PayPal recovers from widespread outage

PayPal experienced an outage that at its peak affected most of its members for about an hour-and-a-half, but with aftershocks that lingered until midafternoon.

The technical problems, which prevented PayPal members from using the online payment service to conduct transactions, began at about 11 a.m. U.S. Eastern Time and were prematurely declared solved around 1 p.m., although issues lasted until about 3:30 p.m.

Hours-long outages and availability problems with online payment systems such as PayPal inevitably cost merchants money in lost sales, dissatisfied customers and tarnished brands.

In its blog postings about the issue, PayPal hasn't given a reason for the outage but said it plans eventually to provide details about what went wrong. "I'd like to apologize on behalf of the company to anyone who was affected," wrote a PayPal official identified only as Anuj.

PayPal, with more than 87 million active PayPal accounts -- and growing -- in 190 markets and 24 currencies worldwide, is increasingly important to the financial health of parent company eBay.

PayPal posted third-quarter revenue growth of 22 percent from a year earlier, to US$838 million, while the eBay online marketplace increased its revenue by only 3 percent.

Revenue for all of eBay increased just 1 percent, eBay said last week. PayPal made up 37 percent of eBay's overall revenue, up from 31 percent in 2009's third quarter.

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