HOME

TheInfoList



OR:

PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional
paper Paper is a thin sheet material produced by mechanically or chemically processing cellulose fibres derived from wood, rags, grasses or other vegetable sources in water, draining the water through fine mesh leaving the fibre evenly distribu ...
methods such as checks and
money order A money order is a directive to pay a pre-specified amount of money from prepaid funds, making it a more trusted method of payment than a cheque. History The money order system was established by a private firm in Great Britain in 1792 and was ...
s. The company operates as a payment processor for online vendors,
auction An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition e ...
sites and many other commercial users, for which it charges a fee. Established in 1998 as Confinity, PayPal went public through an IPO in 2002. It became a wholly owned subsidiary of
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became ...
later that year, valued at $1.5 billion. In 2015 eBay spun off PayPal to its shareholders, and PayPal became an independent company again. The company was ranked 143rd on the 2022
Fortune 500 The ''Fortune'' 500 is an annual list compiled and published by ''Fortune (magazine), Fortune'' magazine that ranks 500 of the largest United States Joint-stock company#Closely held corporations and publicly traded corporations, corporations by ...
of the largest United States corporations by revenue.


History


Early history

PayPal was originally established by Max Levchin, Peter Thiel, and
Luke Nosek Luke Nosek (; born 1975/1976) is a Polish-American entrepreneur, notable for being a co-founder of PayPal. Biography Łukasz Nosek was born in Tarnów, Poland. After emigrating to the US, he earned a B.S. in Computer Engineering from the Uni ...
in December 1998 as Confinity, a company that developed security software for hand-held devices. Having had no success with that business model, however, it switched its focus to a digital wallet. The first version of the PayPal electronic payments system was launched in 1999. In March 2000, Confinity merged with x.com, an online financial services company founded in March 1999 by
Elon Musk Elon Reeve Musk ( ; born June 28, 1971) is a business magnate and investor. He is the founder, CEO and chief engineer of SpaceX; angel investor, CEO and product architect of Tesla, Inc.; owner and CEO of Twitter, Inc.; founder of The B ...
, Harris Fricker, Christopher Payne, and Ed Ho. Musk was optimistic about the future success of the money transfer business Confinity was developing. Musk and Bill Harris, then-president and CEO of X.com, disagreed about the potential future success of the money transfer business and Harris left the company in May 2000. In October of that year, Musk decided that X.com would terminate its other internet banking operations and focus on PayPal. That same month, Elon Musk was replaced by Peter Thiel as CEO of X.com, which was renamed PayPal in June 2001 and went
public In public relations and communication science, publics are groups of individual people, and the public (a.k.a. the general public) is the totality of such groupings. This is a different concept to the sociology, sociological concept of the ''Öf ...
in 2002. PayPal's IPO listed under the ticker PYPL at $13 per share and generated over $61 million.


eBay subsidiary (2002–2014)

Shortly after PayPal's IPO, the company was acquired by
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became ...
on October 3, 2002, for $1.5 billion in eBay stock. More than 70 percent of all eBay auctions accepted PayPal payments, and roughly 1 in 4 closed auction listings were transacted via PayPal. PayPal became the default payment method used by the majority of eBay users, and the service competed with eBay's subsidiary
Billpoint Billpoint was the name of a person-to-person money transfer service founded in 1998, and purchased in 1999 by online auctioneer eBay. History Billpoint was founded in 1998 by S. Young Lee, Hope Chen, Will Chen, Jason May, Ian Flint and Jay Sh ...
, as well as
Citibank Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...
's c2it,
Yahoo! Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo Inc., which is 90% owned by investment funds managed by Apollo Global Mana ...
's
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 Arthas.com, a provider of electronic billing services. ...
, and
Google Checkout Google Checkout was an online payment processing service provided by Google aimed at simplifying the process of paying for online purchases. It was discontinued on November 20, 2013 and the service moved to Google Wallet (now called Google Pay). ...
. In 2005, PayPal acquired the VeriSign payment solution to provide added security support. In 2007, PayPal announced a partnership with MasterCard, which led to the development and launch of the PayPal Secure Card service, a software that allows customers to make payments on websites that do not accept PayPal directly. By the end of 2007, the company generated $1.8 billion in revenue. In January 2008, PayPal acquired Fraud Sciences, a privately held Israeli start-up that developed online risk tools, for $169 million. In November 2008, the company acquired
Bill Me Later PayPal Credit, formerly named Bill Me Later (BML), is a proprietary payment method offered on the websites of many well-known merchants, including those of Wal-Mart, Home Depot, USPS, eBay, B&H Photo Video, Best Buy, Overstock.com, JetBlue Airwa ...
, an online transactional credit company. By 2010, PayPal had over 100 million active user accounts in 190 markets through 25 different currencies. In July 2011, fourteen alleged members of the
Anonymous Anonymous may refer to: * Anonymity, the state of an individual's identity, or personally identifiable information, being publicly unknown ** Anonymous work, a work of art or literature that has an unnamed or unknown creator or author * Anony ...
hacktivist In Internet activism, hacktivism, or hactivism (a portmanteau of ''hack'' and ''activism''), is the use of computer-based techniques such as hacking as a form of civil disobedience to promote a political agenda or social change. With roots in ha ...
group were charged with attempting to disrupt PayPal's operations. The
denial of service In computing, a denial-of-service attack (DoS attack) is a cyber-attack in which the perpetrator seeks to make a machine or network resource unavailable to its intended users by temporarily or indefinitely disrupting services of a host conne ...
attacks occurred in December 2010, after PayPal stopped processing donations to
WikiLeaks WikiLeaks () is an international non-profit organisation that published news leaks and classified media provided by anonymous sources. Julian Assange, an Australian Internet activist, is generally described as its founder and director and ...
. On 5 December 2013, 13 of the
PayPal 14 The PayPal 14 are a group of defendants allegedly connected with the hacktivist group Anonymous, thirteen of whom pleaded guilty in a San Jose court in California, United States in December 2013, to charges of conspiring to disrupt access to the ...
pleaded guilty to misdemeanor and felony charges related to the attacks. The company continued to build its Merchant Services division, providing e-payments for retailers on eBay. In 2011, PayPal announced that it would begin moving its business offline so that customers can make payments via PayPal in stores. In August 2012, the company announced its partnership with Discover Card to allow PayPal payments to be made at any of the 7 million stores in the Discover network. By the end of 2012, PayPal's total payment volume processed was . and accounted for 40% of eBay's revenue, amounting to in the 3rd quarter of 2012. In 2013, PayPal acquired IronPearl, a Palo Alto startup offering engagement software, and Braintree, a
Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = List of sovereign states, Count ...
-based payment gateway, to further product development and mobile services. In June 2014 David Marcus announced he was leaving his role as PayPal President; Marcus joined PayPal in August 2011 after its acquisition of Zong, of which he was the founder and CEO. David Marcus succeeded Scott Thompson as president, who left the role to join
Yahoo Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo! Inc. (2017–present), Yahoo Inc., which is 90% owned by investment funds ma ...
. PayPal announced that Marcus would be succeeded by Dan Schulman, who previously served as CEO of Virgin Mobile and Executive vice president of
American Express American Express Company (Amex) is an American multinational corporation, multinational corporation specialized in payment card industry, payment card services headquartered at 200 Vesey Street in the Battery Park City neighborhood of Lower Man ...
.


