eBay 2009 Annual Report Download - page 16

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Seller Value Proposition
PayPal offers online merchants an all-in-one payment processing solution that is less expensive than most
credit card merchant accounts, offers industry-leading fraud prevention and streamlines the checkout experience
for users of the approximately 81 million active registered accounts in approximately 190 markets as of
December 31, 2009. Active registered accounts are defined as registered accounts that successfully sent or
received at least one payment or payment reversal through the PayPal system (or Bill Me Later accounts that are
currently able to transact and that have received a statement) within the last 12 months. Users of active registered
accounts may engage in cross-border shopping, which may help merchants to increase sales volume. In addition,
PayPal offers a payment gateway service that provides merchants who already have a credit card merchant
account with a secure connection from their online store to their internet merchant account and processing
network.
A merchant can typically open a PayPal account and begin accepting credit card payments within a few
minutes. Most merchants are approved instantly for a PayPal account and do not need to provide a personal
guarantee, acquire specialized hardware, prepare an application, or contact a payment gateway. PayPal can
reduce or eliminate the need for merchants to receive and store sensitive customer financial information.
Furthermore, PayPal charges lower transaction fees than most U.S. merchant accounts, and charges no setup fees
and few or no recurring monthly fees.
The account-based nature of PayPal’s network helps us to better detect and prevent fraud when funds enter,
flow through and exit the PayPal network. Sellers can also reduce the risk of transaction losses resulting from
unauthorized credit card use and fraudulent chargebacks if they comply with PayPal’s Seller Protection Policy.
U.S. merchants offering Bill Me Later provide buyers with various transactional credit arrangements at the
point of sale through Bill Me Later’s banking relationships. Beginning in the fall of 2009, Bill Me Later was
made available as a funding source to approved U.S. PayPal customers, which may help to increase our
Payments sales volume.
PayPal Overview
Joining PayPal
PayPal offers three types of accounts: Personal, Business and Premier. A new account holder typically
opens an account to send money for an eBay purchase or a purchase on another website, a payment for services
rendered, or a payment to an individual in lieu of cash or check. Allowing new account holders to join the
network when they make or receive payments encourages PayPal’s natural, user-driven growth. PayPal’s account
sign-up process asks each new account holder to provide PayPal with his or her name, street address, phone
number and email address. The account holder’s email address serves as the unique account identifier. PayPal
also offers certain customers who sell on their own websites the ability to accept credit card payments from
buyers without requiring the buyer to open a PayPal account.
PayPal Transaction Overview
Buyers make payments at the PayPal website, at the eBay.com website, or at the websites of merchants that
have integrated PayPal’s Website Payments or Express Checkout features. To make a payment at PayPal’s
website, a buyer logs in to his or her account and enters the recipient’s email address and the amount of the
payment. To make a payment through eBay.com or merchant websites, a buyer selects an item for purchase,
chooses PayPal for payment and enters his or her email address and password to authorize the payment. The
buyer chooses whether PayPal debits the money from the buyer’s PayPal balance, credit card, Bill Me Later
account (in the U.S.), or bank account and the payment is then credited to the recipient’s PayPal balance. For
some bank account payments (which we call eCheck payments), the transaction is held until the funds have
cleared the sender’s bank, which typically takes three to five business days. Once the payment is completed, the
recipient can make payments to others or withdraw his or her funds at any time via check (in the U.S. and five
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