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==Bank status==
==Bank status==
In the United States, PayPal is licensed as a money transmitter on a state-by-state basis. Although PayPal is not a bank, the company is still subject to and adheres to many of the rules and regulations governing the financial industry including Regulation E consumer protections and the [[USA PATRIOT Act]].
In the United States, PayPal is licensed as a money transmitter on a state-by-state basis. Although PayPal is not a bank, the company is still subject to and adheres to many of the rules and regulations governing the financial industry including Regulation E consumer protections and the [[USA PATRIOT Act]].

Paypal is often criticized to have a disregard for the protection of its buyers/sellers through its 'seller protection policy' and can often be stressful for many of its users. Please visit
www.paypalsucks.com for more info.


==Safety==
==Safety==

Revision as of 22:07, 11 August 2006

PayPal Inc.
Company typeSubsidiary
FoundedPalo Alto, California USA (1998)
FounderMax Levchin
Peter Thiel Edit this on Wikidata
HeadquartersSan Jose, California USA
Revenue27,518,000,000 United States dollar (2022) Edit this on Wikidata
3,837,000,000 United States dollar (2022) Edit this on Wikidata
2,419,000,000 United States dollar (2022) Edit this on Wikidata
Total assets70,379,000,000 United States dollar (2020) Edit this on Wikidata
Websitewww.paypal.com

PayPal is an e-commerce business allowing payments and money transfers be made through the internet. It serves as an electronic alternative to traditional paper methods such as checks and money orders. PayPal performs payment processing for online vendors, auction sites, and other corporate users, for which it charges a fee. In October 2002, Paypal became an eBay company, a wholly owned subsidiary of eBay. Their corporate headquarters are in San Jose, California.

Account Requirements

PayPal account holders must be 18 or over with a debit/credit card or bank account and e-mail address.

History

Beginnings

PayPal was founded in December of 1998 by Peter Thiel and Max Levchin. One of its first premises was the 165 University Avenue office in Palo Alto, California, home of a number of other noted Silicon Valley startups. On the business side, many of its initial recruits were alumni of The Stanford Review, also founded by Peter Thiel. Most early engineers hailed from the University of Illinois at Urbana-Champaign, recruited by Max Levchin.

In its initial incarnation, PayPal was a service for users to send (or "beam") money via PDAs, with actor James Doohan, Star Trek's "Scotty," as its spokesman. The PDA software was later discarded in favor of a web-based system that became popular with eBay's millions of buyers and sellers. Coupled with aggressive marketing campaigns offering $10 (and later $5) for new users to sign up, the firm grew at a meteoric rate of 7–10 percent per day between January and March 2000.

The domain name X.com was associated with PayPal in early 2000 when it acquired Confinity, PayPal's then parent company. [1] After the acquisition, the leaders of X.com ran PayPal before being ousted by both companies' investors.

Though growing rapidly, PayPal was losing $10 million a month and was fraught with internal turmoil that led to three CEO changes in its first year of operations. Foreign organized crime rings found ways to steal millions from the young company by automatically registering accounts using stolen identities. To block automated systems from using this form of fraud, PayPal devised a system (see Captcha) of making the user enter numbers from a blurry picture; according to Eric M. Jackson, author of the book The PayPal Wars, PayPal invented this system now in common use; though, there is evidence AltaVista used a captcha as early as 1997, before PayPal existed.

eBay watched the rise in volume of online payments, and realized its fit with online auctions. But rather than work with PayPal, eBay purchased a competing payment service named Billpoint. eBay made Billpoint the official payment system of eBay, dubbing it "eBay Payments", but cut the functionality of Billpoint by narrowing it to only payments made for eBay auctions.

For this reason PayPal was listed in several times as many auctions as Billpoint. In February of 2000 there were approximately an average of 200,000 daily auctions advertising the PayPal service while Billpoint (in beta) had only 4,000 auctions. By April of 2000 there were more than 1,000,000 auctions promoting the PayPal service. PayPal was able to turn the corner and become the first dot-com to IPO after the September 11 attacks — an accomplishment ironically tinged later when PayPal's new high profile status helped prompt a slew of class action lawsuits and regulatory probes, including one by NY Attorney General Eliot Spitzer.

