PayPal
Encyclopedia
Money order
A money order is a payment order for a pre-specified amount of money. Because it is required that the funds be prepaid for the amount shown on it, it is a more trusted method of payment than a cheque.-History of money orders:...
s.
Originally, a PayPal account could be funded with an electronic debit from a bank account
Bank account
A Bank account is a financial account recording the financial transactions between the customer and the bank and the resulting financial position of the customer with the bank .-Account types:...
or by a credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
at the payer's choice. But sometime in 2010 or early 2011, PayPal began to require a verified bank account after the account holder exceeded a predetermined spending limit. After that point, PayPal will attempt to take funds for a purchase from funding sources according to a specified funding hierarchy, regardless of what funding source is listed as "primary" in the account-holder's profile. The funding hierarchy is (1) a balance in the PayPal account; (2) a PayPal credit account, PayPal Extras, PayPal SmartConnect, or Bill Me Later (if selected as primary funding source); (3) a verified bank account; (4) other funding sources, such as non-PayPal credit cards.
The recipient of a PayPal transfer can either request a check from PayPal, establish their own PayPal deposit account or request a transfer to their bank account.
PayPal is an acquirer, performing payment processing for online vendors, auction
Auction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
sites, and other commercial users, for which it charges a fee
Fee
A fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup.Traditionally, professionals in Great Britain received a fee in contradistinction to a payment, salary, or wage, and would often use guineas rather than pounds as units of account...
. It may also charge a fee for receiving money, proportional to the amount received. The fees depend on the currency used, the payment option used, the country of the sender, the country of the recipient, the amount sent and the recipient's account type. In addition, eBay purchases made by credit card through PayPal may incur extra fees if the buyer and seller use different currencies.
On October 3, 2002, PayPal became a wholly owned subsidiary of eBay
EBay
eBay Inc. is an American internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide...
. Its corporate headquarters are in San Jose
San Jose, California
San Jose is the third-largest city in California, the tenth-largest in the U.S., and the county seat of Santa Clara County which is located at the southern end of San Francisco Bay...
, California, United States at eBay's North First Street satellite office campus. The company also has significant operations in Omaha, Nebraska
Omaha, Nebraska
Omaha is the largest city in the state of Nebraska, United States, and is the county seat of Douglas County. It is located in the Midwestern United States on the Missouri River, about 20 miles north of the mouth of the Platte River...
; Scottsdale, Arizona
Scottsdale, Arizona
Scottsdale is a city in the eastern part of Maricopa County, Arizona, United States, adjacent to Phoenix. According to the U.S. Census Bureau, as of 2010 the population of the city was 217,385...
; and Austin, Texas
Austin, Texas
Austin is the capital city of the U.S. state of :Texas and the seat of Travis County. Located in Central Texas on the eastern edge of the American Southwest, it is the fourth-largest city in Texas and the 14th most populous city in the United States. It was the third-fastest-growing large city in...
in the US, Chennai, Dublin, Kleinmachnow
Kleinmachnow
Kleinmachnow is a municipality in the Potsdam-Mittelmark district, in Brandenburg, Germany.-Geography:It is situated southwest of the centre of Berlin, immediately neighbouring the borough of Steglitz-Zehlendorf, and east of Potsdam...
(near Berlin) and Tel Aviv
Tel Aviv
Tel Aviv , officially Tel Aviv-Yafo , is the second most populous city in Israel, with a population of 404,400 on a land area of . The city is located on the Israeli Mediterranean coastline in west-central Israel. It is the largest and most populous city in the metropolitan area of Gush Dan, with...
. As of July 2007, across Europe, PayPal also operates as a Luxembourg-based bank.
On March 17, 2010, PayPal entered into an agreement with China UnionPay
China UnionPay
China UnionPay , also known as UnionPay or by its abbreviation, CUP, is the only domestic bank card organization in the People's Republic of China . Founded in March 2002, China UnionPay is an association for China's banking card industry, operating under the approval of the People's Bank of China...
(CUP), China's bankcard association, to allow Chinese consumers to use PayPal to shop online. PayPal is planning to expand its workforce in Asia to 2,000 by the end of the year 2010.
Between December 4–9, 2010, PayPal services were attacked in a series of denial-of-service attack
Denial-of-service attack
A denial-of-service attack or distributed denial-of-service attack is an attempt to make a computer resource unavailable to its intended users...
s organized by Anonymous
Anonymous (group)
Anonymous is an international hacking group, spread through the Internet, initiating active civil disobedience, while attempting to maintain anonymity. Originating in 2003 on the imageboard 4chan, the term refers to the concept of many online community users simultaneously existing as an anarchic,...
in retaliation for PayPal's decision to freeze the account of WikiLeaks
Wikileaks
WikiLeaks is an international self-described not-for-profit organisation that publishes submissions of private, secret, and classified media from anonymous news sources, news leaks, and whistleblowers. Its website, launched in 2006 under The Sunshine Press organisation, claimed a database of more...
citing terms of use violations over the publication of leaked US diplomatic cables
United States diplomatic cables leak
The United States diplomatic cables leak, widely known as Cablegate, began in February 2010 when WikiLeaks—a non-profit organization that publishes submissions from anonymous whistleblowers—began releasing classified cables that had been sent to the U.S. State Department by 274 of its consulates,...
.
Beginnings
The current incarnation of PayPal is the result of a March 2000 merger between ConfinityConfinity
Confinity Inc. is best known as the creator of PayPal. It was founded in December 1998 by Max Levchin,Peter Thiel, and Luke Nosek, initially as a Palm Pilot payments and cryptographycompany...
and X.com. Confinity was founded in December 1998 by Max Levchin
Max Levchin
Max Rafael Levchin is a Ukrainian-born American computer scientist and internet entrepreneur widely known as one of the co-founders and for his role as the former chief technology officer of PayPal....
, Peter Thiel
Peter Thiel
Peter Andreas Thiel is an American business magnate, venture capitalist, and hedge fund manager. With Elon Musk and Max Levchin, Thiel co-founded PayPal and was its CEO...
