PayPal, which operates 114 million accounts in 55 countries, announced in mid-September that users in the Czech Republic will be able to receive funds through their PayPal accounts as well as transfer them to local bank accounts. The company previously only allowed Czechs to make payments to PayPal accounts.

The expanded service allows customers to move their money via the Internet without having to enter complicated or potentially sensitive bank account information.

Analysts and merchants said the company's arrival will only bring more e-shoppers to a market that is getting more and more crowded.

"The functionality will be available in the coming weeks," PayPal spokeswoman Jamie Patricio told The Prague Post. "We feel that the time is right to offer the [full-scale] PayPal service in the Czech Republic."

Online auction site eBay bought the company in 2002, and Patricio said that PayPal's international strategy focuses on following eBay's footprints around the world, launching PayPal sites in countries where a strong demand is emerging.

E-commerce boom

Indeed, e-shopping has become increasingly popular in this country, as the Internet reaches more households and Czechs' become more comfortable with the process of online payments.

"E-shopping is getting more and more popular," said Ondřej Fryč, owner of the largest Czech online merchant, Internet Mall (mall.cz).

More than 85 percent of the country's 3 million active Internet users buy goods online, said Martin Kasa, owner of kasa.cz, a leading e-merchant. The Association for Electronic Commerce (APEK) reported that the volume of e-shopping in this country reached about 10 billion Kč ($445.6 million) last year, nearly 40 percent higher than 2004.

"This year, the market is likely to rise another 40 percent," APEK spokesman Nikola Rafaj said.

Following the steep rise of e-commerce, the number of online merchants is growing, too. Apart from specialized online merchants such as Internet Mall, Eurocomm Group, Quelle and NWT Computer, even regular shops are beginning to launch online sales.

Electronics retailer Electro World started online sales in July and saw an immediate boost in revenue. Store Manager Anna Rumiannová said online sales reached 1.5 million Kč during the first month of the service.

Bank-friendly player

PayPal's Patricio said the U.S. company intended to cooperate with Czech e-commerce retailers, and certain Czech online merchants will offer PayPal as a preferred method of payment.

She refused to reveal whether the company has already initiated talks.

"We'll explore these opportunities as they arise," she said.

Apart from extending payment services to online shoppers, the opportunity to receive funds via PayPal could also help other individuals save money when making financial transactions abroad. As opposed to local commercial banks, which charge fees for money transfers, transactions made via PayPal are free.

Patricio insisted, however, that PayPal did not represent competition for local commercial banks.

"PayPal does not perceive banks as competitors," she said. "In fact, banks are important partners for PayPal. We use their existing financial infrastructure to allow customers to send and receive money online."

Patricio said that PayPal's effort to tie into the Czech banking infrastructure was the reason for the belated launch of the full-scale service in this country.

"Also, we had to work hard to ensure that we are in compliance with any regulatory guidelines" Patricio said.

The company previously ranked the Czech Republic the lowest out of four markets; customers from higher-ranking countries are able to send and receive money, and also to transfer it to bank accounts. In some countries, however, customers can only transfer money to accounts at banks registered in the United States.