Spin-off from eBay (2014–present)

It was announced on September 30, 2014, that eBay would spin off PayPal into a separate publicly traded company, a move demanded in 2013 by activist
hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as ...
magnate Carl Icahn. The spin-off was completed on July 18, 2015. Dan Schulman is the current president and CEO, with former eBay CEO
John Donahoe John Joseph Donahoe II (born April 30, 1960) is an American businessman who is the CEO of Nike. Early in his career he worked for Bain & Company, becoming the firm's president and CEO in 1999. He is on the board of directors at Nike, The Bridges ...
serving as chairman. On January 31, 2018, eBay announced that "After the existing eBay-PayPal agreement ends in 2020, PayPal will remain a payment option for shoppers on eBay, but it won't be prominently featured ahead of debit and credit card options as it is today. PayPal will cease to process card payments for eBay at that time." The company will "instead begin working with Amsterdam-based Adyen". On July 1, 2015, PayPal announced that it was acquiring digital money transfer company
Xoom Corporation Xoom Corporation (also known as Xoom, a PayPal Service) is an electronic funds transfer or remittance provider that allows consumers to send money, pay bills and reload mobile phones from the United States and Canada to 131 countries. History X ...
. PayPal spent $25 a share in cash to acquire the publicly traded Xoom, or about $1.09 billion. The deal was closed in the fourth quarter of 2015. The move strengthened PayPal’s international business, giving it access to Xoom’s 1.3 million active U.S. customers that sent about $7 billion in the 12 months ending on March 31, to people in 37 countries. On September 1, 2015, PayPal launched its
peer-to-peer Peer-to-peer (P2P) computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the network. They are said to form a peer-to-peer ...
payment platform "PayPal.Me", a service that allows users to send a custom link to request funds via text, email, or other messaging platforms. Custom links are set to be structured as PayPal.me/username/amount requested. PayPal.Me was launched in 18 countries including the United States, United Kingdom, Germany, Australia, Canada, Russia, Turkey, France, Italy, Spain, Poland, Sweden, Belgium, Norway, Denmark, Netherlands, Austria and Switzerland. PayPal had 170 million users, as of September 2015, and the focus of PayPal.Me was to create a mobile-first user experience that enables faster payment sharing than PayPal's traditional tools. On May 17, 2018, PayPal agreed to purchase Swedish payment processor iZettle for $2.2 billion. This was PayPal's largest acquisition until late November 2019 and the company claims that it is the in-store expertise and digital marketing strength that will complement its own online and mobile payment services. On March 19, 2019, PayPal announced its partnership with
Instagram Instagram is a photo and video sharing social networking service owned by American company Meta Platforms. The app allows users to upload media that can be edited with filters and organized by hashtags and geographical tagging. Posts can ...
as part of the company's new checkout feature, "Checkout on Instagram". In June 2019, PayPal reported that Chief Operating Officer Bill Ready would be leaving the company at the end of the year. In December 2019,
Google Google LLC () is an American Multinational corporation, multinational technology company focusing on Search Engine, search engine technology, online advertising, cloud computing, software, computer software, quantum computing, e-commerce, ar ...
announced that Ready would become the new commerce chief. On January 6, 2020, PayPal acquired
Honey Honey is a sweet and viscous substance made by several bees, the best-known of which are honey bees. Honey is made and stored to nourish bee colonies. Bees produce honey by gathering and then refining the sugary secretions of plants (primar ...
for over $4 billion. This is PayPal's largest acquisition to date, and its most recent. It more recently signed a deal with NBCUniversal. In January 2021, PayPal became the first foreign operator with 100% control of a payment platform in China, gaining an advanced position in the local online payment market. In an international survey conducted in March 2021 by
Morning Consult Morning Consult is a global decision intelligence company established in 2014. It was named one of the fastest growing technology companies in North America by Deloitte in both 2018 and 2019 and was valued at more than one billion dollars in Jun ...
, PayPal was found to be the second most trusted brand globally. On October 20, 2021, Bloomberg reported that PayPal is interested in acquiring Pinterest, with a potential price around $70 a share, there’s no certainty the talks will lead to an agreement.


Acquisitions


Finances

The fiscal year for Paypal is from January 1 to December 31. For fiscal year 2019, Paypal reported earnings of US$2.459 billion, with an annual revenue of $17.772 billion, an increase of 15% over the previous fiscal cycle. PayPal's shares traded at over $108 per share, and its market capitalization was valued at over $127.58 billion in December 2019. The
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
has accelerated the growth of digital payment platforms, including PayPal, at the expense of the traditional banking sector. As a result, Paypal has seen an increase in its stock to up to 78% in 2020 as of October. In addition, total payment volume has increased 29% amounting to $220 billion increasing positive investor sentiment.