, Luke Nosek
Luke Nosek
Luke Nosek is an American entrepreneur of Polish descent.Nosek received a B.S. in Computer Science from the University of Illinois at Urbana-Champaign. During college in the summer of 1995, he cofounded SponsorNet New Media, Inc., along with fellow UIUC students Max Levchin and Scott Banister...
, and Ken Howery
Ken Howery
Ken Howery is a co-founder and managing partner at Founders Fund.Howery graduated from Stanford University in 1998 with a B.A. in Economics. He was a co-founder of PayPal and served as the company's first CFO from 1998 until 2002. His partner within this Paypal project was Peter Thiel at Thiel...
, initially as a Palm Pilot payments and cryptography company. X.com was founded by Elon Musk
Elon Musk
Elon Musk is an American engineer and entrepreneur heritage best known for co-founding PayPal, SpaceX and Tesla Motors. He is currently the CEO and CTO of SpaceX, CEO and Product Architect of Tesla Motors and Chairman of SolarCity...
in March 1999, initially as an Internet financial services company. Both Confinity and X.com launched their websites in late 1999. Both companies were located on University Avenue in Palo Alto. Confinity's website was initially focused on reconciling beamed payments from Palm Pilots with email payments as a feature and X.com's website initially featured financial services with email payments as a feature.
At Confinity, many of the initial recruits were alumni of The Stanford Review
The Stanford Review
The Stanford Review is a libertarian student-run newspaper that serves Stanford University in Stanford, California. It was founded in 1987 by Peter Thiel and Norman Book. It is published and distributed without charge to the Stanford community periodically during the academic year.-Notable former...
, also founded by Peter Thiel, and most early engineers hailed from the University of Illinois at Urbana-Champaign
University of Illinois at Urbana-Champaign
The University of Illinois at Urbana–Champaign is a large public research-intensive university in the state of Illinois, United States. It is the flagship campus of the University of Illinois system...
, recruited by Max Levchin. On the X.com side, Elon Musk recruited a wide range of technical and business personnel, including many that were critical to the combined company's success, such as Amy Klement, Sal Giambanco, Roelof Botha
Roelof Botha
Roelof F. Botha is a venture capitalist and company director. By training, he is a qualified actuary.Botha is a partner at Sequoia Capital and sits on the board of Eventbrite, Jawbone, Mahalo, Meebo, Nimbula, Square, Tokbox, Tumblr, Unity and Xoom...
of Sequoia Capital
Sequoia Capital
Sequoia Capital is a Californian venture capital firm located on Sand Hill Road in Menlo Park, California. The Wall Street Journal has called Sequoia Capital "one of the highest-caliber venture firms", and noted that it is "one of Silicon Valley's most influential venture-capital firms"...
, Sanjay Bhargava and Jeremy Stoppelman.
To block potentially fraudulent access by automated systems, PayPal used a system (see CAPTCHA
CAPTCHA
A CAPTCHA is a type of challenge-response test used in computing as an attempt to ensure that the response is generated by a person. The process usually involves one computer asking a user to complete a simple test which the computer is able to generate and grade...
) of making the user enter numbers from a blurry picture, which they coined the Gausebeck-Levchin test.
eBay watched the rise in volume of its online payments and realized the fit of an online payment system with online auctions. eBay purchased Billpoint
Billpoint
Billpoint was the name of a person-to-person money transfer service founded in 1998 and purchased in 1999 by online auctioneer eBay. Billpoint's website was taken offline while eBay integrated Billpoint into their auction service, and it did not reappear until the Spring of 2000 when it was...
in May 1999, prior to the existence of PayPal. eBay made Billpoint its official payment system, 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 many more auctions than Billpoint. In February 2000, the PayPal service had an average of approximately 200,000 daily auctions while Billpoint (in beta) had only 4,000 auctions. By April 2000, more than 1,000,000 auctions promoted the PayPal service. PayPal was able to turn the corner and become the first dot-com
Dot-com company
A dot-com company, or simply a dot-com , is a company that does most of its business on the Internet, usually through a website that uses the popular top-level domain, ".com" .While the term can refer to present-day companies, it is also used specifically to refer to companies with...
to IPO after the September 11 attacks.
In 2011, PayPal announced that it would begin moving its business offline so that customers can make payments via PayPal in stores.
Acquisition by eBay
In October 2002, PayPal was acquired by eBay for $1.5 billion. 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 BillpointBillpoint
Billpoint was the name of a person-to-person money transfer service founded in 1998 and purchased in 1999 by online auctioneer eBay. Billpoint's website was taken offline while eBay integrated Billpoint into their auction service, and it did not reappear until the Spring of 2000 when it was...
, Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
's c2it, whose service was closed in late 2003, and Yahoo!
Yahoo!
Yahoo! Inc. is an American multinational internet corporation headquartered in Sunnyvale, California, United States. The company is perhaps best known for its web portal, search engine , Yahoo! Directory, Yahoo! Mail, Yahoo! News, Yahoo! Groups, Yahoo! Answers, advertising, online mapping ,...
's PayDirect
PayDirect
Yahoo! PayDirect was the name of a person-to-person money transfer service by Yahoo! via HSBC, competing with Billpoint and PayPal.Yahoo launched PayDirect in March 2000 after purchasing Athas, a provider of electronic billing services. Athas' dotBank.com service allowed customers to make online...
, whose service was closed in late 2004. Western Union announced the December 2005 shut down of their BidPay
BidPay
BidPay was an online auction payment service web site, established in 1999 by Steve Chin and Marek Bradbury that originally allowed auction buyers to purchase money orders online using their credit card. BidPay was purchased by First Data Corporation/Western Union in 2001 for an undisclosed sum...
service but subsequently sold it in 2006 to CyberSource Corporation
Cybersource
CyberSource is a provider of electronic payment and risk management services. CyberSource solutions enable electronic payment processing for Web, call centre, and POS environments. CyberSource also offers industry risk management services for merchants accepting card-not-present transactions...
