PayPal Outage Effects Online Retailing and eBay

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PayPal Outage Effects Online Retailing and eBay

eBay Inc.’s online payment system PayPal said on Tuesday that account data and personal information were not compromised by a glitch in the new system update that has resulted in some users not being able to log into their accounts and also PayPal not being able to process some merchants’ online shopping sales.

eBay said on its website that it continues working to fix the issues, which resulted from a software update introduced on Friday morning. Rueters reports that the glitch also has caused problems with PayPal’s debit cards and its shipping functionality. PayPal is quite a busy online payment system with more than 50 million total accounts. During a three month period last quarter it processed $4.4 billion in payments both on and off eBay.

eBay is not the only site which uses PayPal as its merchant service of choice for online retailing. PayPal is the merchant solution of choice for many small, medium and large web publishers and shopping sites along with basic advertising service sites. PayPal over the years has become its own form of online currency and is much popular than other online banking and payment services.

In a statement today PayPal said that it “has been experiencing technical problems which have caused intermittent availability for members attempting to use the site. PayPal and eBay teams are working at full force to fix the underlying issues and improve site access.”

Today, access to PayPal continues to be intermittent. Some members are able to log in to the site and make payments and perform other activities, although they may be experiencing very slow system responses. Other members are not able to get in right away, or at all. PayPal users may also be having problems with their debit cards.

Sellers who use PayPal shipping functionality may be having problems shipping products to their buyers, and buyers may be experiencing difficulties paying sellers. We encourage members to be patient with trading partners as we work to improve PayPal access.

These PayPal issues are the result of unforeseen problems that resulted when a new code base to upgrade the site architecture was introduced to the PayPal platform on Friday morning. The code worked well when tested and during the first hours of launch. Unfortunately, problems handling peak levels of traffic developed later in the day that created intermittent availability and errors for members. These problems have continued in varying degrees since Friday.

Account data and personal information have not been compromised by these issues. eBay and PayPal technical teams are working at full force to fix the underlying problems and improve site access.

Once PayPal goes back online, users may not find that everything is perfect with the service and its handling of discrepancies during this down period. Auction Bytes reports:

Even when PayPal goes back online, it is likely buyers and sellers will have a tough time reconciling their records and verifying whether payments have been made.

Users have turned to the courts in the past over eBay and PayPal problems. In July, eBay users sued eBay over billing glitches, which are still not resolved according to users.

Users filed a class-action lawsuit against PayPal in 2002 over poor customer service issues and the closing of accounts without notice. The parties reached a settlement this July, requiring PayPal to pay out $9.25 million into a settlement fund that must also pay for administrative costs and plaintiffs’ lawyer fees.

The only service on par with PayPal was c2it, but CitiGroup closed the service a year ago. CheckFree and BidPay are alternative payment methods also popular with eBay users, but have nowhere near the market share of PayPal.

PayPal is expanding internationally in Europe, and the Wall Street Journal recently referenced a report from Chinese media that PayPal will launch in China by the end of this year.

Loren Baker
Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing strategy & development agency.
Loren Baker
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