Apple (NASDAQ:AAPL) is making its iTunes service a little more user-friendly by teaming up with eBay's (NASDAQ:EBAY) PayPal to facilitate payments. Given the holidays, consumers' possible credit-card burnout, and the large customer bases that use both iTunes and PayPal -- gosh, where's the mistletoe?
Through the deal, announced Friday, the first half-million PayPal members to use the service to purchase music through iTunes before March will get five songs free. Given the fact that one might surmise that a lot of folks might get some freshly gift-wrapped iPods here soon, it seems like a good move for both companies.
eBay has recently touted the statistic that one in three U.S. Internet users has a PayPal account. (The latest total count is 56 million PayPal users worldwide.) Indeed, PayPal has definitely gone further than its roots as a payment method for its parent company's online auctions. Smaller sites that accept PayPal payments have become more prevalent, and PayPal is also available for users to pay bills or send money to anyone with email access.
While PayPal allows users to pay via their credit cards, its real usefulness is that it allows people to use funds directly from their checking accounts or allotted funds. The latter two methods, of course, are the way a Foolish online shopper really wants to conduct Internet commerce, unless he or she is certain of paying off that balance on the monthly credit card statement.
Indeed, PayPal is positioned to benefit from increased consumer attention to the dangers of credit card debt. It's become clear to many that too much credit card use is a trap, and online shopping has probably helped a lot of people venture ever higher toward their credit card limits. (Speaking of spending, if you're looking to pare down your debt, our Credit Center can help.)
In addition, PayPal has marketed itself as a secure vehicle for people who are nervous about sending their credit card information over the wilds of the Internet. (The PayPal name has been used as a common vehicle for high-profile "phishing" scams, although it's by no means alone -- large banks have often had their names hijacked by con artists.)
The deal with PayPal does seem likely to help Apple cull a whole slew of consumers who are accustomed to using PayPal through eBay, and that could add up to a lot of extra love for iTunes. However, in my opinion, the deal also highlights the possibilities for PayPal -- to become a ubiquitous method of online payment offered across Internet sites while helping to transform the Internet from a credit-heavy to a cash-centric society.
Here's more Foolishness about Apple and eBay:
- Can Sony (NYSE:SNE) take on Apple? And moreover, can Apple say cheese?
- Is eBay killing us?
- What -- eBay apologize?
eBay is a Motley Fool Stock Advisor pick. Find out the latest picks by trying the service risk-free for six months.
Alyce Lomax does not own shares of any of the companies mentioned.