. BidPay subsequently ceased operations on December 31, 2007. Some competitors that offer some of PayPal's services, such as Google Checkout
Google Checkout
Google Checkout is an online payment processing service provided by Google aimed at simplifying the process of paying for online purchases. Users store their credit or debit card and shipping information in their Google Account, so that they can purchase at participating stores by clicking an...
, Wirecard
Wirecard
Wirecard AG is a global financial services and technology company headquartered in Aschheim, Munich, Germany. The company provides payment processing, card issuing and risk management services to more than 10.000 corporate customers worldwide. Its Internet payment service competes with PayPal and...
, and Moneybookers
Moneybookers
Moneybookers is an e-commerce business that allows payments and money transfers to be made through the Internet. It serves as an electronic alternative to traditional paper methods such as cheques and money orders. Moneybookers performs payment processing for websites, online auction sites, and...
remain in business, despite the fact that eBay now requires everyone on its Australian and United Kingdom sites to offer PayPal.
eBay Australia was subsequently forced to moderate its position by the Australian Competition & Consumer Commission, mandating that sellers on eBay Australia offer PayPal as one of the (but not necessarily the only) payment methods. These accepted payment methods include bank deposit, cheques and money orders, escrow, and credit cards (processed by other than PayPal).
In January 2008, PayPal agreed to acquire Fraud Sciences, a privately held Israeli start-up company with expertise in online risk tools, for $169 million, in order to enhance eBay and PayPal's proprietary fraud management systems and accelerate the development of improved fraud detection tools. In November 2008, the company acquired Bill Me Later
Bill Me Later
Bill Me Later is a proprietary payment method offered on the websites of many well-known merchants, including those of Wal-Mart, USPS, Best Buy, Overstock.com, American Airlines, JetBlue Airways, Jewelry Television and Hotels.com. The site, which offers consumers a line of revolving credit through...
, an online payments company offering transactional credit at over 1000 online merchants in the US.
PayPal's total payment volume, the total value of transactions, was US$ 60 billion in 2008, an increase of 27 percent over the previous year, and US$ 71 billion in 2009, an increase of 19 percent over the previous year. The company continues to focus on international growth and growth of its Merchant Services division, providing e-payments for retailers on eBay.
Business today
Currently, PayPal operates in 190 markets, and it manages more than 232 million accounts, more than 100 million of them active. PayPal allows customers to send, receive, and hold funds in 24 currencies worldwide. These currencies are the Australian dollarAustralian dollar
The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...
, Brazilian real
Brazilian real
The real is the present-day currency of Brazil. Its sign is R$ and its ISO code is BRL. It is subdivided into 100 centavos ....
, Canadian dollar
Canadian dollar
The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...
, Chinese renminbi yuan (only available for some Chinese accounts, see below), Euro, pound sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
, Japanese yen
Japanese yen
The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...
, Czech koruna
Czech koruna
The Czech koruna or Czech crown has been the currency of the Czech Republic since 8 February 1993 when, together with its Slovak counterpart, it replaced the Czechoslovak koruna at par....
, Danish krone
Danish krone
The krone is the official currency of the Kingdom of Denmark consisting of Denmark, the Faroe Islands and Greenland. It is subdivided into 100 øre...
, Hong Kong dollar
Hong Kong dollar
The Hong Kong dollar is the currency of the jurisdiction. It is the eighth most traded currency in the world. In English, it is normally abbreviated with the dollar sign $, or alternatively HK$ to distinguish it from other dollar-denominated currencies...
, Hungarian forint
Hungarian forint
The forint is the currency of Hungary. It is divided into 100 fillér, although fillér coins are no longer in circulation. The introduction of the forint on 1 August 1946 was a crucial step of the post-WWII stabilization of the Hungarian economy, and the currency remained relatively stable until...
, Israeli new sheqel
Israeli new sheqel
The Israeli New Shekel is the currency of the State of Israel. The shekel is divided into 100 agorot...
, Malaysian Ringgit
Malaysian ringgit
The Malaysian ringgit is the currency of Malaysia. It is divided into 100 sen...
, Mexican peso
Mexican peso
The peso is the currency of Mexico. Modern peso and dollar currencies have a common origin in the 15th–19th century Spanish dollar, most continuing to use its sign, "$". The Mexican peso is the 12th most traded currency in the world, the third most traded in the Americas, and by far the most...
, New Zealand dollar
New Zealand dollar
The New Zealand dollar is the currency of New Zealand. It also circulates in the Cook Islands , Niue, Tokelau, and the Pitcairn Islands. It is divided into 100 cents....
, Norwegian krone
Norwegian krone
The krone is the currency of Norway and its dependent territories. The plural form is kroner . It is subdivided into 100 øre. The ISO 4217 code is NOK, although the common local abbreviation is kr. The name translates into English as "crown"...
, Philippine Peso
Philippine peso
The peso is the currency of the Philippines. It is subdivided into 100 centavos . Before 1967, the language used on the banknotes and coins was English and so "peso" was the name used...
, Polish zloty
Polish zloty
The złoty , which literally means "golden", is the currency of Poland. The modern złoty is subdivided into 100 groszy . The recognized English form of the word is zloty, plural zloty or zlotys...
, Singapore dollar
Singapore dollar
The Singapore dollar or Dollar is the official currency of Singapore. It is normally abbreviated with the dollar sign $, or alternatively S$ to distinguish it from other dollar-denominated currencies...
, Swedish krona
Swedish krona
The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...
, Swiss franc
Swiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
, New Taiwan Dollar
New Taiwan dollar
The New Taiwan dollar , or simply Taiwan dollar, is the official currency of the Taiwan Area of the Republic of China since 1949, when it replaced the Old Taiwan dollar...
, Thai Baht
Thai baht
The baht is the currency of Thailand. It is subdivided into 100 satang . The issuance of currency is the responsibility of the Bank of Thailand.-History:The baht, like the pound, originated from a traditional unit of mass...
and U.S. dollar. PayPal operates locally in 21 countries.
Residents in 194 markets can use PayPal in their local markets to send money online.