Offices

PayPal's corporate headquarters are located in the
North San Jose Innovation District Rincon de los Esteros, also known as Innovation Triangle, the Golden Triangle, the Innovation District, or simply as Rincon, is a vast district of San Jose, California, making up a significant portion of North San Jose. The district has one of ...
of
San Jose, California San Jose, officially San José (; ; ), is a major city in the U.S. state of California that is the cultural, financial, and political center of Silicon Valley and largest city in Northern California by both population and area. With a 2020 popu ...
, at North First Street campus. The company's operations center is located in
La Vista, Nebraska La Vista is a city in Sarpy County, Nebraska, United States. The population was 15,758 at the 2010 census. The city was incorporated on February 23, 1960. La Vista is a suburb of Omaha. It is bordered by the cities of Omaha and Ralston on the n ...
, which was opened in 1999.Virgil Larson, "Local building, global growth: PayPal opens facility, plans to expand staff to keep up with business", '' Omaha World-Herald'', March 8, 2007, 1D. Since July 2007, PayPal has operated across the
European Union The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are located primarily in Europe, Europe. The union has a total area of ...
as a Luxembourg-based bank. The PayPal European headquarters are located in
Luxembourg Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy of Luxembourg, ; french: link=no, Grand-Duché de Luxembourg ; german: link=no, Großherzogtum Luxemburg is a small lan ...
and the international headquarters are in
Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, bor ...
. PayPal opened a technology center in
Scottsdale, Arizona , settlement_type = City , named_for = Winfield Scott , image_skyline = , image_seal = Seal of Scottsdale (Arizona).svg , image_blank_emblem = City of Scottsdale Script Logo.svg , nic ...
in 2006, and a software development center in
Chennai Chennai (, ), formerly known as Madras ( the official name until 1996), is the capital city of Tamil Nadu, the southernmost Indian state. The largest city of the state in area and population, Chennai is located on the Coromandel Coast of th ...
, India in 2007. In October 2007, PayPal opened a data service office on the north side of
Austin, Texas Austin is the capital city of the U.S. state of Texas, as well as the seat and largest city of Travis County, with portions extending into Hays and Williamson counties. Incorporated on December 27, 1839, it is the 11th-most-populous city ...
, and also opened a second operations center in
La Vista, Nebraska La Vista is a city in Sarpy County, Nebraska, United States. The population was 15,758 at the 2010 census. The city was incorporated on February 23, 1960. La Vista is a suburb of Omaha. It is bordered by the cities of Omaha and Ralston on the n ...
that same year. In 2011, joining similar customer support operations located in
Berlin, Germany Berlin ( , ) is the capital and List of cities in Germany by population, largest city of Germany by both area and population. Its 3.7 million inhabitants make it the European Union's List of cities in the European Union by population within ci ...
;
Chandler, Arizona Chandler is a city in Maricopa County, Arizona, United States, and a suburb in the Phoenix-Mesa-Chandler Metropolitan Statistical Area (MSA). It is bordered to the north and west by Tempe, to the north by Mesa, to the west by Phoenix, to t ...
;
Dublin Dublin (; , or ) is the capital and largest city of Ireland. On a bay at the mouth of the River Liffey, it is in the province of Leinster, bordered on the south by the Dublin Mountains, a part of the Wicklow Mountains range. At the 2016 ...
and
Dundalk Dundalk ( ; ga, Dún Dealgan ), meaning "the fort of Dealgan", is the county town (the administrative centre) of County Louth, Ireland. The town is on the Castletown River, which flows into Dundalk Bay on the east coast of Ireland. It is h ...
, Ireland;
Omaha, Nebraska Omaha ( ) is the largest city in the U.S. state of Nebraska and the county seat of Douglas County. Omaha is in the Midwestern United States on the Missouri River, about north of the mouth of the Platte River. The nation's 39th-largest ...
; and
Shanghai Shanghai (; , , Standard Chinese, Standard Mandarin pronunciation: ) is one of the four Direct-administered municipalities of China, direct-administered municipalities of the China, People's Republic of China (PRC). The city is located on the ...
, China; PayPal opened a second customer support center in
Kuala Lumpur, Malaysia , anthem = '' Maju dan Sejahtera'' , image_map = , map_caption = , pushpin_map = Malaysia#Southeast Asia#Asia , pushpin_map_caption = , coordinates = , su ...
, and began the hiring process. In 2014, PayPal opened a new global center of operations in Kuala Lumpur.


Services

PayPal's services allow people to make
financial transaction A financial transaction is an Contract, agreement, or communication, between a buyer and seller to exchange goods, Service (economics), services, or Asset, assets for payment. Any transaction involves a change in the status of the finances of two ...
s online by granting the ability to transfer funds electronically between individuals and businesses. Through PayPal, users can send or receive payments for online auctions on websites like
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became ...
, purchase or sell goods and services, or donate money or receive donations. It is not necessary to have a PayPal account to use the company's services. PayPal account users can set
currency conversion In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of ...
option in account settings. The PayPal app is available online or at the iTunes App Store and Google Play. One year after acquiring Braintree, PayPal introduced its "One Touch" service, which allows users to pay with a one-touch option on participating merchants websites or apps. In 2007, PayPal acquired the online credit product
Bill Me Later PayPal Credit, formerly named Bill Me Later (BML), is a proprietary payment method offered on the websites of many well-known merchants, including those of Wal-Mart, Home Depot, USPS, eBay, B&H Photo Video, Best Buy, Overstock.com, JetBlue Airwa ...
, Inc., which has since been rebranded as PayPal Credit and provided services for Comenity Capital Bank, the lender of PayPal Credit accounts. Founded in 2000, Bill Me Later is headquartered in
Timonium, Maryland Timonium is a census-designated place (CDP) in Baltimore County, Maryland, United States. As of the 2010 census it had a population of 9,926. Prior to 2010 the area was part of the Lutherville-Timonium CDP. The Maryland State Fair is held in T ...
. PayPal Credit offers shoppers access to an instant online revolving line of credit at thousands of vendors that accept PayPal, subject to credit approval. PayPal Credit allows consumers to shop online in much the same way as they would with a traditional credit card. The rebranding of Bill Me Later as PayPal Credit also means that consumers can use PayPal Credit to fund transactions virtually anywhere PayPal is accepted. In 2015 PayPal agreed that PayPal Credit would pay a $25 million fine to settle a complaint filed in Federal Court by the
Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mo ...
. From 2009 to 2016, PayPal operated Student Accounts, allowing parents to set up a student account, transfer money into it, and obtain a debit card for student use. The program provided tools to teach how to spend money wisely and take responsibility for actions. PayPal discontinued Student Accounts in August 2016. In November 2009, PayPal partially opened its platform, allowing other services to get access to more APIs and to use its infrastructure in order to enable peer-to-peer online transactions. On November 28, 2011, PayPal reported Black Friday brought record mobile engagement, including a 538% increase in global mobile payment volume when compared with Black Friday 2010. In 2012, the company launched "PayPal Here", a small business mobile payment system that includes a combination of a free
mobile app A mobile application or app is a computer program or software application designed to run on a mobile device such as a phone, tablet, or watch. Mobile applications often stand in contrast to desktop applications which are designed to run on d ...
and a small card-reader that plugs into a
smart phone A smartphone is a portable computer device that combines mobile telephone and computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities and extensive mobile operating systems, whi ...
. PayPal launched an updated app for iOS and Android in 2013 that expanded its mobile app capabilities by allowing users to search for local shops and restaurants that accept PayPal payments, order ahead at participating venues, and access their PayPal Credit accounts (formerly known as Bill Me Later). On October 21, 2020, PayPal announced a new service allowing customers to use
cryptocurrencies A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It ...
to shop at 26 million merchants on the network starting in 2021. Paypal has been using Paxos Trust to provide the back end infrastructure allowing users to manage and trade cryptocurrencies in accordance to data privacy rules and financial regulations. Paxos has been in charge of acquiring the necessary regulatory approvals for Paypal to facilitate cryptocurrency assets. As part of the announcement, PayPal secured the first conditional cryptocurrency license from the New York State Department of Financial Services, which will allow customers to purchase cryptocurrencies such as
Bitcoin Bitcoin (abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
,
Litecoin Litecoin (Abbreviation: LTC; sign: Ł) is a decentralized peer-to-peer cryptocurrency and open-source software project released under the MIT/X11 license. Inspired by Bitcoin, Litecoin was among the earliest altcoins, starting in October 201 ...
, Ethereum, and
Bitcoin Cash Bitcoin Cash is a cryptocurrency that is a fork of Bitcoin. Bitcoin Cash is a spin-off or altcoin that was created in 2017. In November 2018, Bitcoin Cash split further into two cryptocurrencies: Bitcoin Cash and Bitcoin SV. History Since i ...
. In March 2022, PayPal introduced a flat-fee structure for cryptocurrency transactions under $200; transactions over $200 incur a 1.8% fee for purchases or sales up to $1,000, and 1.5% for any transaction amount greater than $1,000. , PayPal operates in 202 markets and has 426 million active, registered accounts. PayPal allows customers to send, receive, and hold funds in 25 currencies worldwide.


