Difference between revisions of "PayPal"
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| − | '''PayPal Inc.''' is an American e-commerce service which enables users around the world to send and receive payments and money transfers over the internet. Initially founded in 1998 by Max Levchin, Peter Thiel, Luke Nosek and Ken Howery, the company was then taken public in 2002 and has since grown to become the world's most widely used online payment service, processing nearly 8 million transactions daily. <ref> https://www.searchenginejournal.com/the-10-most-popular-online-payment-solutions/ </ref> In addition to servicing online financial transactions between individuals, PayPal also operates as an intermediary between online businesses and customers. As of 2017, PayPal has nearly 200 million registered users and | + | '''PayPal Inc.''' is an American e-commerce service which enables users around the world to send and receive payments and money transfers over the internet. Initially founded in 1998 by Max Levchin, Peter Thiel, Luke Nosek and Ken Howery, the company was then taken public in 2002 and has since grown to become the world's most widely used online payment service, processing nearly 8 million transactions daily. <ref>[https://www.searchenginejournal.com/the-10-most-popular-online-payment-solutions/ The 10 Most Popular Online Payment Solutions]</ref> In addition to servicing online financial transactions between individuals, PayPal also operates as an intermediary between online businesses and customers. As of 2017, PayPal has nearly 200 million registered users and supports transactions in 25 different currencies. <ref>[https://www.paypal.com/us/webapps/mpp/about Who We Are - PayPal]</ref> The company is headquartered in San Jose, California and has 18,000 employees. PayPal Inc. has undergone numerous transformations since its founding through its expansion of services and product offerings which have had an influential impact on the advancement and overall landscape of the entire online payment industry. Some of the procedures and practices exhibited by PayPal have been met with substantial ethical criticism and consumer complaints. |
<br><br> | <br><br> | ||
==History== | ==History== | ||
| − | PayPal initially was founded under the name Confinity in 1998 as a company | + | PayPal initially was founded under the name Confinity in 1998 as a company that developed cryptography services used in the making of Palm Pilot payments. It was not until 1999 that the company officially launched and adopted the name PayPal as a money transfer service. The following year, Confinity merged with Elon Musk’s company X.com, adopted its name and began solely focusing on further research and development into the PayPal product. After a corporate restructuring in 2001, the company decided to change its name one last time to PayPal Inc. since many of its surveyed consumers found the name X.com to be vague. |
| − | With only 600 employees and $50 million in revenues during the final quarter of 2001, PayPal Inc. decided to file for an IPO and was taken public in 2002 with share prices of $13. Upon becoming a public company, PayPal Inc. was soon acquired by the online auction and shopping website eBay for $1.5 billion and quickly grew to become the primary method of payment used on the site as eBay gradually phased out its own competing payment service Billpoint. <ref> https://www.cnet.com/news/ebay-picks-up-paypal-for-1-5-billion/ </ref> PayPal Inc. remained a subsidiary of eBay until 2014, when eBay and its board decided to separate the two companies | + | With only 600 employees and $50 million in revenues during the final quarter of 2001, PayPal Inc. decided to file for an IPO and was taken public in 2002 with share prices of $13. Upon becoming a public company, PayPal Inc. was soon acquired by the online auction and shopping website eBay for $1.5 billion and quickly grew to become the primary method of payment used on the site as eBay gradually phased out its own competing payment service Billpoint. <ref>[https://www.cnet.com/news/ebay-picks-up-paypal-for-1-5-billion/ eBay picks up PayPal for $1.5 billion]</ref> PayPal Inc. remained a subsidiary of eBay until 2014, when eBay and its board decided to separate the two companies in order to allow PayPal Inc. to exist as its own individual public company. <ref>[https://www.ebayinc.com/stories/news/ebay-inc-and-carl-icahn-settle-proxy-fight/?utm_source=301Redirect&utm_medium=301Redirect&utm_campaign=301Redirect eBay Inc. and Carl Icahn Settle Proxy Fight]</ref> |
==Services== | ==Services== | ||
