PayPal, a popular online payment service owned by eBay Inc., wants to become a payment option for digital music transactions. The company is offering reduced payment processing fees to a la carte down

PayPal, a popular online payment service owned by eBay Inc., wants to become a payment option for digital music transactions. The company is offering reduced payment processing fees to a la carte download services that do high-volume business.

PayPal will charge digital music services 2.5% plus nine cents for each transaction. That's a 30%-50% savings on the fixed fees such services normally pay for processing: typically 2% plus 20-30 cents per transaction.

Payment processing costs are a growing area of concern for operators of digital music services, as more consumers begin paying for downloads. With the typical 99 cent download wholesaling for 65-80 cents, payment processing fees are cutting into profits for digital services.

Processing fees from credit-card companies are not structured to deal with micro-payment transactions such as 99 cent downloads.

PayPal has yet to announce deals with a digital music service, but agreements are expected to be unveiled soon.