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Article #4: PayPal explained

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






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