History & Today

• Founded in December 1998 by Peter Thiel and Max Levchin in Silicon Valley, California.

• Nowadays headquarters are located in San Jose.• Early PayPal product development focused on

building functionality to enable people to "beam" money to each other using handheld devices.

• In October 2002 PayPal was acquired by eBay. • eBay phased out Billpoint and integrated PayPal into

its services

History & Today

• Merchant Services Total Payment Volume as percent of Total Payment Volume was approximately 53 percent in Q1 2009.

• Bill Me Later Total Payment Volume as percent of Total Payment Volume was approximately 1 percent in Q1 2009.

• PayPal transacted about $2,039 in Total Payment Volume every second in Q1 2009.

• PayPal accounts contain approximately $3 billion in stored value that is spent every 2 weeks.

Technologies

• The technologies used by PayPal consist of the main security mechanisms that most sites would employ.

• PayPal uses HTTPS and SSL to encrypt the data stream when a user establishes a session with the PayPal site.

• It is unknown what security mechanisms are used to protect their databases containing information about their customers.

Why Use PayPal?

• Faster than sending checks or money orders• Industry-leading fraud prevention helps keep you safe• Financial information is kept private and secure• eBay Tools and Merchant Services are free to use• Accepted on eBay and merchant websites• Payments can be made locally or in 190 countries and

regions worldwide

Advantages

• Payment is sent directly from one recognized bank account to another account.

• Immediate and convenient.• Payment is deposited directly into the seller's

account.• Transfer: Send and Receive is handled in different

actions• Fast & Easy Transfers

Benefits

• PayPal makes buying products and services or even sending money as easy as sending email.

• It's secure and you don't have to give out your credit card account details to each merchant you buy from.

• It's an extra measure of security for your credit card when you buy.

• It's an extra measure of security for merchants since they are dealing with verified buyers.

• PayPal is now owned by eBay - so security, service and reliability is good and improving each year.

Sell with more savvy

Sell with ease

Sell with confidence

Accept debit and credit cards

Get fast access to your money

Paypal’s benefit to sellerers

Secure transactions

Pay with flexibility

Save time

International shopping

PayPal’s Benefit to Buyers

PayPal’s competitors

Go mobile with your money.Obopay is the first truly comprehensive mobile payment service in the United States.

Find it with Google. Buy it with Google Checkout.

Buyer & Seller SafelyData EncryptionData Encryption

Prevention FraudPrevention Fraud

Protection for purchaseProtection for purchase

Common Fraud-Related Risks

Accessing a payment network to complete fraud

Accessing payment networks

Chargebacks

A cardholder disputes a credit card purchase

Using a stolen credit card to purchase goods and services

Product theft

Using stolen information to open new credit cards

Identity theft

PayPal Provides an All-in-One Solution for Online Merchants

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Protecting the security of a merchant’s information is the top priority at PayPal.

Customer’s issuing bank

Merchant’s acquiring bank

CustomerMerchant

Processor

Payment Processing

Service

2

Payment Processing Service

Authorization Process

1. Customer decides to make an online purchase and inputs credit card information

76

5

Customer

Merchant

1 Processor

3

Customer’s issuing bank

4

2. Merchant’s website receives customer information and sends it to a payment processing service3. Payment processing service routes information to processor4. Processor routes information to bank that issued customer’s credit card (issuing bank)5. Issuing bank sends authorization (or declination) to processor6. Processor routes transaction results to payment processing service7. Payment processing service sends results to merchant

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8. Merchant decides to accept or reject purchase

8

2

Payment Processing Service

Processor

Settlement Process

14

1. Merchant informs the payment processing service to settle transactions2. Payment processing service sends transaction information to the processor3. Processor checks the information and forwards settled transaction information to the issuing bank4. Issuing bank transfers funds to the processor5. Processor routes funds to the acquiring bank6. Acquiring bank credits merchant’s bank account7. Issuing bank includes merchant’s charge on customer’s credit card account

6

4

Merchant’s acquiring bank

5

Merchant

Customer

1Customer’s issuing bank

37

The PayPal Value Proposition

PayPal user accounts

12M

96M

201M

2001 2005 20091999

BackgroundPayPal Inc. is the biggest online company in the world that providing a transfer and online payment services via email between Consumer to Consumer and Peer to Peer.

