PayPal
PayPal is an Internet business which allows the transfer of money between email users, avoiding traditional paper methods such as checks and money orders. PayPal also performs payment processing for e-commerce vendors, auction sites, and other corporate users, for which they charge a fee. As of this writing, they do not charge for small money transfers.PayPal, headquartered in San Jose, California, was founded in 1998 by Peter Thiel and Max Levchin. Due to the manner in which the company operates, they do not qualify as a bank and they are not obligated to abide by the legislation that governs banks. PayPal is considered a money transmitter in many states and is licensed as such where required.
In its initial incarnation, PayPal was a service for users to send money via PDAss. While the PDA concept was a flop, the web-based payment system began to catch on. 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 [1].
PayPal was acquired by eBay in October 2002. 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 is the most widely used service of its kind. However, a number of users have had frustrating situations with PayPal authorities. A controversial aspect of PayPal is that they have a policy and history of closing accounts and withholding funds for reasons that they will not disclose.
Competitors include Yahoo's Paydirect service, and services offered by Citibank. Yahoo's competing service is currently free for all users after the web portal briefly experimented with, and soon abandoned, the idea of collecting additional fees from consumers.
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