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ProPay enters person-to-person payment sector

The credit card processing company introduces its person-to-person payment service that allows individuals to accept credit card payments.

ProPay, a credit card processing company, today introduced its person-to-person payment service and joined the glut of companies striving to allow individuals to accept credit card payments.

In the past, only merchants were equipped to accept credit cards, but Orem, Utah-based ProPay said today it wants to give consumers the same option of accepting credit cards as payment at garage sales, auctions and even loaning money to relatives.

Because of the rise in electronic buying, consumers are looking for quick and secure ways to use their credit cards, analysts have said. Other methods have been experimented with, but nothing has replaced credit cards for online buying. Companies such as eBay-owned Billpoint and PayMyBills.com have become popular payment methods as the firms set their sights on taking a share of the billions generated through private transactions each year.

But while companies have flooded into the sector, no clear leader has emerged. Some of the obstacles the payment-services firms face is that consumers are reluctant to change the way they conduct financial affairs, worry about security and question whether a site outage will prevent them from accessing their money.

Last week, a system glitch caused sporadic site outages at PayPal over four days, preventing many customers from getting to their money. Scores of PayPal customers complained on eBay and Auctionwatch message boards, and an eBay official confirmed that many auctions were disrupted.

PayPal, the fastest growing of the person-to-person firms, is the payment method used by 31 percent of eBay's auction sellers.

Most of the payment services work in a similar fashion, with the firm becoming a conduit between individuals and performing the credit card transactions for them.

At ProPay, a customer sets up a free account with the firm and then can choose from six methods to accept or send payment, the company said in a statement. In the online payment, a seller sends information to ProPay on the product to be sold. The company emails the buyer a form to enter his or her credit card number. The seller never sees the number.

For each transaction ProPay processes, it takes 3.5 percent of the total sale in addition to charging a fee of 35 cents.

Other ways to send payment include setting up ProPay accounts and transferring money between them, having ProPay send funds to any bank or transmitting funds via wireless devices.