stated that the rate was in line with expectations and “much less than at other credit issuers.” He also said due to Bill Me Later issuing credit for each discrete transaction, the company is able to rein in credit extensions more readily. Projections on expanding Bill Me Later overseas have also been revealed. One of the main advantages Bill Me Later brings to eBay and PayPal, is that it is accepted by approximately 1,000 online merchants already. 

Even with the facts provided above, PayPal remains a profitable unit of eBay. In 2008 revenue of the company made 3.78% of transaction volume, with a margin of 2.29% (61% of revenue, after deducting expenses and transaction losses). Active accounts globally have risen to 70.4 million (growth of 23% from 2007). Transaction volume made 252.2 million (growth of 24%). 

Source: digitaltransactions.net