| − | Since its initial inception as the payment service used for eBay transactions, PayPal Inc. has vastly expanded and branched out into multiple other product lines offering an array of different and more advanced services. Using the $60 million raised during its first IPO, PayPal Inc. launched an aggressive and unique marketing campaign to expand its user base. The company created a referral program which offered $10 to each new user who signed up for PayPal and added a credit card to their account as well as $10 to the person who referred them. This strategy used until late 2003 was a tremendous success and led to a 7-10% daily growth rate in customers and ultimately increased the PayPal user base from 100,000 members to over 100 million by 2010. <ref> | + | Since its initial inception as the payment service used for eBay transactions, PayPal Inc. has vastly expanded and branched out into multiple other product lines offering an array of different and more advanced services. Using the $60 million raised during its first IPO, PayPal Inc. launched an aggressive and unique marketing campaign to expand its user base. The company created a referral program which offered $10 to each new user who signed up for PayPal and added a credit card to their account as well as $10 to the person who referred them. This strategy used until late 2003 was a tremendous success and led to a 7-10% daily growth rate in customers and ultimately increased the PayPal user base from 100,000 members to over 100 million by 2010. <ref>[https://www.referralcandy.com/blog/paypal-referrals/ PayPal’s $60m Referral Program: A Legendary Growth Hack]</ref> Over this time period, PayPal began offering numerous new services. |
===Peer-to-Peer Services=== | ===Peer-to-Peer Services=== | ||
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The PayPal My Cash is a card that allows users to transfer physical money into their PayPal account. Users can purchase and send money with My Cash, all without using a bank account or a credit card. The users can transact $20-$500 dollars at a time. | The PayPal My Cash is a card that allows users to transfer physical money into their PayPal account. Users can purchase and send money with My Cash, all without using a bank account or a credit card. The users can transact $20-$500 dollars at a time. | ||
===Venmo=== | ===Venmo=== | ||
| − | [[Venmo]] is an app owned by PayPal Inc. as a result of the acquisition of Braintree for $800 million in 2013. <ref> http://fortune.com/2016/07/13/paypal-venmo-millennials/ </ref> Venmo is similar to the PayPal app in servicing payment transactions between individuals, however it does not allow for transactions from individuals to vendors. Additionally, Venmo has a unique social media aspect to it by posting the users' transactions chronologically in a news feed style. | + | [[Venmo]] is an app owned by PayPal Inc. as a result of the acquisition of Braintree for $800 million in 2013. <ref>[http://fortune.com/2016/07/13/paypal-venmo-millennials/ PayPal Is Okay If Millennials Don’t Know It Owns Venmo]</ref> Venmo is similar to the PayPal app in servicing payment transactions between individuals, however it does not allow for transactions from individuals to vendors. Additionally, Venmo has a unique social media aspect to it by posting the users' transactions chronologically in a news feed style. |
| − | PayPal also provides PayPal Digital Gifts, a system | + | PayPal also provides PayPal Digital Gifts, a system through which users can purchase and send gift cards for hundreds of brands online. <ref>[https://www.paypal.com/us/webapps/mpp/about-paypal-products PayPal Shopping Deals]</ref> |
==Ethical Concerns== | ==Ethical Concerns== | ||
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===Fraud=== | ===Fraud=== | ||
| − | Identity thieves target PayPal because it is an Internet-based service that records financial transactions and the private information of its users; the nature of the service makes it more easily liable to hacking. Using social engineering techniques such as phishing, attackers have been able to steal user login credentials by fooling users into logging into their account through a fraudulent website. <ref> | + | Identity thieves target PayPal because it is an Internet-based service that records financial transactions and the private information of its users; the nature of the service makes it more easily liable to hacking. Using social engineering techniques such as phishing, attackers have been able to steal user login credentials by fooling users into logging into their account through a fraudulent website. <ref>[http://www.express.co.uk/life-style/science-technology/728056/paypal-scam-user-account-hacked-scammers-phishing PayPal SCAM – This email is being used to trick users, here's how to stop being hacked, Michael Moore 2 November 2016]</ref> After such attacks occurred, hackers illegally executed withdrawals from user accounts. To address this problem, PayPal implemented a fraud detection system named "Igor" that uses the latest artificial intelligence technology to detect fraudulent transactions through pattern recognition. PayPal now has only a loss rate of .5%, which is currently the highest in the industry. <ref>[https://fee.org/articles/paypals-private-governance/ PayPal's Private Governance]</ref> |
===Security=== | ===Security=== | ||
