PayPal Holdings Inc. is increasing prices for thousands of small businesses as the company looks to maintain revenue growth and boost profit margins as a stand- alone business separate from EBay Inc.
The San Jose, California-based payments company is introducing for U.S. merchants a flat rate of 2.9 percent plus 30 cents for domestic transactions and 3.9 percent plus a fee that varies by country for international transactions. The change takes effect Oct. 1, PayPal said Thursday in an e-mail to sellers.
The new structure eliminates discounts -- as low as 2.2 percent -- for businesses with sufficient sales. Most of PayPal's larger customers, including global brands, have individual contracts that won't be affected by the change.
PayPal didn't release new revenue projections as a result of the price increase. The company, which completed its split from EBay in July, is projected to have third-quarter sales of $2.28 billion, according to the average of analysts' estimates compiled by Bloomberg.
The digital payments business had 169 million users and processed 1.1 billion transactions in the second quarter, with transaction volume up 27 percent from a year earlier, PayPal said last month. Investors see value in the company's projected growth as online shopping booms and people's spending habits change.
PayPal and competitors such as Square Inc. are trying to position themselves as more than just digital transaction businesses by offering loans and marketing services. PayPal emphasized its fraud protection and cross-border selling options in its e-mail to merchants.
"We value our partnership with you, and we commit to investing in new capabilities to help you grow," the company said.