(20 April 2010) Buyers and sellers on bobshop, South Africa’s largest consumer-to-consumer online auction site and marketplace, can now transact with each other using PayPal.

In South Africa, PayPal is linked with First National Bank. This gives a specifically local flavour to the widely used international online payment system. PayPal has more than 100 million accounts in 190 countries and regions and is otherwise a wholly private enterprise, not connected with financial institutions.

PayPal is currently not offered as one of the default payment methods on Bob Shop. In order to be able to receive PayPal payments for items sold on the site, sellers need to request this option.

“It has to be emphasised that all PayPal transactions are done in American dollars”, says Bob Shop Managing Director Andy Higgins. “South Africans can’t use PayPal to trade in Rands. That is why PayPal probably will not be used widely in local transactions”.

Higgins adds that about 98 percent of all transactions concluded on Bob Shop are done within national boundaries. The site has over 400,000 registered users and over 370,000 items listed for sale at any moment. The value of goods traded each month reaches about R30 million.

For domestic use, Bob Shop has developed bobPay-EFT, a fast internet payment method covering all four big South African banks (Absa, FNB, Nedbank and Standard Bank), which is free of charge.

PayPal charges sellers between 2.9 and 3.9 percent of the value of the good, plus a flat fee of about 0.30 US cents per transaction; on top of that, FNB charges 1.5 percent and implements a PayPal-specific dollar-Rand exchange rate. South Africans receiving PayPal payments are required to withdraw them (in Rands) within 30 days. All transactions are monitored by the South African Reserve Bank, which entails some additional administration.

“For all its specifically South African limitations, we expect that the introduction of PayPal will be welcomed by our local sellers with international ambitions, as well as by our international sellers. Hopefully, this will lead to an increase in trading across national borders”, says Higgins.

He also points out that some buyers, especially online-shopping-shy ones, might be more likely to buy from sellers who accept PayPal payments, because this system has built-in safety measures similar to credit card charge-backs: “Unfortunately, this potential boost to South African e-commerce will be largely lost due to the fact that PayPal-South Africa does not allow transactions in Rands.”

“In any case”, concludes Higgins, “the introduction of PayPal to the country is to be welcomed as one more indicator that South Africa is becoming a part of the global e-commerce arena”.