| − | PayPal uses data encryption technology, two-factor authentication, firewalls and information access controls in order to keep personal information collected from its users secure as well as to prevent unauthorized alteration or disclosure of this data. Additionally, when a transaction is made through PayPal the recipient is unable to see any sensitive financial information such as bank account or credit card numbers. However, in May 2014 PayPal affiliate eBay suffered one of the largest data breaches in history on 148 million of its customers. The information which was compromised in the breach included the customers' name, encrypted password, email address, physical address, phone number and date of birth. <ref> http://info.rippleshot.com/blog/ebay </ref> This begs the question as to how secure the PayPal security measures really are and whether there is a possibility of a potential data breach in the future. | + | PayPal uses data encryption technology, two-factor authentication, firewalls and information access controls in order to keep personal information collected from its users secure as well as to prevent unauthorized alteration or disclosure of this data. Additionally, when a transaction is made through PayPal the recipient is unable to see any sensitive financial information such as bank account or credit card numbers. However, in May 2014 PayPal affiliate eBay suffered one of the largest data breaches in history on 148 million of its customers. The information which was compromised in the breach included the customers' name, encrypted password, email address, physical address, phone number and date of birth. <ref>[http://info.rippleshot.com/blog/ebay Truly Massive Data Breach at eBay]</ref> This begs the question as to how secure the PayPal security measures really are and whether there is a possibility of a potential data breach in the future. |
| − | In January 2016 a cybersecurity expert and PayPal user discovered that has account had been hacked due to the poor authentication protocols in place with PayPal customer service. His account had been accessed by simply providing customer service with the last four digits of his SSN and a former credit card number over the phone. The account was shut down by PayPal after the hackers attempted to wire money to an email account associated with an ISIS group member. <ref> http://bgr.com/2016/01/04/paypal-account-security-hackers/ </ref> | + | In January 2016, a cybersecurity expert and PayPal user discovered that has account had been hacked due to the poor authentication protocols in place with PayPal customer service. His account had been accessed by simply providing customer service with the last four digits of his SSN and a former credit card number over the phone. The account was shut down by PayPal after the hackers attempted to wire money to an email account associated with an ISIS group member. <ref>[http://bgr.com/2016/01/04/paypal-account-security-hackers/ Your PayPal account can be hacked more quickly than you think]</ref> |
===Privacy=== | ===Privacy=== | ||
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When a user signs up for PayPal and creates an account using their email address they must consent to providing PayPal with personal information to use the service. PayPal states that this is necessary in order to help personalize and improve the user's experience as well as to provide targeted marketing and advertising. The personal information collected includes: financial information such as credit card and bank account numbers; personal information such as date of birth, SSN, or national ID number; contact information such as address, email and phone number; as well as web information such as data about the pages you access, computer IP address, device ID or unique identifier, device type, geo-location information, computer and connection information, mobile network information, statistics on page views, traffic to and from the sites, referral URL, ad data, and standard web log data. | When a user signs up for PayPal and creates an account using their email address they must consent to providing PayPal with personal information to use the service. PayPal states that this is necessary in order to help personalize and improve the user's experience as well as to provide targeted marketing and advertising. The personal information collected includes: financial information such as credit card and bank account numbers; personal information such as date of birth, SSN, or national ID number; contact information such as address, email and phone number; as well as web information such as data about the pages you access, computer IP address, device ID or unique identifier, device type, geo-location information, computer and connection information, mobile network information, statistics on page views, traffic to and from the sites, referral URL, ad data, and standard web log data. | ||
| − | While all of this information is available for its consumers to view in the PayPal privacy policy, many of the users do not read this and therefore do not realize the extent to which their personal information is being recorded and tracked. PayPal additionally uses cookies, web beacons, flash cookies and HTML 5 cookies to operate across all browsers which can monitor activity on the users device even when they are not using PayPal's website or services. Furthermore, PayPal clearly states that it does not currently respond to 'Do Not Track' browser signals so there is not an easy way to opt out of these surveillance methods. PayPal also retains the personal information collected from your account "for a certain period of time" even after the account has been closed if the user wishes to no longer use the service. <ref> https://www.paypal.com/us/webapps/mpp/ua/privacy-full </ref> | + | While all of this information is available for its consumers to view in the PayPal privacy policy, many of the users do not read this and therefore do not realize the extent to which their personal information is being recorded and tracked. PayPal additionally uses cookies, web beacons, flash cookies and HTML 5 cookies to operate across all browsers which can monitor activity on the users device even when they are not using PayPal's website or services. Furthermore, PayPal clearly states that it does not currently respond to 'Do Not Track' browser signals so there is not an easy way to opt out of these surveillance methods. PayPal also retains the personal information collected from your account "for a certain period of time" even after the account has been closed if the user wishes to no longer use the service. <ref>[https://www.paypal.com/us/webapps/mpp/ua/privacy-full Privacy Policy for PayPal Services]</ref> |