PayPal revenues for Q1 2009 were $643 million, up 11 percent year over year. 42 percent of revenues in q1 2009 were from international markets. PayPal's Total Payment Volume (TPV), the total value of transactions in Q1 2009 was nearly $16 billion, up 10 percent year over year.
In 2008, PayPal's TPV off eBay exceeded volume on eBay for the first time. PayPal's Total Payment Volume in 2008 was $60 billion representing nearly 9 percent of global e-commerce and 15 percent of US e-commerce.
At an analyst day on March 11, 2009, eBay CEO John Donahoe announced that PayPal could be a larger driver of revenue than the eBay marketplaces business. RIM announced that PayPal will be the only payment mechanism for its Blackberry App World, which launched on April 1, 2009.
PayPal launched Student Accounts for teens in August 2009 allowing parents to set up a student account, transfer money into it, and obtain a debit card for student use. The program provides tools to teach teens how to spend money wisely and take responsibility for their actions.
In November 2009 PayPal opened its platform, allowing other services to get access to its code and to use its infrastructure in order to enable peer-to-peer online transactions.
Although PayPal's corporate headquarters are located in San Jose, PayPal's operations center is located near Omaha, Nebraska
Omaha, Nebraska
Omaha is the largest city in the state of Nebraska, United States, and is the county seat of Douglas County. It is located in the Midwestern United States on the Missouri River, about 20 miles north of the mouth of the Platte River...
, where the company employs more than 2,000 people as of 2007. PayPal's European headquarters are in Luxembourg and international headquarters in Singapore. In October of 2007, PayPal opened a data service office on the north side of Austin. The company also recently opened a technology center in Scottsdale, Arizona
Scottsdale, Arizona
Scottsdale is a city in the eastern part of Maricopa County, Arizona, United States, adjacent to Phoenix. According to the U.S. Census Bureau, as of 2010 the population of the city was 217,385...
, and Chennai
Chennai
Chennai , formerly known as Madras or Madarasapatinam , is the capital city of the Indian state of Tamil Nadu, located on the Coromandel Coast off the Bay of Bengal. Chennai is the fourth most populous metropolitan area and the sixth most populous city in India...
, India.
On November 28, 2011 PayPal reported Black Friday brought record mobile engagement including a 538 percent increase in global mobile payment volume when compared to Black Friday 2010.
PayPal business model evolution
PayPal’s success in terms of users and volumes was the product of a three-phase strategy described by eBay CEO Meg Whitman: “First, PayPal focused on expanding its service among eBay users in the U.S. Second, we began expanding PayPal to eBay’s international sites. And third, we started to build PayPal’s business off eBay”.Phase-1
In the first phase, payments volumes were coming mostly from eBay auction web-site. The system was very attractive to auction sellers, most of which were individuals or small businesses that were unable to accept credit card, and for consumers as well.In fact, many sellers could not qualify for a credit card “merchant account” because they lacked a commercial credit history. The service also appealed to auction buyers because they could fund PayPal accounts using credit cards or bank account balances, without divulging credit card numbers to unknown sellers. PayPal employed an aggressive marketing campaign to accelerate its growth, depositing $10 in new users’ PayPal accounts (+$10 for each new user they referred).
Phase-2
The biggest challenge in 2000 remained PayPal’s unsustainable business model. Initially, PayPal offered its service with lower cost, planning to earn interest on funds in users’ PayPal accounts (i.e., the “float”). However, most recipients withdrew their funds immediately. Furthermore, a large majority of senders funded their payments using credit cards, which cost PayPal roughly 2% of payment value, rather than relying on electronic transfers from bank accounts, which were much less costly.In order to boost its user base over eBay, both in US and internationally, PayPal decided to lever some of the ever existing concerns of sellers and buyers dealing with the virtual world, simplifying and easing the procedures regarding litigations, frauds and liabilities (transaction losses borne by PayPal also included the cost of buyer and seller protection programs. In fact, when merchants went bankrupt—not rare events in online retailing—PayPal was liable for any outstanding chargebacks related to credit card-funded PayPal payments. As with credit cards, buyers were protected against unauthorized use of their PayPal accounts. In addition, eBay buyers using PayPal received up to $1,000 in fraud protection (with a limit of three refunds per year) for items never delivered or materially misrepresented, but only if the seller had high eBay feedback ratings. Finally, subject to a $5,000 annual cap, merchants with business accounts qualified for seller protection against losses due to chargebacks, provided that they complied with reimbursement policies (e.g., retaining traceable proof of shipping to a confirmed address or requiring a signature receipt for items valued over $250).
Phase-3
After fine-tuning PayPal’s business model and increasing its domestic and international penetration on eBay, PayPal started its off-eBay strategy. Strong growth in active users growth by adding users across multiple platforms, despite the slowdown in on-eBay growth and low-single-digit user growth on the eBay site. A late 2003 reorganization created a new business unit within PayPal—Merchant Services—to provide payment solutions to small and large e-commerce merchants outside the eBay auction community. Starting in the second half of 2004, PayPal Merchant Services unveiled several initiatives to enroll online merchants outside the eBay auction community, including:- Lowering its transaction fee for high-volume merchants from 2.2% to 1.9% (while increasing the monthly transaction volume required to qualify for the lowest fee to $100,000)
- Encouraging its users to recruit non-eBay merchants by increasing its referral bonus to a maximum of $1,000 (versus the previous $100 cap)
- Persuading credit card gateway providers, including CyberSource and Retail Decisions USA, to include PayPal among their offerings to online merchants.
- Hiring a new sales force to acquire large merchants such as Dell, Apple's iTunes, and Yahoo! Stores, which hosted thousands of online merchants
- Reducing fees for online music purchases and other “micropayments”
- Launching PayPal Mobile, which allowed users to make payments using text messaging on their cell phones
Local restrictions
Paypal, as of yet, have not provided their services to many countries that are known to have a high percentage of internet shoppers such as BangladeshBangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...
and Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
.
China
In China PayPal offers two kinds of accounts:- 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.cn accounts, for sending and receiving money to and from other PayPal.cn accounts.
