Paypal are to introduce Micropayments, an "affordable" solution for small amounts (under $2) according to a press release.

The new pricing will provide merchants with a more affordable way to process payments for low-cost digital content such as video games, online greeting cards, news articles, mobile phone content and digital music. PayPal's micropayments pricing is designed to give customers the convenience of a-la-carte purchases, such as 99-cent downloadable ringtones, without having to sign up for annual subscriptions or pre-funded payment accounts.

You can read more at that Press Release.

Examples

Selling price: $0.50
Old charge: $0.22
New Charge: $0.08
Saving: $0.14

Selling price: $1.00
Old charge: $0.23
New Charge: $0.10
Saving: $0.13

Selling price: $1.50
Old charge: $0.25
New Charge: $0.13
Saving: $0.12

Selling price: $2.00
Old charge: $0.27
New Charge: $0.15
Saving: $0.12

Though 12 or 13 cents does not sound like much, these savings over the course of a few thousand transactions add up quite substantially.

Well done Paypal!