eBay 2008 Annual Report Download - page 16

Verification of Account Holders
To fund payments from their bank accounts in the U.S., account holders must first become verified by PayPal.
The primary method for verification is our patented Random Deposit technique. Under this technique, PayPal
makes two deposits ranging from 1 cent to 99 cents to the account holder’s bank account. To verify ownership of the
account, the account holder then enters the two amounts as a four-digit code at the PayPal website. In addition to
allowing funding through bank accounts, verification also removes some spending limits on account holders’
accounts and gives them reputational advantages when transacting with other members of the PayPal community.
Outside of the U.S., similar verification processes are used for credit card accounts and in the limited number of
countries where PayPal offers bank funding. In certain cases specific to local markets, bank funded transactions are
permitted up to set limits before additional verification is required.
Withdrawing Money
Each account holder in the U.S. and in 64 other countries may withdraw money from his or her PayPal account
through an electronic fund transfer to his or her U.S. bank account or, in 40 of those countries, to their local bank
account. In the U.S. and seven other countries, users can withdraw their funds by a mailed check. Withdrawals by
electronic transfer in the U.S. may take three to five business days to arrive in the account holder’s bank account,
depending on the bank, and make take longer in other countries. Mailed checks may take one to two weeks to arrive.
Qualifying PayPal business users in the U.S. can receive a PayPal ATM/debit card, which provides these users with
instant access to their PayPal account balances. ATM/debit cardholders can withdraw cash from any ATM
connected to the Cirrus or Maestro networks and can make purchases at any merchant accepting MasterCard.
PayPal offers customers the opportunity to apply for a Prepaid card in the U.K., which can be linked to a customer’s
PayPal account to add or withdraw funds. In limited markets, customers can also access their money by generating a
credit to their credit card account.
PayPal’s Trust and Safety Programs
We have developed a number of PayPal trust and safety programs, including PayPal’s Seller Protection and
Buyer Protection Programs. These programs provide additional protection to certain account holders who pay or
receive payment for their transactions through PayPal on eBay. PayPal’s Seller Protection Program covers sellers
who follow specific shipping and handling practices against claims that a transaction was not authorized by the
buyer or that the item was not received. PayPal’s Buyer Protection Program reimburses the buyer in full for qualified
purchases on eBay.com at no cost if the buyer does not receive the item or if the item is significantly not as
described. In some eBay localized markets, protection for buyers is limited to a maximum amount per transaction.
In addition, our Risk Management and Fraud Investigation Teams focus on identifying and preventing fraud before
it occurs, detecting fraud in process, mitigating loss if fraud does occur and delivering information to law
enforcement around the world to better combat online fraud.
Bill Me Later Transactional Credit
Bill Me Later offers U.S. online consumers a way to obtain instant credit at the point of transaction. Bill Me
Later is not a chartered financial institution, and relies on CIT Bank to extend credit to Bill Me Later customers with
the Bill Me Later service. When a consumer makes a purchase using the Bill Me Later service, CIT Bank funds the
consumer loan at the point of sale and advances funds to the merchant. Bill Me Later subsequently purchases the
receivable related to the consumer loan extended by CIT Bank. Bill Me Later accounts are most commonly opened
on a U.S. merchant site offering Bill Me Later as a payment method, but can also be opened at the Bill Me Later
website. A buyer enters his or her birth date and the last four digits of his or her social security number and, if
approved, Bill Me Later opens an account for the buyer. This account can be used on any other U.S. merchant site
offering the Bill Me Later payment option. Once established, customers can then manage their accounts online with
access to their transaction history and monthly statements and can elect to establish recurring electronic monthly
payments. Bill Me Later earns the majority of its revenues by collecting interest on the outstanding customer
balances and collecting late fees, as well as transaction fees from merchants.
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