Skype to offer money-transfer system via PayPal

A screen grab of PayPal.com. Web telephone calling service Skype will shortly begin allowing users to send money to other Skype users via the PayPal online payments system, Skype co-founder Niklas Zennstrom said on Tuesday.

SAN JOSE, California (Reuters) - Web telephone calling service Skype will shortly begin allowing users to send money to other Skype users via the PayPal online payments system, Skype co-founder Niklas Zennstrom said on Tuesday.

Speaking at a technology conference in Silicon Valley, Skype Chief Executive Zennstrom said the company is working with PayPal, but declined to say exactly when the service would be made available to Skype's tens of millions of global users.

Both Skype and PayPal are units of online auction leader eBay Inc.. PayPal is already the most popular way that Skype users pay for long-distance Skype phone calls to other phones.

"You can send money over Skype," Zennstrom said of the upcoming service plan. "This is basically connecting the Skype community over PayPal. All the user needs is a PayPal account."

A Skype spokesman said following Zennstrom's remarks that the service should be formally unveiled within a month.

Skype had 171 million registered users worldwide at the end of 2006. A year ago, PayPal began limited experiments allowing users to send money to other cell phone users via text messages, but has done little to promote that service so far.

Skype-PayPal can function as a money transfer service for transactions as simple as sending a friend money to split a restaurant bill.

"A lot of people using Skype are people who have friends and family on the other side of the world," Zennstrom said.