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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  • Frank Lee

    PAYPAL violates federal privacy laws
    Our corporation has a paypal account and I as an officer of the corporation have a personal account. PayPal has recently suspended our corporate account due to one complaint on my personal account. They say the accounts are interlinked–I notified them that I was just an officer and that the paypal account was owned by the corporation. They had me fax over our corporate banking signature cards, inventory invoices, driver’s license, American Express merchant account information, etc, etc. PayPal lifted the suspension on the corporate account after jumping through all these hoops (federal law prohibits business’ including banks requesting copies of driver’s license) and on the same day when the corporation attempted to transfer funds to their banking account, PayPal again suspended the account because of the link of the officer and his personal account. I do not recommend doing business with PayPal; we would like to know if anyone else as encountered unjust treatment from PayPal; how it was resolved if so, any recommendations you can provide, or would be interested in filing a class action lawsuit for their violation of infringing on your privacy rights by requesting a faxed copy of your driver’s license after the fact of opening a paypal account. Thanks you.

  • Bob Kuprion

    Deal with Paypal and sooner or later you will get burned. I would never touch them again with a ten foot stick. No customer service what so ever if you have a problem. Your money may disappear into thin air and then you will have to learn an Asian language to speak with anyone.