| PayPal is an e-commerce business allowing | | | | PayPal had previously been the payment method |
| payments and money transfers to be made | | | | of choice by more than fifty percent of eBay |
| through the Internet. It serves as an | | | | users, and the service competed with |
| electronic alternative to traditional paper | | | | eBay’s subsidiary Billpoint. eBay has |
| methods such as cheques and money orders. | | | | since phased out its Billpoint service in |
| PayPal performs payment processing for online | | | | favor of retaining the PayPal brand. Most of |
| vendors, auction sites, and other corporate | | | | PayPal’s major competitors have shut |
| users, for which it charges a fee. On 3 | | | | down or have been sold; Citibank’s |
| October 2002, PayPal became a wholly owned | | | | c2it service closed in late 2003, and |
| subsidiary of eBay. Their corporate | | | | Yahoo!'s PayDirect service closed in late |
| headquarters are in San Jose, California, at | | | | 2004. Western Union announced the December |
| eBay's North First Street satellite office | | | | 2005 shut down of their BidPay service, but |
| campus. The company also has significant | | | | subsequently sold it in 2006 to CyberSource |
| operations in Omaha, Nebraska; Dublin, | | | | Corporation. Some competitors which offer |
| Ireland; and Berlin, Germany. | | | | some of PayPal’s services, such as |
| | | | Wirecard, Moneybookers, 2Checkout, CCNow and |
| History | | | | Kagi, remain in business. |
| | | | |
| Beginnings | | | | PayPal’s total payment volume, the |
| | | | total value of transactions in Q4 2006, was |
| PayPal, Inc., as it is known today, is the | | | | $11 billion, up 36% year over year. The |
| result of a March 2000 merger between | | | | company continues to focus on international |
| Confinity and X.com.Confinity was founded in | | | | growth and growth of its Merchant Services |
| December of 1998 by Max Levchin, Peter Thiel, | | | | division, providing online payments for |
| and Luke Nosek, initially as a Palm Pilot | | | | retailers off eBay. |
| payments and cryptography company. Confinity | | | | |
| launched its milestone product, PayPal in | | | | As of the end of Q4 2006, PayPal operates in |
| late 1999. X.com was founded by Elon Musk in | | | | 103 markets (including China) and it manages |
| March of 1999, initially as an Internet | | | | over 133 million accounts. PayPal allows |
| financial services company. Both companies | | | | customers to send, receive and hold funds in |
| were located on University Avenue in Palo | | | | 17 currencies worldwide. These currencies are |
| Alto. At Confinity, many of the initial | | | | the U.S. Dollar, Canadian Dollar, Australian |
| recruits were alumni of The Stanford Review, | | | | Dollar, Euro, Pounds Sterling, Japanese Yen, |
| also founded by Peter Thiel, and most early | | | | Chinese RMB, Czech Koruna, Danish Krone, Hong |
| engineers hailed from the University of | | | | Kong Dollar, Hungarian Forint, New Zealand |
| Illinois at Urbana-Champaign, recruited by | | | | Dollar, Norwegian Krone, Polish Zloty, |
| Max Levchin. On the X.com side, Elon Musk | | | | Singapore Dollar, Swedish Krona, and Swiss |
| recruited a wide range of personnel, many of | | | | Franc. PayPal operates locally in 13 |
| whom remain at PayPal today, such as Amy | | | | countries. |
| Klement and several other members of the | | | | |
| senior team.[citation needed] | | | | Residents in 48 new markets can now use |
| | | | PayPal in their local markets to send money |
| To block potentially fraudulent accesss by | | | | online. These new markets include Indonesia, |
| automated systems, PayPal devised a system | | | | the Philippines, Croatia, Fiji, Vietnam and |
| (see CAPTCHA) of making the user enter | | | | Jordan. A complete list can be viewed at |
| numbers from a blurry picture, which they | | | | https://www.paypal.com/worldwide. |
| coined the Gausebeck-Levchin test; according | | | | |
| to Eric M. Jackson, author of the book The | | | | In China PayPal offers two kinds of accounts: |
| PayPal Wars, PayPal invented this system now | | | | |
| in common use; though, there is evidence | | | | PayPal.com accounts, for sending and |
| AltaVista used a captcha as early as 1997, | | | | receiving money to/from other PayPal.com |
| before PayPal existed. | | | | accounts. All non-Chinese accounts are |
| | | | PayPal.com accounts, so these accounts may be |
| eBay watched the rise in volume of online | | | | used to send money internationally. |
| payments, and realized its fit with online | | | | |
| auctions. eBay purchased Billpoint in May | | | | PayPal.cn accounts, for sending and receiving |
| 1999, prior to the existence of Paypal. eBay | | | | money to/from other PayPal.cn accounts. |
| made Billpoint the official payment system of | | | | |
| eBay, dubbing it "eBay Payments", but cut the | | | | It is impossible to send money between |
| functionality of Billpoint by narrowing it to | | | | PayPal.cn accounts and PayPal.com accounts, |
| only payments made for eBay auctions. | | | | so PayPal.cn accounts are effectively unable |
| | | | to make international payments. For |
| For this reason PayPal was listed in several | | | | PayPal.cn, the only supported currency is the |
| times as many auctions as Billpoint. In | | | | Renminbi (RMB, ISO: CNY), whereas PayPal.com |
| February of 2000 there were approximately an | | | | supports Canadian Dollar, Euro, Pound |
| average of 200,000 daily auctions advertising | | | | Sterling, U.S. Dollar, Australian Dollar, New |
| the PayPal service while Billpoint (in beta) | | | | Zealand Dollar, Swiss Franc, Hong Kong |
| had only 4,000 auctions. By April of 2000 | | | | Dollar, Singapore Dollar, Swedish Krona, |
| there were more than 1,000,000 auctions | | | | Danish Krone, Polish Zloty, Norwegian Krone, |
| promoting the PayPal service. PayPal was able | | | | Hungarian Forint, Czech Koruna. |
| to turn the corner and become the first | | | | |
| dot-com to IPO after the September 11 | | | | PayPal’s operation center is located |
| attacks. | | | | near Omaha, Nebraska and PayPal’s |
| | | | international headquarters is located in |
| Acquisition by eBay | | | | Dublin, Ireland. The company also recently |
| | | | opened a technology center in Scottsdale, |
| In October 2002 PayPal was acquired by eBay. | | | | Arizona. |