It is impossible to send money between PayPal.cn accounts and PayPal.com accounts, so PayPal.cn accounts are effectively unable to make international payments. For PayPal.cn, the only supported currency is the renminbi
Renminbi
The Renminbi is the official currency of the People's Republic of China . Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of the PRC...
.
Japan
In late March 2010, new Japanese banking regulations forced PayPal Japan to suspend the ability of personal account holders registered in Japan from sending or receiving money between individuals and as a result are now subject to PayPal's business fees on all transactions.Taiwan
As of mid July 2010, users in Taiwan have noticed that the "Personal" tab for sending money has been omitted without notice. There is no longer an option to send personal payments, thus forcing all recipients to pay a fee.Brazil
As of mid-November 2010, users in Brazil also have noticed that the "Personal" tab for sending money has been omitted without notice. There is no longer an option to send personal payments, thus forcing all recipients to pay a fee. Balance transfers between PayPal accounts of the same account holder incur an additional 6.4% fee.As of beginning January 2011, Brazilian users are no longer allowed to withdraw money using credit/debit cards.
India
As of March 2011(Date needs to be changed), PayPal made changes to the User Agreement for Indian users to comply with Reserve Bank of IndiaReserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
regulations https://www.paypal-apac.com/india/. Notable changes to the agreement were:
- Export related payments for goods and services may not exceed $500.
- Any balance or future payments must not be used to buy goods or services but transferred to a bank account within 7 days from the receipt of payment.
- Credit/Debit cards must be used to pay through Paypal.
The per transaction limit just been changed to USD 3000, since 14 October 2011 (http://paypal-apac.com/email/20111013-india/index.html)
PayPal Labs
PayPal's innovation environment, PayPal-Labs.com, hosts several outreach and experimental projects such as the storefront application, the MySpace and Facebook donation widgets, and the PayPal blog.Bank status
Peter ThielPeter Thiel
Peter Andreas Thiel is an American business magnate, venture capitalist, and hedge fund manager. With Elon Musk and Max Levchin, Thiel co-founded PayPal and was its CEO...
, the founder of PayPal, has stated that PayPal is not a bank because it does not engage in fractional-reserve banking
Fractional-reserve banking
Fractional-reserve banking is a form of banking where banks maintain reserves that are only a fraction of the customer's deposits. Funds deposited into a bank are mostly lent out, and a bank keeps only a fraction of the quantity of deposits as reserves...
. Rather, PayPal's funds that have not been disbursed are kept in commercial interest-bearing checking accounts.
In the United States, PayPal is licensed as a money transmitter on a state-by-state basis. PayPal is not classified as a bank in the United States, though the company is subject to some of the rules and regulations governing the financial industry including Regulation E consumer protections and the USA PATRIOT Act
USA PATRIOT Act
The USA PATRIOT Act is an Act of the U.S. Congress that was signed into law by President George W. Bush on October 26, 2001...
.
Commencing July 2, 2007, as PayPal (Europe) S.à r.l. & Cie, S.C.A., PayPal moved its European operations from the UK to Luxembourg. As a Luxembourg entity, it is since regulated as a bank by the Commission de Surveillance du Secteur Financier (CSSF) and provides PayPal service throughout the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
.
Safety and protection policies
The PayPal Buyer Protection Policy states that the customer may file a buyer complaint within 45 days if they did not receive an item or if the item they purchased was significantly not as described. If the buyer used a credit card, they might get a refund via chargebackChargeback
A chargeback is the return of funds to a consumer, forcibly initiated by the consumer's issuing bank. Specifically, it is the reversal of a prior outbound transfer of funds from a consumer's bank account, line of credit, or credit card....
from their credit-card company. However, in the UK, where such a purchaser is entitled to specific statutory protections (that the credit card company is a second party to the purchase and is therefore equally liable in law if the other party defaults or goes into liquidation) under Section 75 Consumer Credit Act 1979, the purchaser loses this legal protection if the card payment is processed via PayPal..
According to PayPal, it protects sellers in a limited fashion via the Seller Protection Policy. In general the Seller Protection Policy is intended to protect the seller from certain kinds of chargebacks or complaints if seller meets certain conditions including proof of delivery to the buyer. PayPal states the Seller Protection Policy is "designed to protect sellers against claims by buyers of unauthorized payments and against claims of non-receipt of any merchandise". The 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). The PayPal Seller Protection Policy does not provide the additional consumer protection afforded by UK consumer legislation (e.g. Sale of Goods Act) and in addition it cannot be enforced in the Courts because PayPal operates from Luxembourg, outside all three of the UK legal jurisdictions.
Security
Security key
In early 2006, PayPal introduced an optional security keySecurity token
A security token may be a physical device that an authorized user of computer services is given to ease authentication...
as an additional precaution against fraud. A user account tied to a security key has a modified login process: the account holder enters his or her login ID and password, as normal, but is then prompted to press the button on the security key and enter the six-digit number generated by it. For convenience, the user may append the six-digit to his or her password in the login screen. This way he or she is not prompted for it on another page. Using this method is required for some services, such as when using PayPal through the eBay application on iPhone.
This two-factor authentication
Two-factor authentication
Two-factor authentication is an approach to authentication which requires the presentation of two different kinds of evidence that someone is who they say they are. It is a part of the broader family of multi-factor authentication, which is a defense in depth approach to security...
is intended to make account compromise by a malicious third party without access to the physical security key difficult, although it does not prevent so-called Man in the Browser
Man in the Browser
Man-in-the-Browser , a form of Internet threat related to Man-in-the-Middle , is a trojan that infects a web browser and has the ability to modify pages, modify transaction content or insert additional transactions, all in a completely covert fashion invisible to both the user and host application...
(MITB) attacks. However, the user (or malicious third party) can alternatively authenticate by providing the credit card or bank account number listed on his or her account. Thus, the PayPal's implementation does not offer the security of true two-factor authentication.
The key currently costs US$29.95 for all users with no ongoing fees. The option of using a security key with one's account is currently available only to users registered in Australia, Germany, Canada, the United Kingdom, and the United States.