Business model evolution

PayPal's success in users and volumes was the product of a three-phase strategy described by former eBay CEO Meg Whitman: "First, PayPal focused on expanding its service among eBay users in the US. 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, payment volumes were coming mostly from the eBay auction website. The system was very attractive to auction sellers, most of which were individuals or small businesses that were unable to accept credit cards, 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.


Phase 2

Until 2000, PayPal's strategy was to earn interest on funds in PayPal accounts. However, most recipients of PayPal credits withdrew funds immediately. Also, many senders funded their payments using credit cards, which cost PayPal roughly 2% of payment value per transaction. To solve this problem, PayPal tailored its product to cater more to business accounts. Instead of relying on interests earned from deposited funds, PayPal started relying on earnings from service charges. They offered seller protection to PayPal account holders, provided that they comply with reimbursement policies. For example, PayPal merchants are either required to retain a traceable proof of shipping to a confirmed address or to provide a signed receipt for items valued over $750.


Phase 3

After fine-tuning PayPal's business model and increasing its domestic and international penetration on eBay, PayPal started its off-eBay strategy. This was based on developing stronger growth in active users 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 Cybersource is a payment service provider founded in 1994. In November 2007, Cybersource acquired the U.S. small business payment services provider Authorize.Net for $565 million. On April 22, 2010, Visa Inc. acquired Cybersource for $2 billio ...
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 Dell is an American based technology company. It develops, sells, repairs, and supports computers and related products and services. Dell is owned by its parent company, Dell Technologies. Dell sells personal computers (PCs), servers, data ...
, Apple's iTunes, and
Yahoo! Store Viaweb was a web-based application that allowed users to build and host their own online stores with little technical expertise using a web browser. The company was started in July 1995 by Paul Graham, Robert Morris (using the pseudonym "John M ...
s, 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


Global reach

PayPal can be used in more than 200 countries/regions. Different countries have different conditions: ''Send only'' (Package Service allows sending only, valid in 97 countries), ''PayPal Zero'' (package suggests the possibility of enrollment, entry, and withdrawal of funds in foreign currency, but the user can not hold the balance PayPal account, operates in 18 countries), ''SRW Send – Receive – Withdrawal'' (the possibility of enrollment, input-output and the ability to keep your PayPal account balance in the currency and to transfer to the card when the user sees fit, operates in 41 countries) and ''Local Currency'' (SRW plus opportunity to conduct transactions in the local currency, 21 countries).


China

In July 2017, PayPal announced a partnership with Baidu, to allow the Chinese firm’s 100 million mobile wallet users to make payments to PayPal’s 17 million merchants through the Baidu service.


Crimea

In January 2015, PayPal ceased operations in
Crimea Crimea, crh, Къырым, Qırım, grc, Κιμμερία / Ταυρική, translit=Kimmería / Taurikḗ ( ) is a peninsula in Ukraine, on the northern coast of the Black Sea, that has been occupied by Russia since 2014. It has a p ...
in compliance with international sanctions against Russia and Crimea.


India

As of March 2011, PayPal has made changes to the User Agreement for Indian users to comply with
Reserve Bank of India The Reserve Bank of India, chiefly known as RBI, is India's central bank and regulatory body responsible for regulation of the Indian banking system. It is under the ownership of Ministry of Finance, Government of India. It is responsible f ...
regulations. The per transaction limit had been set to USD $3,000, since October 14, 2011. However, on July 29, 2013, PayPal increased the per transaction limit to USD $10,000. This brings the per transaction limit for India in line with the restrictions imposed by PayPal in most other countries. PayPal has disabled sending and receiving personal payments in India, thus forcing all recipients to pay a transaction fee. PayPal plans to make India an incubation center for the company's employee engagement policies. In 2012, PayPal hired 120 people for its offices in
Chennai Chennai (, ), formerly known as Madras ( the official name until 1996), is the capital city of Tamil Nadu, the southernmost Indian state. The largest city of the state in area and population, Chennai is located on the Coromandel Coast of th ...
and
Bengaluru Bangalore (), officially Bengaluru (), is the capital and largest city of the Indian state of Karnataka. It has a population of more than and a metropolitan population of around , making it the third most populous city and fifth most ...
. On 8 November 2017, PayPal launched domestic operations under PayPal Payments Private Limited and now provides digital payment solutions for merchants and customers in India. As of 2020, Paypal supports the domestic card system RuPay and is planning to further integrate
Unified Payment Interface Unified Payments Interface (UPI) is an instant real-time payment system developed by National Payments Corporation of India (NPCI). The interface facilitates inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. It is used ...
(UPI) in collaboration with National Payments Corporation of India (NPCI). PayPal now has the largest global engineering team in India outside of the US, which is spread over
Bengaluru Bangalore (), officially Bengaluru (), is the capital and largest city of the Indian state of Karnataka. It has a population of more than and a metropolitan population of around , making it the third most populous city and fifth most ...
,
Chennai Chennai (, ), formerly known as Madras ( the official name until 1996), is the capital city of Tamil Nadu, the southernmost Indian state. The largest city of the state in area and population, Chennai is located on the Coromandel Coast of th ...
and
Hyderabad Hyderabad ( ; , ) is the capital and largest city of the Indian state of Telangana and the ''de jure'' capital of Andhra Pradesh. It occupies on the Deccan Plateau along the banks of the Musi River, in the northern part of Southern Indi ...
.


Israel and Palestinian Territories

PayPal is available in Israel but is not available in the
Palestinian territories The Palestinian territories are the two regions of the former British Mandate for Palestine that have been militarily occupied by Israel since the Six-Day War of 1967, namely: the West Bank (including East Jerusalem) and the Gaza Strip. The ...
. Nor can Palestinians working in the
West Bank The West Bank ( ar, الضفة الغربية, translit=aḍ-Ḍiffah al-Ġarbiyyah; he, הגדה המערבית, translit=HaGadah HaMaʽaravit, also referred to by some Israelis as ) is a landlocked territory near the coast of the Mediter ...
or Gaza access it but Israelis living in settlements in the West Bank can use PayPal. This decision has prompted Palestinian tech companies to seek a policy change from PayPal.


