CUSTOMERS of DBS Bank and POSB can shop using their bank accounts at online stores that accept payment through the Pay- Pal system by June.

These customers make up the bulk of bank-account holders here.

Previously, Singaporeans could use only credit or debit cards to transfer funds to a Pay- Pal account to buy products from stores that use the payment system.

But, with the new service, DBS and POSB customers without credit or debit cards can use their bank accounts to fund such online transactions.

Many online stores accept credit- or debit-card payments but not direct bank transfers.

Shoppers here have to pay a fee for overseas bank transfers, but will avoid this fee for bankaccount transfers under the new PayPal and DBS service.

No fees are also levied on consumers who make purchases through PayPal with either a credit card or bank account.

But, regardless of credit-card or bank payment, PayPal purchases for items priced in foreign currencies will incur a 2.5 per cent fee, on top of the currency- exchange rate it sets.

PayPal said that there are "millions of merchants online that accept PayPal". They include auction site eBay.com, SingPost's online shopping portal vPOST, and lifestyle product maker Osim's webstore.

The new service is a two-way exclusive deal between PayPal and DBS for two years. It was announced yesterday during the launch of PayPal's international headquarters in Singapore.

The office here will oversee the firm's global business outside of the United States.

PayPal and DBS said that the new tie-up will give consumers more channels to shop online.

Online shopping looks to be catching on in Singapore.

Figures from the Infocomm Development Authority of Singapore's website show that of Internet users aged 15 years and above who have used the Internet in 2008, 36 per cent of them shop online, an increase over 27 per cent in 2004.

In fact, PayPal said that the volume of online PayPal transactions made with overseas-based stores by consumers in Singapore has been growing by over 70 per cent annually.

The growth in Singapore mirrors the Asia-Pacific's growth in online shopping.

Mr Scott Thompson, president of PayPal, said: "Over the last five years, PayPal's payment volumes in Asia have grown by nearly 400 per cent."

For this reason, the American firm is investing in the Asia-Pacific and doubling its workforce from 1,000 employees to 2,000 this year.

Of these, at least 100 more places will be made available in the Singapore office, on top of the over 150 employees here.

On top of the new deal with DBS, PayPal said that it is hoping to launch a remittance service here in the second half of the year.

Approval for the service has already been granted in markets like Australia and Hong Kong.

kennyc@sph.com.sg

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