Strategies: Small businesses sell online with PayPal

— -- Do you want to sell over the Internet — and actually get paid? Do you sell on the Web now but want to increase the pool of potential buyers? Then you'll want to know about PayPal, the online payment system celebrating its 10th anniversary this year.

Years ago, when we first wanted to sell from our company's website, we realized we'd have to accept credit cards — that was the only way to get instant payment so we could ship our books and customers could download our software. But opening up a credit card merchant account wasn't easy — it still isn't. We had to send in tax returns and financial statements. It took a long time.

You don't have to go through that hassle. If you want to start accepting credit cards or receiving payments online, you could be up and running with PayPal in about the time it takes you to read this column. Even if you accept credit cards, you may also want to accept PayPal payments because PayPal makes it possible for people without credit cards to make purchases online.

In fact, PayPal has been a huge part of the reason for the growth of Internet commerce, enabling total strangers to exchange money securely.

"The founders thought people wanted to beam money from Palm Pilot to Palm Pilot," said Scott Thompson, PayPal's president.

There wasn't a crying need for that, but in 1998, with online commerce exploding, there was a desperate need for people to be able to safely exchange funds over the Web.

"EBay comes along, and buyers and sellers never meet each other. ... Someone would send a check in the mail, then someone would send the product," Thompson said.

Clearly, that system left a lot of room for fraud and other problems. Some checks never arrived; some goods never were shipped. And a lot of buyers didn't want to give their personal checks — with bank routing numbers — to total strangers.

PayPal filled an important function in the market, especially for the huge eBay market, and it thrived, eventually being purchased by eBay itself in 2002 for $1.5 billion.