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Wells Fargo to Process EBay Billing Transactions

E-commerce: Banking firm takes a 35% stake in auctioneer's Billpoint unit, a move that will allow more payments by credit card.


SAN JOSE — Wells Fargo & Co., the nation's seventh-largest bank holding company, has taken a minority stake in online auctioneer EBay Inc.'s Billpoint subsidiary in a move that will allow a greater number of buyers to pay by credit card.

EBay, which brings together buyers and sellers for everything from luxury cars to Pez dispensers, had previously offered links to outside companies who could process credit card transactions, though this will be the first time credit card payments can go directly through EBay. Most transactions were being completed using money orders or checks.

Under terms of the deal, in which Wells Fargo takes a 35% stake in Billpoint, the bank's bill-processing technology could speed up transactions considerably. Deal closings, which could take a week or more, could become almost instantaneous if buyers and sellers utilize the process.

"EBay's business can move that much faster when you take out the biggest friction in the system," said analyst Daniel Ries at CE Unterberg Towbin, who rates EBay "strong buy." "Can you imagine if Macy's didn't take credit cards?"

Wells Fargo's stake in Billpoint, the cost of which was not disclosed, also could position the bank holding company as a key player in the race to process all forms of billing over the Internet.

Research has found consumers are clamoring for such services as they increasingly conduct business and personal transactions on the Web. Consumers also appear willing to pay a reasonable fee for such convenience, offering the potential for huge profits to the company or companies that capture the market.

"The real value we see in this is to be the Internet's payment processor," said Dick Kovacevich, president and chief executive of Wells Fargo. "Ninety percent of what we're doing is making sure that payments can be done fast and securely across the Net."

Several smaller companies already offer third-party bill processing for consumer-to-consumer or consumer-to-small-business transactions. And several consortiums are rolling out services that allow banks or brokerages to receive merchant billing information and to debit payments from customer accounts in a seamless process for the consumer.

EBay said Wednesday that it will invite certain groups of sellers to sign up for the program and then will make it available for all U.S. sellers within the next few weeks to give the auction site a chance to work out any potential problems.

Wells shares rose $1.63 to close at $34.69 on the New York Stock Exchange, and EBay shares rose $5.88 to close at $149.25 on Nasdaq.

Separately, EBay said it's not planning to make a bid for Sotheby's Holdings Inc., disputing a report in a British newspaper. The Independent in London reported Tuesday that EBay was expected to offer $1.6 billion for Sotheby's, citing unnamed sources.

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