Yahoo, PayPal partner for e-transactions

Yahoo and PayPal have partnered to promote PayPal merchants in Yahoo search ads

Yahoo and eBay's PayPal have teamed up to attach a special icon to online merchants that advertise with Yahoo and offer PayPal's Express Checkout transaction processing.

The move seems intended to offer a joint defence against Google's Checkout payment processing service, which grants special incentives to merchants that are also Google advertisers.

The blue shopping cart icons will begin appearing along with qualifying Yahoo search ads on Tuesday evening.

The pact is part of the broader partnership Yahoo and eBay struck in May of last year, before Google formally announced its Checkout service.

Back then, the vendors agreed to make PayPal the exclusive third-party provider of Yahoo's online wallet, where users can store credit card, shipping and billing information for online shopping.

Yahoo also pledged at the time to heavily promote PayPal across its network and among its merchants and advertisers, but provided few details. Tuesday's announcement seems to be the result of that pledge.

The deal will yield "a streamlined purchase process" for PayPal customers and boost the value of Yahoo's new search ad platform, the companies said in a statement.

As part of the launch, Yahoo and PayPal are serving up special offers for merchants, such as free PayPal processing through December 31, 2007 and a $US100 credit for Yahoo search ads.

The Yahoo PayPal Checkout Program is free to join.

More information is available in a Web site devoted to the program.

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