What’s PayPal’s History? How Max Levchin and Peter Thiel Founded The Business
PayPal has made a revolution in the world of online payments. Today buying stuff and paying online anywhere in the world has become even easier, than paying at the local store. You can make it with a few clicks, without even leaving your home. And using PayPal.com is not only fast and convenient, but it is also safe. You, as a buyer, are protected to some extent from fraudulent activities having the option to get your money back if something goes wrong.
PayPal was founded back in 1998 by two guys – Max Levchin and Peter Thiel, initially under the name “Confinity“. It began as a security-focused business, allowing users of PDA (personal digital assistant) devices to have a digital wallet. This way it was impossible for their money to be stolen because it was even not real – just encoded digital information which only the owner of the wallet could use. In 1999 the e-mail online payments technology was born, transforming PayPal into what it is today. Its users were able to pay online instantly and easily. This made it the most preferred payment method for both merchants and buyers on the big and very popular auction site – eBay.com. The sellers there began placing the logo of PayPal on the pages with their offers, which really boosted its popularity – it was free advertising. Its founders spotted this trend and made some improvements, making the payments there even easier. In January 2000, the registered users of PayPal reached 100 000. In March the same year, Confinity merged with its rival company – x.com, taking advantage of its brand and popularity. This turned out to be a very smart move… Just two months later, the registered user accounts grew 10 times to 1 000 000. In the middle of 2001, Confinity changed its name officially to PayPal.
The huge and fast success attracted the attention of some organized crime groups and hackers, who used the service for fraudulent activities and money laundering. That brought some serious troubles for the company, which was even banned in some states like Louisiana. FBI and some government authorities started investigating PayPal’s business. Since then, the company made some significant security improvements. Despite all of this, the company’s image stayed intact, and its users continued to grow. Initially, $10 bonus was offered for new accounts, as some other bonuses for referring friends. This was an expensive marketing strategy but turned out to be really effective. Soon, PayPay became the standard and the most usual way of paying online.
Paypal’s IPO – Going Public…
In February 2002, PayPal launched a very successful initial public offering (IPO), offering 5,4 million shares at $13. The trading session started at $15,41 per share, but buyers quickly drove the price up bringing it to over $20 at the end of the trading day.
In 2002 more and more eBay users were choosing to make their payments via PayPal, than using the payment system of the auction called “Bullpoint”. Beating their own system was a clear sign for eBay’s management about the potential of the new company. And they wanted to take control over this… On 8th of July, 2002, eBay announced, that they were buying PayPal for $1,5 billion. This way they got something that had already been a big part of their business – their payment system.
What Is PayPal Today?
Today PayPal is the ultimate leader in online payments worldwide. It operates in more than 180 countries and makes it possible for users from all around the world to make quick, easy and secure payments in 25 different currencies. The registered user accounts were more than 240 million by the end of 2011, and the active ones were more than 100 million. The company made payments possible across different locations, currencies, and languages and is definitely one of the greatest inventions of our century. The service also allows everyone to pay in any way she would prefer, including through bank accounts, PayPal Smart Connect, credit cards, or simply account balances without sharing important and sensitive financial and personal information.
How Does It Work?
For more details about what is Paypal, how exactly the payments work and some more interesting information, you can visit: What Is Paypal
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