Apple and PayPal announced on Friday that the iTunes Music Store in the US now accepts payment via PayPal's Virtual Wallet.

"We are thrilled that PayPal users can now buy their music on the world's number one online music store," said Todd Pearson, general manager of PayPal's Merchant Services.

PayPal allows customers to pay using a credit card, bank account or stored account balance. The first 500,000 customers to open a new iTunes account in the US using PayPal as their form of payment before March 31, 2005, will receive five free songs, the company says.

Paypal, which has more than 56m registered users in 45 different countries, makes money by taking a cut from each transaction it processes. About 70 per cent of its deals involve eBay, but the company is seeking new markets.

PayPal sales made $166m from July to September, a 56 per cent increase on the same moths last year.

The iTunes Music Store features more than a million songs from major music companies and 600 independent labels. ®

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