MTAN
It is also possible to use a mobile phone to receive an MTAN (Mobile Transaction Authentication Number) via SMS. Like all security measures, there have been reports of vulnerabilities to older mobile handsets.Regulation
In Europe, PayPal is registered as a bank in Luxembourg under the legal name PayPal (Europe) Sàrl et Cie SCA, a company regulated centrally by the Luxembourg bank authority, the Commission de Surveillance du Secteur Financier (CSSF) (note that all of the company's European accounts were transferred to PayPal's bank in Luxembourg on July 2, 2007.) Prior to this move, PayPal had been registered in the UK as PayPal (Europe) Ltd, an entity which was licensed as an Electronic Money Issuer with the UK's Financial Services AuthorityFinancial Services Authority
The Financial Services Authority is a quasi-judicial body responsible for the regulation of the financial services industry in the United Kingdom. Its board is appointed by the Treasury and the organisation is structured as a company limited by guarantee and owned by the UK government. Its main...
(FSA) from 2004. This ceased in 2007, when the company moved to Luxembourg. It is therefore not possible for UK customers to obtain legal redress from the company in the English, Scottish, or Northern Irish Courts.
In the US, although PayPal has an extensive User Agreement, PayPal is not directly regulated by the U.S. federal government, because it serves as a payment intermediary. PayPal is regulated as a money transmitter, 31 C.F.R. 1010.100(ff)(5). PayPal is also subject to state regulation, but state laws vary, as do their definitions of banks, narrow banks, money services businesses and money transmitters. The most analogous regulatory source of law for PayPal transactions comes from P2P payments using credit and debit cards. Ordinarily, a credit card
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...
transaction, specifically the relationship between the issuing bank and the cardholder, is governed by the Truth in Lending Act
Truth in Lending Act
The Truth in Lending Act of 1968 is United States federal law designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed...
(TILA) 15 U.S.C. §§ 1601-1667f as implemented by Regulation Z, 12 C.F.R. 226, (TILA/Z). TILA/Z requires specific procedures for billing errors, dispute resolution and limits cardholder liability for unauthorized charges. Similarly, the legal relationship between a debit cardholder and the issuing bank is regulated by the Electronic Funds Transfer Act
Electronic Funds Transfer Act
The Electronic Fund Transfer Act was passed by the U.S. Congress in 1978 and signed by President Jimmy Carter, to establish the rights and liabilities of consumers as well as the responsibilities of all participants in electronic funds transfer activities....
(EFTA) 15 U.S.C. §§ 1693-1693r, as implemented by Regulation E, 12 C.F.R. 205, (EFTA/E). EFTA/E is directed at consumer protection and provides strict error resolution procedures. However, because PayPal is a payment intermediary and not otherwise regulated directly, TILA/Z and EFTA/E do not operate exactly as written once the credit/debit card transaction occurs via PayPal. Basically, unless a PayPal transaction is funded with a credit card, the consumer has no recourse in the event of fraud by the seller.
In India, as of January 27, 2010, PayPal has no cross-border money transfer authorization. In The New York Times article "India’s Central Bank Stops Some PayPal Services", Reserve Bank of India spokesman Alpana Killawalla stated: "Providers of cross-border money transfer service need prior authorization from the Reserve Bank under the Payment and Settlement Systems Act, PayPal does not have our authorization." PayPal is not listed in the "Certificates of Authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 for Setting up and Operating Payment System in India".
Fraud
If an unauthorized third party obtains and uses someone's PayPal login information and completes a transaction using the accountholder's debit or credit card, EFTA/E and TILA/Z make PayPal responsible for the breach. There are, of course, fact specific exceptions to this rule. One is if funds are illicitly withdrawn from a PayPal deposit account. In that situation, neither PayPal nor the bank is required to return the funds, because the agreement between a consumer and PayPal makes those types of transactions authorized.PayPal account holders' private information is marginally protected under one federal law. Since PayPal is a financial institution under the Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Act
The Gramm–Leach–Bliley Act , also known as the Financial Services Modernization Act of 1999, is an act of the 106th United States Congress...
(GLB), it cannot disclose its account holders' non-public personal information to third parties unless account holders opt in to those disclosures.
If an account is subject to fraud or unauthorized use, PayPal puts the "Limited Access" designation on the account. At this point, the account holder must:
- Log in
- Reset their password
- Develop a set of security questionSecurity questionA security question is used as an authenticator by banks, cable companies and wireless providers as an extra security layer. They are a form of shared secret....
s (based on the subjective and not fact — e.g. "What is your favorite ice cream?" not "What is your mother's maiden name?") - Verify location by phone or by mail
- Provide a set of documents, including but not limited to, a copy of the user's social security card and state ID, home utility bills, business licenses, and proof of original purchase of recently sold good
Phishing
PayPal presents anti-phishingPhishing
Phishing is a way of attempting to acquire information such as usernames, passwords, and credit card details by masquerading as a trustworthy entity in an electronic communication. Communications purporting to be from popular social web sites, auction sites, online payment processors or IT...
advice on their website for identifying and reporting phishing. PayPal encourages consumers to report all phishing emails to them.
Criticism and limitations
The current (2011/07/29) PayPal user agreement is a 26 page long pdf document. If one buys an item from a PayPal merchant, one is agreeing to an additional layer of arbitration beyond the merchant himself. Thus even if the merchant has acted improperly, PayPal has not violated its own policy until the user has gone through an extra arbitration process with PayPal. According to their 34-page (single-spaced) user agreement, "If a sender of a payment files a Chargeback, the credit card issuer, not PayPal, will determine who wins the Chargeback," which confirms that a user can employ the normal (legally mandated) dispute resolution process with his credit card issuer, instead of following PayPal's procedures. A user who reads section 13.7 (on page 27) finds notice that the user may have chargeback rights independent of the dispute resolution procedure privileges granted by the PayPal UA. Section 14.1 is entitled "Contact PayPal First" indicates that in case of a dispute, the user must contact PayPal first.In 2003, PayPal voluntarily stopped serving as an payment intermediary between gambling websites and their customers who engaged in online gambling. When they quit processing payments within online gambling community, they were the largest payment processor for online gambling transactions. In 2010, PayPal resumed accepting online gambling transactions but only in countries where online gambling is specifically legal and they only service those gambling sites who are properly licenced to operate legally in said jurisdictions.
