About Paypal
Beginnings
The current incarnation of PayPal is the result of a March 2000 merger between Confinity and X.com.[13] Confinity was founded in December 1998 by Max Levchin,Peter Thiel, Luke Nosek, and Ken Howery, initially as a Palm Pilot payments and cryptography company.[14] X.com was founded by Elon Musk in March 1999, initially as an Internet financial services company. Both Confinity and X.com launched their websites in late 1999.[15] Both companies were located on University Avenue in Palo Alto. Confinity's website was initially focused on reconciling beamed payments from Palm Pilots[16] and X.com's website initially featured financial services. Both services offered email payments as a feature.
At Confinity, many of the initial recruits were alumni of the Stanford Review, also founded by Peter Thiel, and most early engineers hailed from the University of Illinois at Urbana-Champaign, 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[17] of Sequoia Capital, Sanjay Bhargava and Jeremy Stoppelman.[18]
To block potentially fraudulent access by automated systems, PayPal used a system (see CAPTCHA) of making the user enter numbers from a blurry picture, which they coined the Gausebeck-Levchin test.[19]
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 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.[20][21][22] By April 2000, more than 1,000,000 auctions promoted the PayPal service.[23] 70% of all eBay auctions accepted PayPal payments, and roughly 1 in 4 closed auction listings were transacted via Paypal.[24] PayPal was able to turn the corner and become the first dot-com to IPO after the September 11 attacks.[25]
As of 2008, PayPal's total payment volume, the total value of transactions, was US$60 billion, an increase of 27 percent over the previous year,[26] and US$ 71 billion in 2009, an increase of 19 percent over the previous year.[27] As of 2011, PayPal's total payment volume processed was US$117 billion.[28] The company continues to focus on international growth and growth of 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.[29]
[edit]Acquisition by eBay
In October 2002, PayPal was acquired by eBay for $1.5 billion.[30] 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 Billpoint, Citibank's c2it, whose service was closed in late 2003, and Yahoo!'s PayDirect, whose service was closed in late 2004. Western Union announced the December 2005 shut down of their BidPay service but subsequently sold it in 2006 to CyberSource Corporation. BidPay subsequently ceased operations on December 31, 2007. Some competitors that offer some of PayPal's services, such as Google Checkout, Wirecard, andMoneybookers remain in business, despite the fact that eBay now requires everyone on its Australian and United Kingdom sites to offer PayPal.[31][32] 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.[33] These accepted payment methods include bank deposit, cheques and money orders, escrow, and credit cards (processed by other than PayPal).[34]
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.[35] In November 2008, the company acquired Bill Me Later, an online payments company offering transactional credit at over 9000 online merchants in the US.[36]
As of 2012, PayPal accounted for 40% of eBay's revenue, amounting to US$1.37 billion in the 3rd quarter of 2012.[2]
[edit]Corporate governance
As of April 2012, PayPal's president is David Marcus; Marcus joined PayPal in August 2011 after its acquisition of Zong, of which he was the founder and CEO.[3] David Marcus succeeded Scott Thompson as president, who left the role suddenly to join Yahoo.[3]
