Wells Fargo is to provide secure Internet payment processing services to person-to-person funds transfer outfit PayPal.
Under the agreement, Wells Fargo's payment processing platform will be utilised to process PayPal transactions over the Internet. The west coast bank says it will handle both credit card and debit instructions on behalf of PayPal users, cementing its position as the leading processor for person-to-person Internet payment providers.
Wells already provides similar services for online auction house eBay.
At PayPal, the bank will earn a fee for each credit card payment and chargeback processed through its system. Wells is insisting on $3 million collateral from PayPal to cover escalating chargeback liabilities. Chase Merchant Services, which handled PayPal's US card payments until December 2001, still holds $10.5 million of PayPal funds against chargebacks.