Near the time when PayPal went public (first quarter 2002), it filed an anti-competition complaint against eBay on the grounds of using its auction venue to attempt to force PayPal off its site. However, the company eventually reconciled with its former rival. [2] [3]

Acquisition by eBay

In October 2002 PayPal was acquired by eBay. PayPal had previously been the payment method of choice by more than fifty percent of eBay users, and the service competed with eBay’s subsidiary Billpoint. eBay has since phased out its Billpoint service in favor of retaining the PayPal brand. Most of PayPal’s major competitors have phased out, most recently Western Union’s BidPay closed in December 2005 (update: BidPay was acquired in 2006 by CyberSource Corporation and is in direct competition to PayPal), Citibank’s c2it service closed in late 2003, and Yahoo!'s PayDirect service closed in late 2004. Some competitors for at least some of PayPal’s services, such as Moneybookers and Kagi, remain in business.

In Q1 2006, the total value of transactions through the PayPal system was $8.8 billion, up 41% year over year. The company continues to focus on international growth and growth of its Merchant Services division, providing online payments for retailers off eBay.

In 2005 the total payment value on PayPal was 27.5 billion dollars according to the corporate presentations on eBay's website.

Business Today

As of the end of Q1 2006, PayPal operates in 55 markets (including China) and it manages over 105 million accounts. Every second PayPal processes an average of $1,128 in total payment volume. PayPal supports payments in U.S. Dollars, Canadian Dollars, Australian Dollars, Euros, Pounds Sterling and Japanese Yen.

PayPal operates locally in 13 countries.

In China, PayPal offers two kinds of accounts[4]:

  • PayPal.com accounts, for sending and receiving money to/from other PayPal.com accounts. All non-Chinese accounts are PayPal.com accounts, so these accounts may be used to send money internationally.
  • PayPal.com.cn accounts, for sending and receiving money to/from other PayPal.com.cn accounts.

It is impossible to send money between PayPal.com.cn accounts and PayPal.com accounts, so PayPal.com.cn accounts are effectively unable to make international payments. For PayPal.com.cn, the only supported currency is the Renminbi (RMB, ISO: CNY), whereas PayPal.com supports USD, CAD, AUD, EUR, GBP and JPY.

PayPal’s operation center is located near Omaha, Nebraska and PayPal’s international headquarters is located in Dublin, Ireland.

In March 2002, two PayPal account holders separately sued the company for alleged violations of the Electronic Funds Transfer Act (EFTA) and California law. Most of the allegations concerned PayPal's dispute resolution procedures. The two lawsuits were merged into one class action lawsuit (In re PayPal litigation). An informal settlement was reached in November 2003, and a formal settlement was signed on June 11, 2004. The settlement requires that PayPal change its business practices (including changing its dispute resolution procedures to make them EFTA-compliant), as well as making a $9.25 million USD payment to members of the class. PayPal denies any wrongdoing.

In August 2002, Craig Comb and others filed a class action against Paypal in Craig Comb, et al. v. PayPal, Inc.. They sued for alleged mishandling of customer accounts and customer services, with regards to Paypal's user agreement. Allegations included the up-to 180 day restriction on deposited funds until disputes are resolved, forcing customers to arbitrate their disputes under the American Arbitration Association's guidelines (a costly procedure), and requiring users to file claims individually, restricting class action suits. The court deemed these actions unconstitutional and filed the case in favor of Comb. [5][6].

Accolades

According to PayPal's little-updated "About Us" webpage [7], "PayPal has received close to 20 awards for technical excellence from the internet industry and the business community at large - most recently the 2003 Webby Award for Best Finance Site and the 2003 Webby People's Voice Award for Best Finance Site."

They have won awards since, notably the "Best Finance Services Site" and "People’s Voice Award" at the 2006 Webby Awards [8].

On the customer side, however, they are heavily criticised (see below).

Criticism

  • PayPal is accused for its lack of customer support. Questions asked through e-mail are likely to get a reply that doesn't actually answer the question. The reply is almost invariably a template, as opposed to a reply written by a human for each e-mail. [9]
  • PayPal stopped business with several gay owners after they implemented their policy of not doing business with sites that offer pornographic products or services, despite the fact that the businesses in question were not selling pornographic products or services. [10]
  • PayPal's Seller Protection policies do not cover intangible goods or goods that are "not as described". Many scammers have used this lack of policy to their advantage. They will buy a product and pay for it via PayPal. When the product is received, they will dispute the charge as "not as described." This freezes the seller's account until the dispute is finalized. After the freeze, PayPal is unlikely to gain back the funds, thus leaving a negative balance to the seller.[11][12][13]
  • PayPal does not allow people from certain countries to use its services, and in some occasions where it does, it only allows the participants to send and not receive. [14] This has brought criticism from people from within these countries.[15]

Also see Critical Sites.