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.


Pakistan

In Pakistan, users can use Xoom, a money transfer service owned by PayPal. In October 2018, Pakistan's government used Xoom to help crowdsource funds for the purpose of building two dams. The government of Pakistan is trying to convince PayPal administration to launch its service in the country, but PayPal is not ready to introduce its services there.


Turkey

Eight years after the company first started operating in the country, Paypal ceased operations in Turkey on 6 June 2016 when Turkish financial regulator BDDK denied it a payment license. The regulators had demanded that PayPal's data centers be located inside Turkey to facilitate compliance with government and court orders to block content and to generate tax revenue. PayPal said that the closure will affect tens of thousands of businesses and hundreds of thousands of consumers in Turkey.


Sri Lanka

In January 2017, the PayPal team was scheduled to visit
Sri Lanka Sri Lanka (, ; si, ශ්‍රී ලංකා, Śrī Laṅkā, translit-std=ISO (); ta, இலங்கை, Ilaṅkai, translit-std=ISO ()), formerly known as Ceylon and officially the Democratic Socialist Republic of Sri Lanka, is an ...
in mid-January to re-establish links. As of 2021, PayPal doesn't operate in the country.


Russia

In March 2022, PayPal suspended all activities in Russia due to
2022 Russian invasion of Ukraine On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's largest refugee crisis since World War II. A ...
.


Ukraine

In March 2022, PayPal expanded its services for Ukrainian accounts, allowing them to send and receive money from friends and family. Previously, PayPal users in Ukraine could only send money internationally from their accounts, not receive it.


Kenya

In 2018, PayPal and Safaricom collaborated to enable Kenyans to perform MPESA transactions by leveraging on the latter's mobile money service.


Indonesia

In 30 July 2022,
Kominfo The Ministry of Communication and Information Technology ( id, Kementerian Komunikasi dan Informatika; abbreviated as Kominfo) is a ministry of the government of Indonesia that is responsible for communication, information affairs and internet ...
blocked PayPal due PSE regulation. Many PayPal users in Indonesia is concerned, because some of them stored lot of their money in this platform. The service had been temporarily unblocked for 5 days for users to withdraw their money from the platform. The main reason is that PayPal have yet to get a permit from Bank Indonesia and Otoritas Jasa keuangan. PayPal had been unblocked in 3 August 2022 after registering.


PayPal Giving Fund

PayPal Giving Fund is a registered charity supported by PayPal that streamlines donations to non-profit organizations.


Digital marketing with PayPal

PayPal launches different marketing activities in various channels and emphasizes that consumers can use it in different ways. PayPal's marketing includes TV commercials, outdoor advertising,
Facebook Facebook is an online social media and social networking service owned by American company Meta Platforms. Founded in 2004 by Mark Zuckerberg with fellow Harvard College students and roommates Eduardo Saverin, Andrew McCollum, Dust ...
, and display advertisement. PayPal provides free
analytics Analytics is the systematic computational analysis of data or statistics. It is used for the discovery, interpretation, and communication of meaningful patterns in data. It also entails applying data patterns toward effective decision-making. It ...
to traders about the ways that consumers utilize online payments. Through the free tracking service, PayPal assists traders in targeting consumers. PayPal's code gathers the consumer information, which can be installed on the trader's website. Both PayPal and traders benefit from the free service. PayPal partners with
Synchrony Financial Synchrony Financial is a consumer financial services company headquartered in Stamford, Connecticut, United States. The company offers consumer financing products, including credit, promotional financing and loyalty programs, installment lendi ...
to provide the PayPal Cashback Mastercard, which offers 2% cash back to customers who use the card to make purchases both online and in physical stores. PayPal’s cashback financial service promotes the number of potential customers.
Apple An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple trees are cultivated worldwide and are the most widely grown species in the genus '' Malus''. The tree originated in Central Asia, where its wild ancest ...
allows PayPal as a mode of payment for App Store,
Apple Music Apple Music is a music, audio and video streaming service developed by Apple Inc. Users select music to stream to their device on-demand, or they can listen to existing playlists. The service also includes the Internet radio stations Appl ...
,
iTunes iTunes () is a software program that acts as a media player, media library, mobile device management utility, and the client app for the iTunes Store. Developed by Apple Inc., it is used to purchase, play, download, and organize digital mu ...
, and Apple Books. PayPal can increase usage of Apple platforms. In addition, PayPal receives revenue from Apple services, especially from the App Store. Customers can use PayPal to make purchases by linking their PayPal accounts to their Apple IDs.


Regulation

Thiel, a founder of PayPal, has stated that PayPal is not a bank because it does not engage in
fractional-reserve banking Fractional-reserve banking is the system of banking operating in almost all countries worldwide, under which banks that take deposits from the public are required to hold a proportion of their deposit liabilities in liquid assets as a reserv ...
. 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.FDIC decides PayPal's no bank
ZDNet (March 13, 2002). Retrieved on 2013-08-12.
But state laws vary, as do their definitions of banks, narrow banks, money services businesses, and money transmitters. Although PayPal is not classified as a bank, the company is subject to some of the rules and regulations governing the financial industry, including
Regulation E 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 a ...
consumer protections and the
USA PATRIOT Act The USA PATRIOT Act (commonly known as the Patriot Act) was a landmark Act of the United States Congress, signed into law by President George W. Bush. The formal name of the statute is the Uniting and Strengthening America by Providing Appro ...
. The most analogous regulatory source of law for PayPal transactions comes from
peer-to-peer Peer-to-peer (P2P) computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the network. They are said to form a peer-to-peer ...
(P2P) payments using credit and
debit cards A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term '' plastic card'' includes the above and as an identity document. These are similar to a credit card, but u ...
. Ordinarily, a credit card transaction, specifically the relationship between the issuing bank and the cardholder, is governed by the Truth in Lending Act (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.Margaret Jane Radin et al., Internet Commerce The Emerging Legal Framework 1174–1175 Foundation Press (2d ed. 2006) Similarly, the legal relationship between a debit cardholder and the issuing bank is regulated by the
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 transfe ...
(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 2008, PayPal Europe was granted a Luxembourg banking license, which, under European Union law, allows it to conduct banking business throughout the EU. It is therefore regulated as a bank by Luxembourg's banking supervisory authority, the
Commission de Surveillance du Secteur Financier The Commission de Surveillance du Secteur Financier (CSSF) is responsible for the financial regulation in Luxembourg Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy o ...
(CSSF). All of the company's European accounts were transferred to PayPal's bank in Luxembourg in July 2007. Prior to this move, PayPal had been registered in the United Kingdom as PayPal (Europe) Ltd, an entity which was licensed as an Electronic Money Issuer with the UK's
Financial Services Authority The Financial Services Authority (FSA) was a quasi-judicial body accountable for the regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 19 ...
(FSA) from 2004. This ceased in 2007, when the company moved to Luxembourg. In India, as of January 2010, PayPal has no cross-border money transfer authorization. In
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
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". PaisaPay is an Indian sister service to PayPal. It is also owned by eBay. PaisaPay makes possible payments from abroad by PayPal account holders to Indian sellers on eBay.in. In Australia, PayPal is licensed as an authorised deposit-taking institution (ADI) and is thus subject to Australian banking laws and regulations. In Singapore, PayPal holds a stored value facility that does not require the approval of the Monetary Authority of Singapore.


