Explanation of PayPal

PayPal is an e-commerce business that provides the secure transfer of money between member accounts. PayPal is free to join and serves as an electronic alternative to checks and money orders.

History

PayPal was formed in March 2000 when Confinity and X.com merged. Confinity was originally an Internet-based Palm Pilot account payment option, and X.com was a financial services company. In 2002, eBay acquired PayPal for $1.5 billion.

Function

A PayPal account can make transfers or payments from a bank account or a credit card; a recipient of a money transfer can sign up for a PayPal debit card, request a check from PayPal or transfer the funds to a bank account.

Significance

PayPal facilitates worldwide e-commerce while managing over 70 million accounts in 19 different currencies.

Warning

The impersonal nature of e-commerce creates an enhanced risk of fraud, especially because the only requirement to make a money transfer is knowledge of a user's account ID and password.

Security Options

As a protection against fraud, PayPal users now have the option to buy a $5 security key. After entering their user IDs and passwords, members are prompted to enter a six-digit security code that is recreated on the display screen of the actual key during every login attempt.

References

• What Is PayPal?
• About PayPal