RELEcTRONI'- ~-

196
CHAPTE R4 • ENABLING BUSINESS-TO-CONSUME
- I . Citigroup' s C2it and Bank 0
inclu~ini oneY • AS of 2014, the cornp:~•s
Enabli~gGlobal Payments at payPa e-m ail d in 3 worldwide markets, had ny
- . t 10 accept
CASE2 were heSitan I rs
19
operate W. b sites in SO countries, and lo.
anks und customers d on re!l I ctol a . ca Ii zed mi J)ion active accounts ,~an.
•1 bnse Jee·
b
"money"
•
1h11I wasn . need for an e ed over 43 d . · also
If you have used eBay (and who hasn't'/), ag storners to sen , receive, and h
Thiel and Levchin snW 11:~1 111 relied on real allows _cu currencies worldwide, ha ~Id
you know how easy it is to pay for items you ironic pay ment systern s ay became pop· 26
buy and to recei ve payment for items you • IIYwhen e
funds din over us$ ISO b'll'I ,on in . transacuV1ng
have sold. Checks. credit card charges. and currency, espccio at niche, handle 2013 alone. ons
ular, and payPal till~d ~its security and cus·
money orders are unnecessary. Instead of After PayPal so ve mers liked the durt·ng the year
ther keY element of PayPal's b
bl ms custo . Ano · Usi
these traditional methods of payment. digital . mobile payments. In 2013, Payp ,·8
torner support pro e , f sing the service, ness ·Je is transactions
. d US$ al
money is easily and effortlessly zapped to toppe 27 bill'ion
convenience and ease o u ers like not 11av· mo 1 .
and from account s at PayPal, the most fre- b a 00 percent increase from its 20 •
and its client base grew. BUY d numbers to 1
quently used digital money transfer service . redit car nearI·Je Y tran . f'igures. According 12
ing to reveal therr c d erchants appre· saction
mo b1 • • to
online. every online merchant, ~I mayment colleC· nalysts, the increasing numbe
Peter Thiel, a hedge fund manager, and rnanY a . . • r of
ciate having PayPal ban e ~]ish an account hOne appltcauons 1s responsible f
Max Levchin. an online security specialist, srnar tp d . or
founded what was to become PayPal-it was tion. New PayPal clients esta d and fund the . crease More an more mobile us
d passwor the tn ucting · . ers
first named Field Link, then Confinity, and with a user name an d't card nurn· business on eBay using th .
. • payPal a ere 1 are co nd . , e1r
finally , in 2001 , PayPal. The company went account by giving . information. rtphones, With PayPal s mobile app
ber or bank account transacuon (because srn a h . .. b' s,
online rather naively in 1999. The founders' e s the latter sending rnoneY on t e winning id is easy
vision was to create a digital currency ex- Although PayPal preier . are cheaper than can be handled from nearly anywher
change service free of government controls; bank account transacttons p pal's ac- an d pal, apP for the 1'Ph one an d Andro·cte.
however, hackers, con artists, and organized credit card transactions), half of ay aY 8 "b " h. I
P
phones a11ows users to ump t e1r phones
crime groups quickly realized the potential counts are funded via credit c~ds. 2002 for
eBay bought payPal ,n been wgether to transfer money between one an.
of using the site for scams and money laun-
US$ I ·5 billion and since then has also other. The app also allows a user to request
dering. After implementing tighter secu- . f the rnoneY
a major source of income. or e payPa I has money frorn a group of people for things like
rity measures to stop criminal activity and
assuage customer complaints, the next hur- transfer site. At the same urn • th . d a going-away gift at the office, a fundraiser,
dle to overcome was government regulators. expanded its client base both i~ e Unit:f or any other event where money needs to be
Attorneys general in several states investi- States and abroad and is generating much pooled. Additionally, the app gives users the
gated PayPal's business practices, and New its revenue by charging fees for payment ndpro- ability to "split the ticket" at a restaurant and
York and California levied fines for viola- cessing for a wide variety of online v~ ors, send their portion of the check total to who-
tions. Louisiana banned the company from auction sites, and corporations. Services to ever paid the bill-including tax and tip!
operating in that state (the ban has since buyers are free, but sellers are charged a fee, While the company has had its share of
which is generally lower than fees charged
been lifted). problems with fraud and phishers (scam-
When PayPal began, payment for Web by major credit card companies. PayPal now
sters who send fraudulent e-mail messages
products could only be made through credit offers special merchant accounts for transfer-
and duplicate legitimate Web sites), PayPal
card charges at the purchase site and via ring larger amounts of money and also offers
a donation box feature for biogs a.nd other continues to innovate and be the number-one
checks and money orders sent through the
Web sites where visitors can make donations. method of payment for the world's buyers
U.S. Postal Service. Other companies, such
as Beenz.com and Fl.ooz.com, had tried to PayPal spawned many rivals after its and seJlers.
establish electronic payment systems based initial launch, but most have since died,
on a special digital currency, but merchants,

Questions
4-43. Why do you think PayPal has been so successful throughout
the world?
4.44, What other opportunities will megatrends such as mobility
and social networking provide for PayPal?
4-45, Do you use PayPal? Why or why not?
Based on: (n.d.). PayPaJ-About us. Retrieved May 27, 2014, from https://
Anonymous.
www.paypaJ-media.com/about.
PayPal. (2014, May 25). In Wikipedia, The Free Encyclopedia. Retrieved May28,
2014, from hnp://en.wikipedia.org/w/index.php?title=PayPal&oldid=610122867.
Walker, L. (2005, May 19). PayPal looks to evolve beyond its auction roots.
Washingto,ipost.com. Retrieved May 27, 2014, from http://www.washingtonpos1
.com/wp-dyn/content/article/2005/05/18/AR200505 l 802l 87 .html.
Wal~h, M. (~010, February 18). Facebook and PayPal become payment pals.
Onlme M~dz~ Daily. Retrieved May 10, 20 12, from http://www.mediaposr
.com/pubhcauons/?fa==Articles .show Article&art_aid== 12277 5.

Go to mymislab.com for the following Assisted-graded w riting

. . questions:
.
MyMISLab™
1
. customization
Describe mass
customized .
products. . explain how companies can reap h'ig her profits despite higher producti'on costs ,,,or manu fac unn,
. .and ·"
4-46.
How can onlme retatlers rrumm1ze the risk associated with ered'it card transactions?
4-47.