Abstract
Paypal is an e-commerce business that process payments and money transfers to be made through the web. It is an electronic alternative to traditional modes of payment. It performs payment processing, for a fee for online vendors, auction cites and other users. It corporate head quarters are located in San Jose, California. However, the company also has a substantial volume of operations in Nebraska, Germany and Ireland. Founded by Peter Thiel and Max Levchin, their initial business model was to launch a person-to-person payment network. However, as business volume began to grow, they entered the online auction market places. Incidentally, eBay was also operating Billpoint as its payment system and branded it "eBay Payments." The existence of PayPal ensured the beginning of a fierce but short road of competition between eBay's Billpoint and the latter. By October 2000, Paypal upgraded most of its customers to "business accounts," and hence captured higher returns. The beginning of the end of the duo's competition, however, ground to a halt when in July of 2002, eBay acquired PayPal for $1.4 billion. This decision was partly because of the popularity of PayPal and partly because more than fifty percent of eBay's customers were using PayPal's services.
