eBay 2010 Annual Report Download - page 15

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. We also automatically verify select accounts when certain other proprietary conditions have been met.
In addition to allowing funding through bank accounts, verification also removes some spending limits on
account holders’ accounts and may enhance their credibility when transacting with other members of the PayPal
community. Outside of the U.S., similar verification processes are used for payment 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 74 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 approximately 45 of those
countries, to their local bank account. In the U.S. and nine 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 may take longer in other countries. Mailed checks
may take one to two weeks to arrive. Qualifying PayPal business users in the U.S. are eligible to 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. and Italy, which can be linked to a customer’s PayPal account to add or withdraw funds. In
certain 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 or off eBay.com in certain key geographies. PayPal’s
Seller Protection Program covers sellers in certain key geographies 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, subject to specified limitations, for qualified purchases
on or off eBay.com in certain key geographies if the buyer does not receive the item or, in limited markets, if the
item is significantly not as described. In some non-U.S. 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 Payment Solution
Bill Me Later offers U.S. online consumers a way to obtain instant credit at the point of transaction through
its relationship with a chartered financial institution, WebBank, which replaced CIT Bank as the issuer of Bill
Me Later credit products effective September 1, 2010. Bill Me Later is not a chartered financial institution nor is
it licensed to make loans in any state. Accordingly, Bill Me Later must rely on a bank or licensed lender to issue
the Bill Me Later credit products and extend credit to customers in order to offer the Bill Me Later service.
Currently, when a consumer makes a purchase using a Bill Me Later credit product issued by a chartered
financial institution, the chartered financial institution extends credit to the consumer, funds the extension of
credit at the point of sale and advances funds to the merchant. We subsequently purchase the receivables related
to the extensions of credit made by the chartered financial institution and, as a result of that purchase, bear the
risk of loss in the event of loan defaults. Although the chartered financial institution continues to own each
customer account, we own the related receivable, and Bill Me Later is responsible for all servicing functions
related to the account.
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