|
PayPal Inc. - Merchant Services,
Credit Card Processing -
Category Directory
408-967-8100
2211
N. First Street
San
Jose, CA 95131
www.paypal.com
Business Description (source: eBay 10-K)
PayPal enables any business or consumer with email access in 38 countries to
send and receive online payments securely, conveniently and
cost-effectively. PayPal’s network builds on the existing financial
infrastructure of bank accounts and credit cards to create an international
payment system. PayPal delivers a product well suited for small businesses,
online merchants, individuals and others.
Our goal for PayPal is to become the Web’s most convenient, secure, and
cost-effective payment solution. PayPal currently offers its account-based
system in English to users in 38 countries including the United States. For
the post-acquisition period from October 4, 2002 through December 31, 2002,
PayPal’s payment volume sent to business accounts, which we refer to as
Total Payment Volume, or TPV, totaled $2.1 billion. PayPal’s TPV consists
mainly of payments to small businesses. Currently, the majority of these
payments relate to sales of goods and services through online trading
platforms, primarily on eBay. As of December 31, 2002, PayPal had 23 million
accounts. During the post-acquisition period from October 4, 2002 through
December 31, 2002, users of eight million of these accounts sent or received
a payment that resulted in a fee. As of December 31, 2001, PayPal had nearly
13 million total accounts, of which eight million sent or received a payment
that resulted in a fee during the year ended December 31, 2001.
PayPal has achieved its rapid growth through a combination of wide adoption
on eBay.com and our website in the United Kingdom, user convenience,
competitive pricing and robust customer safeguards. During the year ended
December 31, 2002, PayPal’s total number of accounts grew by 10.5 million,
an average of 29,000 per day. For the post-acquisition period from October
4, 2002 through December 31, 2002, PayPal processed an average of 440,000
payments per day, totaling $24.0 million in daily volume. The average
payment amount sent during this period was $55.
PayPal Works
Joining the Network
To send or receive a payment, a user first must open a PayPal account. A new
user typically opens an account to send money for an eBay purchase or a
purchase on another website, for services rendered, or for a payment to an
individual in lieu of cash. Allowing new users to join the network at the
time of making or receiving payments encourages PayPal’s natural,
user-driven growth. PayPal’s account sign-up process asks each new user to
register with PayPal his or her name, street address and email address,
which serves as the unique account identifier.
Making Payments
Senders make payments at the PayPal website, at an item listing on eBay or
another online marketplace where the seller has integrated PayPal’s Instant
Purchase Feature, or at the sites of merchants that have integrated PayPal’s
Web Accept feature. To make a payment at PayPal’s website, a sender logs in
to his or her account and enters the recipient’s email address and the
amount of the payment. To make a payment through Instant Purchase or Web
Accept, a sender selects an item for purchase, confirms the payment
information and enters his or her email address and password to authorize
the payment. In both scenarios, PayPal debits the money from the sender’s
PayPal balance, credit card or bank account and instantly credits it to the
recipient’s PayPal balance in the case of an eCheck payment, the funds are
credited to the recipient’s PayPal balance after two to three business days.
In turn, the recipient can make payments to others or withdraw his or her
funds at any time via check, electronic funds transfer, or via the PayPal
debit card. PayPal earns revenues when an account receives a payment.
Funding Payments
Senders fund payments in three ways:
• from the sender’s existing PayPal balance;
• from the sender’s bank account, using the Automated Clearing House, or
ACH, network; or
• from the sender’s credit card.
We incur funding costs on payments at varying levels based on the nature of
the payment. To those users who choose to maintain PayPal balances, we offer
a money market rate of return on balances placed in PayPal’s Money Market
Fund. The PayPal Money Market Fund, which is invested in a portfolio managed
by Barclays Global Fund Advisors, bore a current compound annual yield of
1.44% as of December 31, 2002.
We use the terms “balance” and “PayPal balance” to refer to funds that
PayPal customers choose either to invest in the PayPal Money Market Fund
(offered only to U.S. customers) or to authorize PayPal to place in
FDIC-insured pooled bank accounts as agent of PayPal’s customers. These
funds belong to our customers and hence are not reflected in our statement
of financial position. Funds belonging to our customers that are not
invested in FDIC-insured accounts, such as funds in transit to or from the
customer’s bank, are shown as a liability on our balance sheet.
Verification of PayPal’s Account Holders
In order for senders to fund payments from their bank accounts, they first
must become verified PayPal users through our Random Deposit technique.
Under this technique, we make two deposits ranging from 1 to 99 cents to the
user’s bank account. To verify ownership of the account, the user then
enters the two amounts as a four-digit code at the PayPal website. In
addition to allowing funding via bank accounts, verification also removes
some spending limits on users’ accounts and gives them reputational
advantages when transacting with other members of the PayPal community.
Withdrawing Money
Each U.S.-based account holder may withdraw money from his or her PayPal
account via an ACH transfer to his or her bank account or by a mailed check
from PayPal. ACH withdrawals may take three to five business days to arrive
in the account holder’s bank account, depending on the bank. Mailed checks
may take one to two weeks to arrive and PayPal charges $1.50 per check.
Qualifying PayPal business users also can receive a PayPal ATM/debit card,
which provides instant liquidity to their respective PayPal account
balances. ATM/debit card holders can withdraw cash, for a $1.00 fee per
transaction, from any ATM connected to the Cirrus or Maestro networks and
can make purchases at any merchant accepting MasterCard.
Credit Card Processing Companies in the Directory
Alliance Data Systems
American Express
Cardservice International
Certegy
Discover Business Services
Electronic Clearing House
First Data
Global Payments
Heartland Payment Systems
iPayment
National Processing Company
Nova Information Systems
Paymentech
PayPal
ProPay
PSi Gate
Total System Services
TNS
WorldPay
|
|