Safety and protection policies

The PayPal Buyer Protection Policy states that the customer may file a buyer complaint if he or she did not receive an item or if the item he or she purchased was significantly not as described. The customer can open a dispute within 180 days from the date of payment and escalate it to a claim within 20 days from opening the dispute. If the buyer used a credit card, he or she might get a refund via chargeback from his or her 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 1974, the purchaser loses this legal protection if the card payment is processed via PayPal. Also, the Financial Ombudsman Service (for the U.K.) position is that section 75 protection does not apply where PayPal or any eMoney service becomes involved in the credit card transaction. This leaves consumers with no recourse to pursue their complaint with the Financial Ombudsman Service. They would only have recourse in the courts, but in any event they cannot because PayPal is incorporated in Luxembourg and, since the UK has left the EU, is now no longer within the jurisdiction of any UK Courts. The key issues that determine the applicability of section 75 are identified very clearly in Office of Fair Trading v Lloyds TSB Bank Plc and others 006EWCA Civ 268 7 and the Bank of Scotland v Alfred Truman (a firm) 005 WHC583 (QB). This is a legal authority that section 75 protection does exist where one has paid on a credit card for a product, via an eMoney service. 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 the 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 ''(most notably the Consumer Rights Act 2015)'' 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 token

In early 2006, PayPal introduced an optional security key as an additional precaution against fraud. A user account tied to a security key has a modified login process. Account-holders enter their login ID and password as normal, but are then prompted to enter a six-digit code provided by a credit card sized hardware security key or a text message sent to the account holder's mobile phone. For convenience, users may append the code generated by the hardware key to their password in the login screen. This way they are not prompted for it on another page. This method is required for some services, such as when using PayPal through the eBay application on iPhone. This two-factor authentication is intended to make it difficult for an account to be compromised by a malicious third party without access to the physical security key, although it does not prevent the so-called
Man in the Browser Man-in-the-browser (MITB, MitB, MIB, MiB), a form of Internet threat related to man-in-the-middle (MITM), is a proxy Trojan horse that infects a web browser by taking advantage of vulnerabilities in browser security to modify web pages, modify tra ...
(MITB) attacks. However, the user (or malicious third party) can alternatively authenticate by providing the credit card or bank account number listed on their account. Thus, the PayPal implementation does not offer the security of true two-factor authentication.


MTAN

It is also possible to use a mobile phone to receive an
mTAN A transaction authentication number (TAN) is used by some online banking services as a form of ''single use'' one-time passwords (OTPs) to authorize financial transactions. TANs are a second layer of security above and beyond the traditional single ...
(Mobile Transaction Authentication Number) via
SMS Short Message/Messaging Service, commonly abbreviated as SMS, is a text messaging service component of most telephone, Internet and mobile device systems. It uses standardized communication protocols that let mobile devices exchange short text ...
. Use of a security code that is sent to the account holder's mobile phone is currently free.


Fraud

As early as 2001, PayPal had substantial problems with online fraud, especially international hackers who were hacking into PayPal accounts and transferring small amounts of money out of multiple accounts. Standard solutions for merchant and banking fraud might use government criminal sanctions to pursue the fraudsters. But with PayPal losing millions of dollars each month to fraud while experiencing difficulties with using the FBI to pursue cases of international fraud, PayPal developed a fraud monitoring system to detect potentially fraudulent transactions. This development of fraud monitoring software at PayPal led Peter Thiel to create Palantir, a big-data security company whose original mission was to "reduce terrorism while preserving civil liberties."


150,000 PayPal cards frozen

In 2015, 150,000 Spanish cardholders had their funds frozen in an apparent fraud case involving a PayPal service provider, Younique Money, which was the de facto administrator of the cards. Previously, PayPal had charged €15 to all its card users without authorization (150,000 users). As of March 2015, most funds had not been returned.


