PayPal

Published: 01/04/2016 - Updated: 23/06/2016 - Tags: Payment Methods

Paypal is an online payment system that provides users a way to make electronic payments without proving a credit or debit card number directly to a vender. The American company was founded in 1998 by Ken Howery, Max Levchin, Elon Musk, Luke Nosek and Peter Thiel. Corporate headquarters are located in San Jose, CA.

At the time of this writing, PayPal boasts 179 million active accounts that span 203 global markets. PayPal also holds funds in 26 currencies. In 2014, PayPal was used to transfer over $228 billion to over 190 countries.

PayPal Services

Paypal offers a number of services apart from their online money transfer system. In 2008, PayPal launched a service known as PayPal Credit. PayPal Credit came to be after PayPal acquired Bill Me Later, an online credit product.

The next year, PayPal released a product known as Student Accounts. This product was designed with teenagers and their parents in mind. Student Accounts allows for a teenager to have their own debit card connected to a PayPal account funded by their parent or guardian. The goal of the product is to teach responsible spending habits.

PayPal Restrictions

Due to PayPal being located in the United States, countries under economic sanctions from the United States are not supported. These countries include Pakistan, Iraq and Afghanistan. PayPal also withdrew operations from the Crimea in January 2015 due to international sanctions against Russia.

PayPal's Safety and protection policies

In the event that the customer does not receive an item of if the item he or she purchased was not as described, The PayPal Buyer Protection Policy states that the customer may file a buyer complaint. A customer can open a dispute within 180 days from the date of payment.

Financial Regulation

PayPal founder Peter Thiel has stressed that PayPal is not a bank. The company does not engage in fractional-reserve banking, but rather stores funds in commercial accounts. This important difference keeps PayPal from being held to the same regulations as a bank in the United States. Australia however, has subjected PayPal to the same rules and regulations as a bank.

Criticism

In 2003, PayPal declined to provide their services as a payment method for online gambling sites. This decision would be reversed in 2010 when PayPal resumed this activity under the condition that online gambling was legal in the region where the site was located and that the site was properly licensed.

PayPal Security

In 2006, PayPal began to offer a modified login as an additional safeguard against online fraud. This additional safeguard came in the form of a hardware security similar to the size of a credit card. The hardware provided the user with a unique six digit code to be entered after successfully verifying the username and password.