The Beginning of PayPal
Peter Thiel and Max Levchin founded PayPal in December 1998 under the name Confinity. Operating out of Silicon Valley, the idealistic vision of the company was one of a borderless currency, free from governmental controls. When venture capital funding combined with eBay transaction partnerships, PayPal quickly shot up to 1 million users after just 15 months [source: PayPal].
The Idea Behind PayPal
The idea behind PayPal is simple: Use encryption software to allow people to make financial transfers between computers. That simple idea has turned into one of the world’s primary methods of online payment. Despite its occasionally troubled history, including fraud, lawsuits and zealous government regulators, PayPal now boasts over 100 million active accounts in 190 markets worldwide [source: PayPal].
Signing Up for PayPal
Signing up for PayPal is quick, and doesn’t even require you to enter any bank account information. However, if you want to use many of PayPal’s features, you’ll need to add and verify a checking account or credit card. To get started, just click the “sign up” link at the top of the site’s home page.
At the next page, you’ll choose whether you want a personal, business or premier account. If you just plan to use PayPal for the occasional eBay auction or online purchase, a personal account is the right choice. If you intend to use PayPal to accept payments for a business, then a business or premier account would be more suitable. If you select a personal account, you can upgrade in the future.
PayPal Infrastructure
From a buyer’s perspective, PayPal changed the way people exchange money online. Behind the scenes, though, it didn’t fundamentally change the way merchants interact with banks and credit card companies. PayPal just acts as a middleman.
To understand what that means, consider that credit and debit card transactions travel on several different networks. When a merchant accepts a charge from a card, that merchant pays an interchange, which is a fee of about 10 cents, plus approximately 2 percent of the transaction amount. The interchange is made up of a variety of smaller fees paid to all the different companies that have a part in the transaction: the merchant’s bank, the credit card association and the company that issued the card. If someone pays by check, a different network is used, one that costs the merchant less but moves more slowly [source: Ellis].
PayPal Account Types
Earlier, we discovered that PayPal has three account types: Personal, Premier and Business. All these account types can use the following core PayPal functions:
Besides these functions, the three accounts also share certain features and limitations. For example, if you have a verified account, you can send up to $10,000 in a single transaction, and there are generally no transaction fees for sending and receiving money between PayPal accounts. However, you’ll pay a fee when using a PayPal debit card or receiving money for something that requires a currency exchange. Unverified accounts, including those without an associated bank account or credit card, have more restrictive sending and withdraw limits. You can determine the limits on your account by clicking a “view limits” link near the top of the page after you sign in to PayPal [source: PayPal].
Sending Funds Via PayPal
PayPal’s form for sending money is very simple: Just provide an e-mail address or mobile number plus the amount and purpose for sending.
Though PayPal rose to stardom via eBay, one of the keys to PayPal’s success has been its ability to expand beyond that market. You can use it to send money to a friend, donate to charity and buy items online. In order to send money using your PayPal account, you’ll need one of two things:
Funds already transferred to your PayPal account before the transaction
From there, it’s just a matter of knowing your recipient. To send money to a person, all you need is the e-mail address associated with that person’s PayPal account. For an organization or business, you can usually send money from a PayPal link at its Web site.
Using PayPal: Receiving Funds
If you want to use PayPal to receive money, you have a range of options available. If you give someone the e-mail address associated with your PayPal account, that person can send you money from their own PayPal account. If you’re selling items on eBay, you can select PayPal as an option for accepting payment through eBay. If you’re selling from your own store or Web site, there are a number of options available for completing sales transactions with PayPal, including the following:
When you’re signed in to PayPal, click the “merchant services” tab to see all the options available to you as a seller. Cost and availability of these services depend on which Web site payments type you’ve selected for your account. You’ll have the “standard” type by default as a recipient, but you can upgrade to the “pro” type for a $30 monthly subscription fee. Merchants with a moderate to high volume of transactions each month should choose the pro type to avoid some of the fees commonly charged by other payment processing services, such as gateway and downgrade fees.
Problems with PayPal
Though PayPal does have millions of seemingly satisfied customers, not all users have had such a pleasant experience. In fact, so many people have felt slighted by PayPal that entire Web sites exist to discuss problems about PayPal and mock its business practices. The most prominent is PayPal Sucks.
The biggest criticism of PayPal is that it acts like a bank, but it isn’t regulated like one. This means that PayPal offers none of the protection that real banks offer, and it isn’t required to maintain any of the security, customer service or dispute resolution services that banks provide. At the same time, PayPal holds large amounts of their customers’ money, makes millions of financial transactions and even offers credit and debit cards.
Most enlightening.
Seems like Paypal is lacking a lot of the assets that Electroneum is just overflowing with.
Thanks for your research (and the references to such research)
I enjoyed the read.
This is only the beginning …
Lets make it great.
Make it Electroneum.
Thanks,
I think it makes it easier for all of us to recognize the achievements of Electroneum and its potential if we compare it with well-established fintech company. People do not realize, but it took Paypal more than a year to get to their first million users and 20 years to get over 100 million users. At the same time absolutely no effect on the unbanked world…
Definitely. …not just for all of" us"who for the most part know at least a little …for the unknowing investor keen to get an idea of ETNs purpose ,goals and potential in the financial world, your article is gold.
Evolution vs Revolution.
ETN wants to coexist with established systems not replace them…to go with the existing “grain” and not against it.
Thats important to maintain.
It fills in the missing links and adds layers of security.
Electroneum isnt out to destroy existing systems.
I think thats what I like about it the most.
I feel that is the key to mass adoption.
By not saying “this is the way” …merely "we have improved the way " everyone is a winner.
I like that Electroneum is now a KYC and AML smartphone-based payment solution, therefore they can enter established mobile phone networks without posing a threat to their financial integrity. The structure of the ecosystem presents a symbiotic relationship with a carrier and propels it’s growth. As of now the way I see it Electroneum is in the position to be the only payment solution for 300 million people, so they will be coexisting with paper bills and coins only. It is a sweet spot 
Take our largest bank in Australia.
Currently exploring its second test phase with a cryptocurrency as a means of smart contract and payments…on a global scale.
Its already tested one of the top ten cryptos…
The results were “good but too expensive and too slow”
They never said it in a negative manner, simply pointing out what it lacked for their specific requirements.
Now they are trialling a subsequent crypto which is invaluable for me to see the two worlds collide in a harmonious sort of way.
Its happening all around the world so Im not about to name names on topic.
“Viva la evolution”