Criticism and controversies

In 2003, PayPal voluntarily ceased serving as a payment intermediary between gambling websites and their online customers. At the time of this cessation, it was the largest payment processor for online gambling transactions. In 2010, PayPal resumed accepting such transactions, but only in those countries where online gambling is legal, and only for sites which are properly licensed to operate in said jurisdictions. Since at least 2005, PayPal has maintained an Acceptable Use policy which disallows "transactions involving ... items that are considered obscene ... rcertain sexually oriented materials or services." Their enforcement of this policy has been a constant source of controversy between PayPal and people within or related to the sex industry. In 2014, PayPal notified subscription service provider Patreon that it was moving to cease integration with Patreon as a platform as the result of Patreon permitting "adult content" on their platform. Patreon subsequently removed access to PayPal services for creators who produced sexual content. If an account is subject to fraud or unauthorized use, PayPal puts the "Limited Access" designation on the account. PayPal has had several notable cases in which the company has frozen the account of users such as
Richard Kyanka Richard Charles "Lowtax" Kyanka (May 11, 1976 – November 9, 2021) was an American internet personality who created the website ''Something Awful''. Origin of Lowtax pseudonym The nickname "Lowtax" is a reference to Tennessee politician Byron ...
, owner of the website Something Awful, in September 2005, Cryptome in March 2010, or
April Winchell April Terri Winchell (born January 4, 1960) is an American actress, writer, and radio host. She is prehaps best known as the second and current voice of Clarabelle Cow, having voiced the character since 1996. Early life Winchell was born in 1 ...
, the owner of Regretsy, in December 2011. The account was reinstated, and PayPal apologized and donated to her cause. In September 2010, PayPal froze the account of the
Minecraft ''Minecraft'' is a sandbox game developed by Mojang Studios. The game was created by Markus "Notch" Persson in the Java programming language. Following several early private testing versions, it was first made public in May 2009 before b ...
developer, Markus Persson. Persson stated publicly that he had not received a clear explanation of why the account was frozen, and that PayPal was threatening to keep the money if they found anything wrong. His account contained around €600,000. PayPal's partner MasterCard ceased taking donations to
WikiLeaks WikiLeaks () is an international non-profit organisation that published news leaks and classified media provided by anonymous sources. Julian Assange, an Australian Internet activist, is generally described as its founder and director and ...
in 2010, and PayPal also suspended, and later permanently restricted, payments to the website after the
U.S. State Department The United States Department of State (DOS), or State Department, is an executive department of the U.S. federal government responsible for the country's foreign policy and relations. Equivalent to the ministry of foreign affairs of other n ...
said WikiLeaks was engaged in illegal activities. Online supporters and activists retaliated by subjecting PayPal and MasterCard, along with other companies, to coordinated
cyber attacks A cyberattack is any offensive maneuver that targets computer information systems, computer networks, infrastructures, or personal computer devices. An attacker is a person or process that attempts to access data, functions, or other restricted ...
. In February 2011, PayPal unbanned the account of a website that supports Iraq War resisters after it had enough information to fulfill its know your customer guidelines. The Chelsea Manning Support Network claimed the backdown was a reaction to a petition to the company to reinstate the account. In May 2013, PayPal declined to pay a reward offered in its Bug Bounty Program to a 17-year-old German student who had reported a cross-site scripting flaw on its site. The company wrote that the vulnerability had been previously reported, and chastised the youth for disclosing the issue to the public, but, uniquely, sent him a "Letter of recognition" for the discovery. In August 2013, entrepreneurs who had used PayPal to collect the funds they raised on
crowdfunding Crowdfunding is the practice of funding a project or venture by raising money from a large number of people, typically via the internet. Crowdfunding is a form of crowdsourcing and alternative finance. In 2015, over was raised worldwide by cro ...
platforms like
Kickstarter Kickstarter is an American public benefit corporation based in Brooklyn, New York, that maintains a global crowdfunding platform focused on creativity. The company's stated mission is to "help bring creative projects to life". As of July 2021, ...
and Indiegogo reported difficulty in being able to withdraw the money. Victims included Ouya, GlassUp (a rival to
Google Glass Google Glass, or simply Glass, is a brand of smart glasses developed and sold by Google. It was developed by X (previously Google X), with the mission of producing an ubiquitous computer. Google Glass displays information to the wearer using ...
), and Mailpile. In May 2014, PayPal blocked the account of a Russian human rights organisation "RosUznik", which supported political prisoners arrested at Bolotnaya Square. As of January 2015, a class-action lawsuit against PayPal has been filed in Israel, claiming that they arbitrarily froze accounts and held funds for up to 180 days without paying interest and thereby directly profited from it. In the examples given in the lawsuit, PayPal had received complaints against small vendors which were later resolved, but the PayPal account was closed. The lawsuit requests that PayPal be declared a monopoly and thus regulated accordingly. In April 2015, ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers '' The Observer'' and '' The Guardian Weekly'', ''The Guardian'' is part of the ...
'' reported that PayPal had blocked the account of
London London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...
-based human rights group
Justice for Iran Justice for Iran (JFI) is a London-based non-governmental human rights organization. The stated objective of the organization is to "address and eradicate the practice of human rights abuses and impunity that empowers officials of the Islamic Repu ...
. In May 2015, PayPal blocked an account intended to raise money for the distribution of
Boris Nemtsov Boris Yefimovich Nemtsov ( rus, Бори́с Ефи́мович Немцо́в, p=bɐˈrʲis jɪˈfʲiməvʲɪtɕ nʲɪmˈtsof; 9 October 195927 February 2015) was a Russian physicist and liberal politician. He was involved in the introduction ...
's report " Putin. War". The explanation by PayPal was that "PayPal does not offer the opportunity to use its system for collecting funds to finance the activities of political parties or for political aims in Russia", though PayPal's ''Acceptable Use Policy'' does not mention financing for political goals.
Non-governmental organization A non-governmental organization (NGO) or non-governmental organisation (see spelling differences) is an organization that generally is formed independent from government. They are typically nonprofit entities, and many of them are active in ...
Freedom House Freedom House is a non-profit, majority U.S. government funded organization in Washington, D.C., that conducts research and advocacy on democracy, political freedom, and human rights. Freedom House was founded in October 1941, and Wendell Wi ...
issued a statement that "PayPal should immediately lift this ban, to help, rather than hinder, press freedom in Russia." By 2016, ConsumerAffairs had received over 1,200 consumer reviews of PayPal, resulting in an overall satisfaction rating of one star out of five for the company. Consumers have also launched numerous anti-PayPal Facebook pages and Twitter accounts to air their complaints. In February 2017, PayPal froze the account of News Media Canada, a
Canadian Canadians (french: Canadiens) are people identified with the country of Canada. This connection may be residential, legal, historical or cultural. For most Canadians, many (or all) of these connections exist and are collectively the source of ...
trade association A trade association, also known as an industry trade group, business association, sector association or industry body, is an organization founded and funded by businesses that operate in a specific industry. An industry trade association partic ...
, in response to a payment from The Reminder, a Flin Flon,
Manitoba Manitoba ( ) is a Provinces and territories of Canada, province of Canada at the Centre of Canada, longitudinal centre of the country. It is Canada's Population of Canada by province and territory, fifth-most populous province, with a population o ...
community A community is a social unit (a group of living things) with commonality such as place, norms, religion, values, customs, or identity. Communities may share a sense of place situated in a given geographical area (e.g. a country, village, t ...
newspaper A newspaper is a periodical publication containing written information about current events and is often typed in black ink with a white or gray background. Newspapers can cover a wide variety of fields such as politics, business, spor ...
, intended to cover the fee for the Reminder's submission of articles for consideration in a nationwide journalism contest run by News Media Canada, including one discussing Syrian refugees. PayPal cited United States regulations as a reason for flagging the transaction between Canadian entities. In September 2018, PayPal banned radio host Alex Jones and his website '' InfoWars'', claiming that his site has content that was hateful and discriminatory against certain religious groups. PayPal discontinued payments to Pornhub models on November 14, 2019, alleging that "Pornhub has made certain business payments through PayPal without seeking our permission". Pornhub criticized the decision as one that affected "over a hundred thousand performers who rely on them for their livelihoods", and steered its payees toward other payment options. In September 2020, PayPal issued new terms of service which introduced a fee for inactive accounts in 19 countries. PayPal sent its clients an e-mail about the updated terms, but didn't mention introducing such a fee. PayPal faced criticism over their policies related to changing the name on a user's account. Critics cited the complicated system involved in changing names, which require legal and government-issued identification. This system has been seen as impacting transgender users, who find trouble in using preferred names and pronouns. In July 2021, PayPal announced a plan to collaborate with the
Anti-Defamation League The Anti-Defamation League (ADL), formerly known as the Anti-Defamation League of B'nai B'rith, is an international Jewish non-governmental organization based in the United States specializing in civil rights law. It was founded in late Septe ...
's Center on Extremism, the League of United Latin American Citizens, and several other nonprofits to analyze its users' transactions in order to investigate the finances of extremist and hate groups in the United States and share the results with law enforcement, policymakers, and other financial corporations; the ADL's CEO, Jonathan Greenblatt, stated that this initiative is meant to help "mitigat extremist threats" and to "help disrupt those activities." In May 2022, Branko Marcetic wrote in ''
Jacobin , logo = JacobinVignette03.jpg , logo_size = 180px , logo_caption = Seal of the Jacobin Club (1792–1794) , motto = "Live free or die"(french: Vivre libre ou mourir) , successor = P ...
'' magazine that PayPal had cancelled the accounts of a number of left-wing media sites and frozen their funds. PayPal gave no explanation for its action, but the article linked the cancellations with the media sites' criticism of US policy in relation to the Russian invasion of Ukraine. '' Consortium News'', ''
Mint Press News ''MintPress News'' (''MPN'') is an American far-left news website founded and edited by Mnar Adley (née, Muhawesh) which was launched in January 2012. It covers political, economic, foreign affairs and environmental issues. Editorially, ''MintP ...
'' and journalist Alan MacLeod were mentioned as those whose accounts had been cancelled. Marcetic wrote that the freezing of Wikileaks' account over a decade earlier had provided a precedent for PayPal's action. In September 2022, PayPal shut the accounts of the British social commentator Toby Young, and two connected organisations: the Free Speech Union and The Daily Sceptic website. Paypal said that the accounts were closed because of breaches its acceptable use policy, apparently because of alleged
misinformation Misinformation is incorrect or misleading information. It differs from disinformation, which is ''deliberately'' deceptive. Rumors are information not attributed to any particular source, and so are unreliable and often unverified, but can turn ...
about a
COVID-19 vaccine A COVID19 vaccine is a vaccine intended to provide acquired immunity against severe acute respiratory syndrome coronavirus 2 (SARS‑CoV‑2), the virus that causes coronavirus disease 2019 (COVID19). Prior to the COVID19 pandemic, an e ...
. PayPal reversed the decision a few days later. In October 2022, PayPal published an update to their acceptable use policy which included a $2,500 fine for the accounts of users PayPal deemed to have been promoting "misinformation". Former PayPal president
David A. Marcus David Marcus ( ro, Mărcuș; born April 12, 1973) is an American entrepreneur. He was the co-creator of Diem, a cryptocurrency project initiated by Facebook. He is the former president of PayPal and Vice President of Messaging Products at Face ...
criticized the change, tweeting that "PayPal's new AUP goes against everything I believe in".
Elon Musk Elon Reeve Musk ( ; born June 28, 1971) is a business magnate and investor. He is the founder, CEO and chief engineer of SpaceX; angel investor, CEO and product architect of Tesla, Inc.; owner and CEO of Twitter, Inc.; founder of The B ...
, co-founder of X.com, which later merged with Confinity to form PayPal, also criticized the change. Following media scrutiny and criticism on social media, PayPal removed the updated policy from their website, stating: "An AUP notice recently went out in error that included incorrect information. PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy. Our teams are working to correct our policy pages."


