Games - PayPal

	Games - PayPal

PayPal is an Internet business which allows the transfer of money between email users and merchants, avoiding traditional paper methods such as checks/cheques and money orders. PayPal also performs payment processing for e-commerce vendors, auction sites, and other corporate users, for which they charge a fee. Corporate headquarters are in San Jose, California; it is now an eBay company.

History

Beginnings

PayPal was founded in December 1998 by Peter Thiel and Max Levchin. One of its first premises was the 165 University Avenue office in Palo Alto, California, home of a number of other noted Silicon Valley startups. On the business side, many of its initial recruits were alumni of The Stanford Review, which was also founded by Peter Thiel. Most of the early engineers hailed from the University of Illinois at Urbana-Champaign, recruited by Max Levchin. In its initial incarnation, PayPal was a service for users to send money via PDAs, with actor James Doohan, Star Trek's "Scotty," as its spokesman. The PDA software was later discarded in favor of a web-based system that became popular with eBay's millions of buyers and sellers. Coupled with aggressive marketing campaigns offering $10 (and later $5) for new users to sign up, the firm grew at a meteoric rate of 7–10 percent per day between January and March 2000.

Unknown to many people is the fact that PayPal is one of the few Internet companies which has a single letter domain name, (http://www.x.com) in use. As of March 2006, this URL still resolves to the PayPal home page. This domain name was associated with PayPal in early 2000, when X.com acquired Confinity, the parent company of PayPal. After the acquisition, the leads of X.com ran PayPal before being ousted by both companies' investors. During this time PayPal attempted to port their service from UNIX to Windows NT, which was later scrapped when Peter Thiel was reinstated as company head.

Though growing rapidly, PayPal was losing $10 million a month and was fraught with internal turmoil that led to three CEO changes in its first year of operations. Foreign organized crime rings found ways to steal millions from the young company by automatically registering accounts using stolen identities. To block automated systems from using this form of fraud, PayPal devised a system (see Captcha) of making the user enter numbers from a blurry picture; according to Eric M. Jackson, author of the book The PayPal Wars, PayPal invented the system now in common use.

eBay saw the rise of online payments and how they would be essential match with online auctions. Rather than work with PayPal, eBay purchased a competing payment service named Billpoint to compete with PayPal. Although eBay made Billpoint the official payment system of eBay, dubbing it "eBay Payments", eBay crippled the functionality of Billpoint by limiting it to only payments made for eBay auctions. PayPal was listed in several times more auctions than Billpoint. In February of 2000 there were approximately an average of 200,000 daily auctions advertising the PayPal service while Billpoint (in beta) had only 4,000 auctions. By April of 2000 there were more than 1,000,000 auctions promoting the PayPal service. PayPal was able to turn the corner and become the first dot-com to IPO after the September 11 attacks — an accomplishment that ironically backfired when PayPal's new high profile status helped prompt a slew of class action lawsuits and regulatory probes, including one by NY Attorney General Eliot Spitzer.

Near the time when PayPal went public (first quarter 2002), it filed an anti-competition complaint against eBay on the grounds of using its auction venue to attempt to force PayPal off its site. The company eventually reconciled with its former rival, eBay.

Acquisition by eBay

In October 2002 PayPal was acquired by eBay. PayPal had previously been the payment method of choice by over fifty percent of eBay users, and the service competed with eBay's subsidiary BillPoint. eBay has phased out its BillPoint service in favor of retaining the PayPal brand. PayPal no longer has any similar competitors, after Citibank's c2it service closed in late 2003, Yahoo!'s PayDirect service closed in late 2004, and BidPay ceased payment operations on the 31st December 2005 (BidPay's site remains to carry out any remaining customer service issues). When eBay purchased PayPal, it barred PayPal from being used for any "adult" services such as pornography and online gambling. For those transactions, offshore money transfer services such as Neteller were set up. However, PayPal's rules were amended in early 2006 when betting exchange Betfair entered into an agreement with PayPal (Europe) Ltd. These changes only apply within the European Union, where online gambling is legal and regulated.

[ Visit the complete Wikipedia entry for PayPal ]

Games - PayPal

History

Beginnings

Acquisition by eBay

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