PayPal Outages Persist, Worry Users

By Matthew Hicks  |  Posted 2004-10-13

PayPal Outages Persist, Worry Users

Sporadic outages at PayPal stretched into a fifth day on Tuesday, though the company late in the day reported that access had returned to normal for most users.

Even as access appeared to be improving, the effect of the payment services troubles was rippling among sellers and buyers who had lost sales and begun questioning its reliability.

PayPal, based in San Jose, Calif., and owned by eBay Inc., is the major online payment system for eBay auctions as well as smaller e-commerce sites. The intermittent outages caused problems across the service, from access to the site and account information to PayPals debit card and shipment services.

The problems began on Friday after PayPal conducted a monthly software update. They subsided on Saturday, only to resurface on Sunday and worsen through at least early Tuesday, according to PayPal users and statements from the company.

Midday on Tuesday, Web-site monitoring companies found the PayPal home page to be largely unavailable at times. During a 2-hour span, AlertSite Inc. reported that PayPal was available only 35 percent of the time. Keynote Systems Inc. also was unable to connect to the site from 10 locations nationwide.

PayPal is blaming the outages on the software update, and officials did not know how many of its 50 million user accounts were affected. Spokeswoman Sara Bettencourt said while some users could not access their accounts or faced delays, others had not experienced problems.

She did not know when the software glitches would be fixed but said that both eBays and PayPals technical teams were working on the issue.

Is eBay a good partner for VARs? Click here to find out.

For Ron Hammon, who sells cowboy hats and gear online through his company Proud Cowboy, in Hartselle, Ala., the outages have cost him sales during a weekend where he had planned on the Columbus Day holiday boosting orders.

Hammon relies on PayPal for payment processing, to run shopping-cart functionality for about 2,000 items sold online and to track and ship orders. He sells about 600 items a month using the service and estimated that he lost about $1,000 in anticipated sales from the on-and-off outages.

"This is not yet a catastrophe, but its heading that way if it lasts much longer," Hammon said. "If this continued for a week, it could very seriously nearly put me out of business."

Next page: Resorting to old-fashioned payments.

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Consumer David Hawkins, of Key Largo, Fla., said he tried to open a PayPal account both on Saturday and again on Monday to pay for an eBay auction he had won. Even when he could access the site, he eventually ran into error messages as he tried to complete the process.

In the end, he e-mailed the eBay seller directly and arranged to pay the old-fashioned way—by mailing a check.

"I will bypass PayPal for this [transaction], and I dont know if I will try it again in the future," Hawkins said.

He was particularly concerned about receiving timeout and other errors on the site while entering sensitive information about bank and checking accounts.

How is eBay maintaining uptime? Read eWEEKs interview with senior VP Marty Abbott.

PayPal officials, though, offered reassurance that user information is secure despite the service interruptions.

"Its not a security breach, and no account information or financial information has been compromised by these issues," Bettencourt said.

Ken Godskind, vice president of marketing at, said that the Web monitoring service largely was unable to establish TCP/IP connections to PayPals site for part of Tuesday, pointing to more traffic than the companys infrastructure could handle either because of increased traffic or pulled back resources.

The duration of the problems at PayPal also perplexed users and observers, who wondered whether PayPal had properly tested the software update before installing it and why the company had not reverted to its old code to restore access.

How important is testing? Find out here.

Bettencourt said that while eBay has rolled back updates to fix problems, the process is not as simple for PayPals system.

"The technical teams are looking at that as an option, but theyre looking to fix the problems as quickly as possible," she said.

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