In September 2005, Richard Kyanka, owner of the website Something Awful
Something Awful
Something Awful, often abbreviated to SA, is a comedy website housing a variety of content, including blog entries, forums, feature articles, digitally edited pictures, and humorous media reviews. It was created by Richard "Lowtax" Kyanka in 1999 as a largely personal website, but as it grew, so...
, set up an account to collect donations for Hurricane Katrina
Hurricane Katrina
Hurricane Katrina of the 2005 Atlantic hurricane season was a powerful Atlantic hurricane. It is the costliest natural disaster, as well as one of the five deadliest hurricanes, in the history of the United States. Among recorded Atlantic hurricanes, it was the sixth strongest overall...
to be given to the Red Cross. Owing to the high rate at which donations were made, the account was automatically frozen, and Kyanka criticized the time and difficulty involved in getting PayPal's customer service to unfreeze the account. In response to the concerns of Something Awful members over the charity used by PayPal, United Way, Kyanka finally opted to have the money refunded to the donors so that they could donate directly to their charities of choice, though PayPal did not refund exchange and handling fees for international donors.
In March 2008, Australian current affairs show Today Tonight
Today Tonight
Today Tonight is a controversial Australian News and Current Affairs program, produced by the Seven Network and shown weeknightly at in direct competition with rival Nine Network program A Current Affair....
aired a segment criticising PayPal, with regard to safety, freezing accounts and customer service.
Several PayPal gripe site
Gripe site
A gripe site is a type of website devoted to the critique and or mockery of a person, place, politician, corporation, or institution. They are also known as "complaint" or "sucks" sites...
s and blog posts have been created complaining of problems such as the freezing of accounts of eCommerce stores if they experience rapid growth, preventing them from being able to pay suppliers and fulfill orders. One such site, Paypalsucks.com, ranked third on a Forbes Magazine listing of "Top Corporate Hate Web Sites" in 2005 based on "hostility" and "entertainment value" of web forum postings and other criteria.
In June 2008, the Australian Competition and Consumer Commission
Australian Competition and Consumer Commission
The Australian Competition and Consumer Commission is an independent authority of the Australia government. It was established in 1995 with the amalgamation of the Australian Trade Practices Commission and the Prices Surveillance Authority to administer the Trade Practices Act 1974...
found that, "The evidence available does not support the view that PayPal is the most secure method of payment, or offers the best service for all transactions."
In February 2010, PayPal stopped or reversed all "personal" transactions in or out of India without prior notice. Funds already transferred and transactions that had previously been "completed" were reversed leaving many vendor accounts over-drafted. Companies, contractors and service providers throughout India were left in debt to PayPal for services they had already provided when PayPal, without warning or consent, returned funds vendors had already received and withdrawn.
In spite of its international reach, PayPal has limited functionalites for multi-country users, most notably the impossibility to have bank accounts in several countries, or to have a shipping address in a different country than one's bank account / credit card.
In March 2010, PayPal froze donations to Cryptome
Cryptome
Cryptome is a website hosted in the United States since 1996 by independent scholars and architects John Young and Deborah Natsios that functions as a repository for information about freedom of speech, cryptography, spying, and surveillance...
, seizing over $5300 of in-transit donations. PayPal refused to inform Cryptome of the reason for this action, claiming that to disclose why the donations had been confiscated would violate Cryptome's own privacy. A week later, PayPal offered an apology, which was rejected by Cryptome founder John Young as "insulting and unacceptable".
In September 2010, PayPal froze the account of Markus Persson, developer of independent video game Minecraft
Minecraft
Minecraft is a sandbox-building independent video game written in Java originally by Swedish creator Markus "Notch" Persson and now by his company, Mojang, formed from the proceeds of the game. It was released as an alpha on May 17, 2009, with a beta version on December 20, 2010...
. His account contained around €600,000.
Also in September 2010, PayPal froze the account of the open-source revision control software TortoiseSVN
TortoiseSVN
TortoiseSVN is a Subversion client, implemented as a Microsoft Windows shell extension. It is free software released under the GNU General Public License.TortoiseSVN won the SourceForge.net 2007 Community Choice Award for Best Tool or Utility for Developers....
. The lead developer compared the situation to a car shop that "decides not to do business with you anymore. ... But then the shop owner tells you that they keep your car for half a year first because that's their policy."
In December 2010, PayPal permanently restricted an account used to raise funds for WikiLeaks
Wikileaks
WikiLeaks is an international self-described not-for-profit organisation that publishes submissions of private, secret, and classified media from anonymous news sources, news leaks, and whistleblowers. Its website, launched in 2006 under The Sunshine Press organisation, claimed a database of more...
citing it was in violation of the PayPal Acceptable Use Policy. At a conference in Paris, a PayPal VP, in response to an attendee's question, stated the account was restricted after PayPal was allegedly pressured by the U.S. State Department. Afterwards, PayPal reiterated the decision was based on violation of PayPal's Acceptable Use Policy. This was followed by cyber attack on the paypal.com website and a boycott of PayPal, in which some users closed their PayPal account in protest.
In November 2011, PayPal moved all shipping to eBay. This move also forced businesses with multiple users to use only their administrative passwords for all employees, which opens the door to potential account fraud by merchant employees.
As a results of this shipping change, many PayPal merchants already frustrated with PayPal fraud protection moved their shipping from PayPal/eBay to other online shippers such as Stamps.com
Litigation
In 2002, CertCoCertco (financial services)
CertCo was a financial cryptography startup spun out of Bankers Trust in the 1990s. It had offices in New York City and Cambridge, Massachusetts...
filed a suit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
against PayPal claiming patent infringement concerning the use of distributed computing systems that process micropayment
Micropayment
A micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. PayPal defines a micropayment as a transaction of less than 12 USD while Visa prefers transactions under 20 Australian dollars, and though micropayments were originally envisioned to...
s, or small cash amounts. In April 2002, CertCo dropped the suit and stated that they had come to a settlement involving, "a non-consequential payment and mutual releases."