== References == | == References == | ||
Revision as of 15:54, 21 April 2017
|
PayPal Inc. is an American e-commerce service which enables users around the world to send and receive payments and money transfers over the internet. Initially founded in 1998 by Max Levchin, Peter Thiel, Luke Nosek and Ken Howery, the company was then taken public in 2002 and has since grown to become the world's most widely used online payment service, processing nearly 8 million transactions daily. [1] In addition to servicing online financial transactions between individuals, PayPal also operates as an intermediary between online businesses and customers. As of 2017, PayPal has nearly 200 million registered users and supports transactions in 25 different currencies. [2] The company is headquartered in San Jose, California and has 18,000 employees. PayPal Inc. has undergone numerous transformations since its founding through its expansion of services and product offerings which have had an influential impact on the advancement and overall landscape of the entire online payment industry. Some of the procedures and practices exhibited by PayPal have been met with substantial ethical criticism and consumer complaints.
Contents
History
PayPal initially was founded under the name Confinity in 1998 as a company that developed cryptography services used in the making of Palm Pilot payments. It was not until 1999 that the company officially launched and adopted the name PayPal as a money transfer service. The following year, Confinity merged with Elon Musk’s company X.com, adopted its name and began solely focusing on further research and development into the PayPal product. After a corporate restructuring in 2001, the company decided to change its name one last time to PayPal Inc. since many of its surveyed consumers found the name X.com to be vague.
With only 600 employees and $50 million in revenues during the final quarter of 2001, PayPal Inc. decided to file for an IPO and was taken public in 2002 with share prices of $13. Upon becoming a public company, PayPal Inc. was soon acquired by the online auction and shopping website eBay for $1.5 billion and quickly grew to become the primary method of payment used on the site as eBay gradually phased out its own competing payment service Billpoint. [3] PayPal Inc. remained a subsidiary of eBay until 2014, when eBay and its board decided to separate the two companies in order to allow PayPal Inc. to exist as its own individual public company. [4]
Services
Since its initial inception as the payment service used for eBay transactions, PayPal Inc. has vastly expanded and branched out into multiple other product lines offering an array of different and more advanced services. Using the $60 million raised during its first IPO, PayPal Inc. launched an aggressive and unique marketing campaign to expand its user base. The company created a referral program which offered $10 to each new user who signed up for PayPal and added a credit card to their account as well as $10 to the person who referred them. This strategy used until late 2003 was a tremendous success and led to a 7-10% daily growth rate in customers and ultimately increased the PayPal user base from 100,000 members to over 100 million by 2010. [5] Over this time period, PayPal began offering numerous new services.
Peer-to-Peer Services
PayPal supplemented its original business model, consumer to vendor transactions, by allowing individual users to send and receive online payments between one another.
PayPal Credit
PayPal Credit is a virtual line of credit for consumers to use at all of the online vendors that accept PayPal. The PayPal Credit service essentially emulates the same experience of online shopping with an ordinary credit card.
PayPal Here
PayPal Here is a mobile payment system intended for small businesses similar to the Square Reader. The system includes an app for businesses to process and track its sales as well as a physical card reader which plugs into the headphone jack of a smart phone or tablet.
PayPal Mobile
PayPal Mobile was launched in 2004 and allows PayPal users to make and receive payments via text messages on their mobile devices.
PayPal MasterCard
The PayPal MasterCard is a debit card which can be used by the holder to withdraw funds from their PayPal account at any MasterCard ATM.
PayPal Application
The PayPal app affords users around the world with the ability to make mobile payments to other PayPal users. The application also provides users the opportunity to make mobile payments to participating vendors.
PayPal My Cash
The PayPal My Cash is a card that allows users to transfer physical money into their PayPal account. Users can purchase and send money with My Cash, all without using a bank account or a credit card. The users can transact $20-$500 dollars at a time.
