Dell accepts PayPal

Have you heard? Dell now accepts PayPal as a payment option on their website. Considering that Dell is one of the largest online retailers in the United States, this could bring PayPal some strong volume and healthy margins. If you’re interested in learning more about how PayPal makes money, than read on. Otherwise, you may find the following extremely boring.

Since the average price of a computer package from Dell is over $1500, it’s likely that PayPal users will be funding their transactions via their bank accounts. That’s good news for PayPal. PayPal’s margins vary depending on the funding mix of each payment. Ach and balance (stored value) payments produce a good margin, while credit card funded payments bring in a comparatively low margin. High dollar transactions (like a laptop) increase the likelihood of an ach funded transaction based on PayPal’s credit card funding limits, and Dell transactions are probably considered to be fairly low risk for PayPal. A low risk payment with a high dollar amount, that’s funded via ach is good business for PayPal. Perhaps even more important, is the credibility Dell could bring to PayPal’s brand. More on that later this week… Phew, that was pretty boring…

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