Bank status

In the United States, PayPal is licensed as a money transmitter on a state-by-state basis. Although PayPal is not a bank, the company is still subject to and adheres to many of the rules and regulations governing the financial industry including Regulation E consumer protections and the USA PATRIOT Act.

Paypal is often criticized to have a disregard for the protection of its buyers/sellers through its 'seller protection policy' and can often be stressful for many of its users. Please visit www.paypalsucks.com for more info.

Safety

The PayPal Buyer Protection Policy claims that customers may file a buyer complaint if they did not receive an item or if the item they purchased was not as described. If the buyer used a credit card, they might get a refund via chargeback from their credit card company.

PayPal protects sellers in a limited fashion via the Seller Protection Policy[16]. In general the Seller Protection Policy is intended to protect the seller from chargebacks or complaints but it is subject to various terms. PayPal states the Seller Protection Policy is "designed to protect sellers against claims by buyers of unauthorised payments and against claims of non-receipt of any merchandise". Note that this contrasts with the consumer protection they claim to offer. This policy should be read carefully before assuming protection. In particular the Seller Protection Policy includes a list of "Exclusions" which itself includes "Intangible goods", "Claims for receipt of goods 'not as described'" and "Total reversals over the annual limit". There are also other restrictions in terms of the sale itself, the payment method and the destination country the item is shipped to (simply having a tracking mechanism is not sufficient to guarantee the Seller Protection Policy is in effect).

Utilizing test payments

Typical users

PayPal's site can be used for testing basic purchasing functions, such as a PayPal Buy Now [17] button. Making a $0.01 payment from another PayPal account and then refunding that payment is an easy way to test your button and may suffice for small projects.

Sandbox

Developers implementing larger PayPal projects, however, will likely want to avoid using real money. PayPal has a "sandbox"[18] version of its website geared towards such developers. Though very useful, the sandbox requires significant effort to configure and may not be appropriate for novices.

Startups by former employees

Former PayPal employees have founded several high-profile companies. YouTube is an prime example of a startup which has become staggeringly popular.[19]

  • LinkedIn was founded by Reid Hoffman, a former VP at PayPal.
  • Palantir Technologies was founded by Nathan Gettings, who developed PayPal's anti-fraud models. Palantir received funding from Peter Thiel.
  • Slide was founded by Max Levchin.
  • Yelp was founded by Jeremy Stoppelmann, former VP of Engineering at PayPal, and Russ Simmons, one of the first employees at PayPal. Yelp is funded by Max Levchin.
  • YouTube was founded by Chad Hurley, Steve Chen, and Jawed Karim, all of whom were early employees at PayPal. YouTube is funded by Sequoia Capital. Roelof Botha, the former CFO of PayPal, is a partner of Sequoia Capital who sits on YouTube's board of directors.
  • Room 9 Entertainment was founded by David O. Sacks, who founded PayPal's Product Group and later served as Chief of Operations (COO).
  • SpaceX was founded by Elon Musk, who founded X.com and served as the CEO following the acquisition of PayPal.
  • HourTown was founded by Ryan Donahue, an early employee at PayPal.

In the news

Trivia

PayPal is one of the few Internet companies with a single letter domain name in use (http://www.x.com/) since early 2000. As of August 2006, this URL still resolves to the PayPal home page.

See also

Bibliography

  • Shannon Sofield, Dave Nielsen & Dave Burchell (2004). PayPal Hacks: 100 Industrial-Strength Tips and Tools. O'Reilly. ISBN 0-596-00751-5. (Paperback, 368 pages)
  • Eric M. Jackson (2004). The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth. World Ahead Publishing. ISBN 0-974-67010-3. (Hardcover, 360 pages)
  • Victoria Rosenborg (2005). PayPal for Dummies. Wiley. ISBN 0-7645-8392-1. (Paperback, 410 pages)

Critical Sites

Other Resources

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