eBay 2003 Annual Report Download - page 13

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VeriÑcation of PayPal's Account Holders
To fund payments from their bank accounts, senders must Ñrst become veriÑed PayPal users. The
primary method for veriÑcation is our Random Deposit technique. Under this technique, we make two
deposits ranging from 1 to 99 cents to the user's bank account. To verify ownership of the account, the
user then enters the two amounts as a four-digit code at the PayPal website. In addition to allowing
funding through bank accounts, veriÑcation also removes some spending limits on users' accounts and gives
them reputational advantages when transacting with other members of the PayPal community.
Withdrawing Money
Each account holder in the U.S. and 22 other countries may withdraw money from their PayPal
account through an electronic fund transfer to his or her bank account or, in the U.S., by a mailed check
from PayPal. ACH withdrawals may take three to Ñve business days to arrive in the account holder's bank
account, depending on the bank. Mailed checks may take one to two weeks to arrive, and PayPal charges
$1.50 per check. Qualifying PayPal business users in the U.S. can receive a PayPal ATM/debit card,
which provides instant liquidity to their respective PayPal account balances. ATM/debit card holders can
withdraw cash, for a $1.00 fee per transaction, from any ATM connected to the Cirrus or Maestro
networks and can make purchases at any merchant accepting MasterCard.
PayPal Fees
PayPal does not charge a fee to open a Personal, Premier or Business account, or to send money or to
add funds. PayPal also does not charge to withdraw funds from any of these accounts that are based in the
U.S.; there is a nominal processing fee for withdrawals by non-U.S. accounts. PayPal charges Premier and
Business accounts to receive payments at rates from 2.2% plus $0.30 per transaction to 2.9% plus $0.30 per
transaction for payments denominated in dollars, and rates from 2.7% plus the equivalent of $0.30 to 3.4%
plus the equivalent of $0.30 for payments denominated in other currencies. PayPal also charges a cross
border fee amounting to an additional 1% for cross-border payments in dollars, and an additional fee of
0.5% for cross-border payments denominated in other currencies. If the transaction involves a currency
conversion, it will be completed at a retail foreign exchange rate determined by PayPal, which is adjusted
regularly based on market conditions. This exchange rate includes a 2.5% spread above the wholesale
exchange rate at which PayPal obtains foreign currency, and the spread is retained by PayPal. Personal
accounts do not pay a fee to receive payments, but may not receive credit card payments. A detailed
listing of PayPal fees for receiving payments and withdrawing funds from non-U.S. bank accounts can be
found under ""Fees'' at our website at www.paypal.com. All pricing is subject to change.
Technology
Our eBay Platform
The eBay platform is composed of a scalable transaction processing system, consumer user interface,
and externally accessible Application Programming Interface, or API, for third-party integrations. The
scalable system is primarily based on internally developed proprietary software, but also includes selected
vendor components. The eBay platform supports the full selling and buying processes, including initial
registration for the service, placing bids and managing outbids, listing items for sale, and auction close.
The eBay platform also manages various notiÑcations for sellers and buyers, including daily status updates,
bid and outbid notices, registration conÑrmations, account change notices, billing notices, and end-of-
auction notices. The platform maintains user registration information, billing accounts, current item listings
and historical listings. All information is regularly archived for record-keeping and analysis purposes. The
platform regularly updates a comprehensive search engine with the titles and descriptions of items, as well
as pricing and bidding updates for active items. The platform also updates the seller's billing account every
time an item is listed, a feature is selected, or an auction closes with a bid in excess of the seller-speciÑed
minimum bid. The platform sends electronic invoices to all sellers at least monthly. In addition to these
features, the eBay service also supports a community bulletin board and chat areas where users and eBay
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