Litigation

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 US$9.25 million payment to members of the class. PayPal denied any wrongdoing. In June 2003,
Stamps.com Stamps.com is an American company that provides Internet-based mailing and shipping services. Until its acquisition by Thoma Bravo Stamps.com was a public company traded on the NASDAQ exchange under the symbol STMP. The company's main offices ...
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 Stamps.com's reasoning for including eBay in the suit. 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 their customer service experiences, including freezing deposited funds for up to 180 days until disputes were resolved by PayPal. PayPal argued that the plaintiffs were required to arbitrate their disputes under the
American Arbitration Association The American Arbitration Association (AAA) is a not-for-profit organization in the field of alternative dispute resolution, providing services to individuals and organizations who wish to resolve conflicts out of court, and one of several arbitrat ...
's Commercial Arbitration Rules. The court ruled against PayPal, stating that "the User Agreement and arbitration clause are substantively unconscionable under California law." Paypal agreed to pay $9.25 million as a result of the case. In September 2002, Bank One Corporation 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 Settlement may refer to: * Human settlement, a community where people live *Settlement (structural), the distortion or disruption of parts of a building *Closing (real estate), the final step in executing a real estate transaction *Settlement (fin ...
in October 2003. In November 2003,
AT&T Corporation AT&T Corporation, originally the American Telephone and Telegraph Company, is the subsidiary of AT&T Inc. that provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agen ...
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 June 2011, PayPal and Israel Credit Cards-Cal Ltd. were sued for NIS 16 million. The claimants accused PayPal of deliberately failing to notify its customers that ICC-Cal was illegally charging them for currency conversion fees. A class-action lawsuit filed in 2010 was settled in 2016, in which the plaintiffs contested PayPal's "holds" on funds. PayPal has proposed a settlement in the amount of $3.2 million in Zepeda v. PayPal which has yet to be ratified. As part of the settlement, the company agreed to change some of its policies.PayPal Agrees to Change Business Practices in Lawsuit Settlement
/ref>


CFPB consent

On 21 May 2015, PayPal agreed that PayPal Credit would pay a $25 million fine to settle a complaint filed in Federal Court by the
Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, payday lenders, mo ...
. The complaint alleged that consumers using PayPal were signed up for PayPal credit accounts without their knowledge nor consent. It alleged that PayPal had promised discounts and payment options the consumers never received, and that users trying to sign up for the regular, non-credit, PayPal accounts were signed up for credit accounts instead. The complaint was filed in the United States District Court for the District of Maryland, which ordered PayPal Credit to refund $15 million to consumers and to pay a $10 million fine.


See also

*
Billpoint Billpoint was the name of a person-to-person money transfer service founded in 1998, and purchased in 1999 by online auctioneer eBay. History Billpoint was founded in 1998 by S. Young Lee, Hope Chen, Will Chen, Jason May, Ian Flint and Jay Sh ...
* E-commerce payment system *
Electronic money Digital currency (digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet. Types of digital cu ...
*
Interchange fee Interchange 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 for sales/services transactions it is a fee that a merchant's bank (the "acquiring bank") pay ...
*
List of online payment service providers The following is a list of notable online payment service providers and payment gateway providing companies, their platform base and the countries they offer services in: (POS -- Point of Sale) See also * Payment gateway * Payments as a ser ...
* Micropayment *
Payment service provider A payment service provider (PSP) is a third-party company that assists businesses to accept electronic payments, such as credit cards and debit cards payments. PSPs act as intermediaries between those who make payments, i.e. consumers, and those ...
* PayPal Mafia * Paytm * Google Pay *
Stripe (company) Stripe, Inc. is an Irish-American financial services and software as a service (SaaS) company dual-headquartered in South San Francisco, California, United States and Dublin, Ireland. The company primarily offers payment processing software and ...


References


External links

* {{Authority control, state=expanded 2002 mergers and acquisitions 2002 initial public offerings Companies based in San Jose, California Corporate spin-offs EBay Electronic funds transfer Financial services companies established in 1998 Financial technology companies Foreign exchange companies Mobile payments Online payments Payment systems Payment service providers American companies established in 1998 1998 establishments in California Internet properties established in 1998