Venmo
Venmo is an app owned by PayPal Inc. as a result of the acquisition of Braintree for $800 million in 2013. [6] Venmo is similar to the PayPal app in servicing payment transactions between individuals, however it does not allow for transactions from individuals to vendors. Additionally, Venmo has a unique social media aspect to it by posting the users' transactions chronologically in a news feed style. PayPal also provides PayPal Digital Gifts, a system through which users can purchase and send gift cards for hundreds of brands online. [7]
Ethical Concerns
Since its conception, PayPal has been under continuous scrutiny for some of its unethical practices; many of its features and services have been labelled as controversial due to the ways in which they stray away from traditional payment standards. Issues such as fraud protection, financial security, and information privacy have been major points of contention and have sparked mainstream media attention on a number of occasions.
Fraud
Identity thieves target PayPal because it is an Internet-based service that records financial transactions and the private information of its users; the nature of the service makes it more easily liable to hacking. Using social engineering techniques such as phishing, attackers have been able to steal user login credentials by fooling users into logging into their account through a fraudulent website. [8] After such attacks occurred, hackers illegally executed withdrawals from user accounts. To address this problem, PayPal implemented a fraud detection system named "Igor" that uses the latest artificial intelligence technology to detect fraudulent transactions through pattern recognition. PayPal now has only a loss rate of .5%, which is currently the highest in the industry. [9]
Security
PayPal uses data encryption technology, two-factor authentication, firewalls and information access controls in order to keep personal information collected from its users secure as well as to prevent unauthorized alteration or disclosure of this data. Additionally, when a transaction is made through PayPal the recipient is unable to see any sensitive financial information such as bank account or credit card numbers. However, in May 2014 PayPal affiliate eBay suffered one of the largest data breaches in history on 148 million of its customers. The information which was compromised in the breach included the customers' name, encrypted password, email address, physical address, phone number and date of birth. [10] This begs the question as to how secure the PayPal security measures really are and whether there is a possibility of a potential data breach in the future.
In January 2016, a cybersecurity expert and PayPal user discovered that has account had been hacked due to the poor authentication protocols in place with PayPal customer service. His account had been accessed by simply providing customer service with the last four digits of his SSN and a former credit card number over the phone. The account was shut down by PayPal after the hackers attempted to wire money to an email account associated with an ISIS group member. [11]
Privacy
When a user signs up for PayPal and creates an account using their email address they must consent to providing PayPal with personal information to use the service. PayPal states that this is necessary in order to help personalize and improve the user's experience as well as to provide targeted marketing and advertising. The personal information collected includes: financial information such as credit card and bank account numbers; personal information such as date of birth, SSN, or national ID number; contact information such as address, email and phone number; as well as web information such as data about the pages you access, computer IP address, device ID or unique identifier, device type, geo-location information, computer and connection information, mobile network information, statistics on page views, traffic to and from the sites, referral URL, ad data, and standard web log data.
While all of this information is available for its consumers to view in the PayPal privacy policy, many of the users do not read this and therefore do not realize the extent to which their personal information is being recorded and tracked. PayPal additionally uses cookies, web beacons, flash cookies and HTML 5 cookies to operate across all browsers which can monitor activity on the users device even when they are not using PayPal's website or services. Furthermore, PayPal clearly states that it does not currently respond to 'Do Not Track' browser signals so there is not an easy way to opt out of these surveillance methods. PayPal also retains the personal information collected from your account "for a certain period of time" even after the account has been closed if the user wishes to no longer use the service. [12]
References
- ↑ The 10 Most Popular Online Payment Solutions
- ↑ Who We Are - PayPal
- ↑ eBay picks up PayPal for $1.5 billion
- ↑ eBay Inc. and Carl Icahn Settle Proxy Fight
- ↑ PayPal’s $60m Referral Program: A Legendary Growth Hack
- ↑ PayPal Is Okay If Millennials Don’t Know It Owns Venmo
- ↑ PayPal Shopping Deals
- ↑ PayPal SCAM – This email is being used to trick users, here's how to stop being hacked, Michael Moore 2 November 2016
- ↑ PayPal's Private Governance
- ↑ Truly Massive Data Breach at eBay
- ↑ Your PayPal account can be hacked more quickly than you think
- ↑ Privacy Policy for PayPal Services