In March 2002, two PayPal account holders separately sued the company for alleged violations of the Electronic Funds Transfer Act
Electronic Funds Transfer Act
The Electronic Fund Transfer Act was passed by the U.S. Congress in 1978 and signed by President Jimmy Carter, to establish the rights and liabilities of consumers as well as the responsibilities of all participants in electronic funds transfer activities....
(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 US$9.25 million payment to members of the class. PayPal denied any wrongdoing.
In May 2002, Tumbleweed Communications
Tumbleweed Communications
Tumbleweed Communications Corp. provided secure messaging and secure file transfer solutions for enterprise and government customers. Tumbleweed Communications merged with Axway in 2008....
filed a lawsuit against PayPal (and later expanded it to include eBay) claiming that PayPal had violated its patents for sending personalized links through e-mail, which PayPal uses to alert its customers about financial transactions. In January 2004, the two parties came to an agreement, but didn't disclose the financial terms of their licensing agreement.
In June 2003, Stamps.com
Stamps.com
Stamps.com is a Los Angeles, California-based company that provides Internet-based mailing and shipping services. Stamps.com is a public company and trades on the NYSE exchange under the symbol STMP.- History :On April 13, 1998, the U.S...
filed a lawsuit against PayPal and eBay claiming breach of contract, breach of the implied covenants of good faith and fair dealing, and interference with contract, among other claims. In a 2002 license agreement, Stamps.com and PayPal agreed that Stamps.com technology would be made available to allow PayPal users to buy and print postage online from their PayPal accounts. Stamps.com claimed that PayPal did not live up to its contractual obligations and accused eBay of interfering with PayPal and Stamps.com's agreement, hence Stamp.com's reasoning for including eBay in the suit.
In August 2002, Craig Comb and two others filed a class action against PayPal in, Craig Comb, et al. v. PayPal, Inc.. They sued, alleging illegal misappropriation of customer accounts and detailed ghastly customer service experiences. Allegations included freezing deposited funds for up to 180 days until disputes were resolved by PayPal, and forcing customers to arbitrate their disputes under the American Arbitration Association
American Arbitration Association
The American Arbitration Association is a private enterprise in the business of arbitration, and one of several arbitration organizations that administers arbitration proceedings. The AAA also administers mediation and other forms of alternative dispute resolution. It is headquartered in New York...
's guidelines (a costly procedure). The court ruled against PayPal, stating that "the User Agreement and arbitration clause are substantively unconscionable under California law," noting their unjustifiable one-sidedness and explicit prohibition of class actions produces results that "shock the conscience" and indicate PayPal was "attempting to insulate itself contractually from any meaningful challenge to its alleged practices".
In September 2002, Bank One Corporation
Bank One Corporation
Some of the banks that were merged into these banks include:*Bank One**Security National Bank & Trust **Affiliated Bankshares of Colorado **American Fletcher Corp. **City National Bank and Trust Co...
sued Paypal for allegedly infringing its cardless payment system patents; the following year Paypal countersued, claiming that Bank One's online bill-payment system was an infringement against PayPal's online bill-payment patent, issued in 1998. The two companies agreed on a settlement in October 2003.
In November 2003, AT&T
AT&T
AT&T Inc. is an American multinational telecommunications corporation headquartered in Whitacre Tower, Dallas, Texas, United States. It is the largest provider of mobile telephony and fixed telephony in the United States, and is also a provider of broadband and subscription television services...
filed suit against eBay and PayPal claiming that their payment systems infringed an AT&T patent, filed in 1991 and granted in 1994. The case was settled out of court the following month, with the terms of the settlement undisclosed.
In March 2004, PayPal and New York state's Attorney General, Eliot Spitzer
Eliot Spitzer
Eliot Laurence Spitzer is an American lawyer, former Democratic Party politician, and political commentator. He was the co-host of In the Arena, a talk-show and punditry forum broadcast on CNN until CNN cancelled his show in July of 2011...
, came to an agreement to require PayPal to disclose clients' rights and liabilities more accurately and to pay $150,000 to the state of New York for penalties and the costs of the investigation.
In April 2007, one of two anti-trust lawsuits was filed against eBay/PayPal by Michael Malone of Texas. This suit claimed that the monopolistic relationship between eBay and PayPal violates United States anti-trust laws. In March 2010, Judge Jeremy Fogel entered summary judgement in favor of Paypal.
In June 2011, PayPal and Israel Credit Cards–Cal Ltd. were sued for NIS16 million. The claimants accused PayPal of deliberately failing to notify its customers that ICC-Cal was illegally charging them for currency conversion fees.
See also
- Electronic moneyElectronic moneyElectronic money is money or scrip that is only exchanged electronically. Typically, this involves the use of computer networks, the internet and digital stored value systems...
- Interchange feeInterchange feeInterchange fee is a term used in the payment card industry to describe a fee paid between banks for the acceptance of card based transactions. Usually it is a fee that a merchant's bank pays a customer's bank however there are instances where the interchange fee is paid from the issuer to...
- List of on-line payment service providers (PayPal's competition)
- MicropaymentMicropaymentA micropayment is a financial transaction involving a very small sum of money and usually one that occurs online. PayPal defines a micropayment as a transaction of less than 12 USD while Visa prefers transactions under 20 Australian dollars, and though micropayments were originally envisioned to...
- BitcoinBitcoinBitcoin is a decentralized, peer-to-peer network over which users make transactions that are tracked and verified through this network. The word Bitcoin also refers to the digital currency implemented as the currency medium for user transactions over this network...
- PayPal MafiaPayPal Mafia"PayPal Mafia" is an informal term for the community of American businesspeople and investors centered in Silicon Valley, who were founders or early employees of e-commerce service PayPal before founding a series of other technology companies...
- PayoneerPayoneerPayoneer is an Internet-based financial services business that allows users to transfer money and receive payments through re-loadable prepaid MasterCard debit cards...