• Established since 1998

• Debut in 1999

• Subsidiary of in 2002

• Head office in San Jose, California, USA

About PayPal - Key Dates:

• 1998: - Peter Thiel and Max Levchin found Field Link, soon renamed Confinity.

• 1999: - Confinity launches first version of the PayPal electronic payments system.

• 2000: - Confinity is acquired by X.com Corporation. • 2001: - X.com makes initial offering of stock on NASDAQ; firm is

renamed PayPal Inc. • 2002: - eBay Inc. acquires PayPal for $1.5 billion in stock.• 2005: PayPal acquires VeriSign’s payment gateway business.• 2007: PayPal introduces the PayPal Security Key.• 2008: PayPal has more than 60 million active accounts in 190

countries and 17 currencies around the world.

How it works - PayPal and eBay

Ways to use PayPal

Pay Online

Shop for what you want quickly and securely

Send Money

Send money to just about anyone with an e-mail address

Get Paid

Accept online payment for items you sell

How PayPal Works

CHOOSE WHO TO PAY

• Select PayPal when checking out at online stores worldwide.

• Or use PayPal to send money to friends across town or on another continent.

1

DECIDE HOW TO PAY

• Pay directly from your PayPal balance or linked bank account.

• Or charge it to your credit card.

2

PAYMENT SENT

• Stay safer - recipient gets the money without seeing sensitive financial details like your credit card or bank account numbers.

• Keep track of all your transactions on PayPal.

3

PayPal Helps Bring You New Customers

21

PayPal is:

Secure

Simple

Fast

Drivers of ConsumerDemand for PayPal PayPal Growth

► Over 201M accounts

► 190 countries

► 24 currencies

► 1000s of merchants add PayPal every year

The PayPal Opportunity

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PayPal Growth

PayPal helps you grow your business

► 141M accounts

► 31% yoy volume growth

► 190 countries

► 70+ currencies

► 1000s of merchants add PayPal every year

PayPal is the safer, easier way to get paid by online shoppers around the world.

Common Fraud-Related Risks

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Using stolen information to open new credit cards

Issuing unauthorized credits or payments

Identity theft Cash theft

Accessing a payment network to complete fraud

Accessing payment networks

Using a stolen credit card to purchase goods and services

Product theft Chargebacks

A cardholder disputes a credit card purchase

How to Protect Your Business Against Fraud

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Transaction LevelEnsure each transaction you accept and process is valid, and be careful in reviewing suspicious transactions because some may be valid.

Account LevelMake sure only authorized users have access to your payment gateway account, and be alert for suspicious account access patterns.

Network LevelEnsure your perimeter is defended against unauthorized access.

1

2

3

Why PayPal - Security• Security key - in 2007, PayPal introduced an optional security key as an

additional precaution against fraud.• Phishing - PayPal has developed substantial anti-Phishing resources.• PayPal Security Center:

– Privacy to Fight Identity Theft– Prevention to Help Stop Fraud– Protection for Your Purchases

• .

What is PayPal?

• PayPal is an Internet business which allows the transfer of money between email users and merchants.

• PayPal is the safer, easier way to pay and get paid online.

• PayPal is an eBay company and is made up of three leading online payment services: – The PayPal global payments platform,– The Payflow Gateway, – Bill Me Later.

Why Use PayPal?

• Faster than sending checks or money orders• Industry-leading fraud prevention helps keep you safe• Financial information is kept private and secure• eBay Tools and Merchant Services are free to use• Accepted on eBay and merchant websites• Payments can be made locally or in 190 countries and

regions worldwide

How it Works?

• Acts as a “middleman”• PayPal is not considered a bank because, It doesn’t

hold any physical money.• Stated as money service• PayPal works as an extra layer as a security feature,

because everyone's information, including credit card numbers, bank account numbers and address, stay with PayPal with other online transactions, that information is transmitted from the buyer to the merchant to the credit card processor.

How it Works?

• All the money held in PayPal accounts is placed into one or more bank accounts, where PayPal collects interest.

• A basic PayPal account (Personal) is free. User can send funds to anyone with an e-mail address, whether or not they have a PayPal account.

• They'll get a message from PayPal about the funds, and then they just have to sign up for their own account.

How it Works?

• Account types:– Personal– Premier– Business

• For occasional online purchase personal account is the right choice

• Payments for users own business, Premier or Business account is more suitable.

• Account type can be upgraded in the future / afterwards.