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