PayPal is an e-commerce business that allows payments and money transfers to be made through the Internet, replacing the traditional paper methods such as cheques. It is a payment intermediary service that facilitates worldwide e-commerce, at the same time, possess the capability to protect the online vendors’ and consumers’ privacy with tight security measures. Not only that, Paypal also enable their customers to invest under the Paypal Money Market funds. This company successfully combines all the different types of E-commerce, like email, mobile and internet, giving it a competitive edge in the market. Paypal’s corporate headquarters are in San Jose, California and United States. On October 3, 2002, PayPal became a wholly owned subsidiary of eBay.
Business Model & Design
Paypal is a Business to consumer transaction service provider. Drawing from what we have studied from the three analytical models or “lenses”, we were able to derive a clearer analysis of Paypal’ business needs, and how the designers were able to conceive, design and implement an information model that meets the requirements of the business. We have ascertained that Paypal aims to be an intermediary between sellers and buyers who have never met before, but are willing to conclude transactions although with a certain level of caution given that both parties are mostly strangers. In this light, it appears that the transaction cost analytical model is an apt one, given that it addresses the regulation or control of potentially unscrupulous behaviours arising from sellers or buyers who seek to profit from dishonest practices. Furthermore, Paypal has succeeded in achieving what is one of the most important features of the transaction cost model: the reduction and possible elimination of search, monitoring and contract costs etc. This is because Paypal acts as a trusted intermediary to collect evidence of shipments from sellers, and payments from buyers. Once the counterparties have done their part, Paypal releases the money to the seller to complete the transaction process. Given its reputation as a safe, secured and reliable intermediary of sorts, buyers and sellers need not have to source out for other intermediaries( which may not have the same security features as Paypal, and this sourcing incurs time and money costs) , monitoring is done by Paypal itself ( example to prevent fraud, identity thefts, verification of bank accounts) and if there is a contractual breach arising from disagreements, Paypal steps in to mediate and act as a arbitrator to enforce contractual terms breached.
Business partners are those who have incorporated Paypal in their own software applications, such as Microsoft Office Accounting Software or Paypal pre-integrated shopping carts. By working alongside with these partners, Paypal is again, able to provide its services as a reliable intermediary.
Features
1) Online funds transfer to over 190 countries and supports 18 currencies
PayPal has person-to-person payment service (P2P). A P2P payment service allows anyone with an e-mail address to transfer funds electronically to someone else with an e-mail address, across geographical boundaries with ease. This shows that with powerful networking technologies like the Internet which Paypal exploits, there is now a flow to spatial spaces. Geographical boundaries are no longer impediments.
2) Payment processing for online vendors and consumers
Paypal offers flexibility of payment modes, which are 1) paypal balance, 2) using paypal to charge to credit cards (Visa, Mastercard) and 3) linked bank account.
However, online vendors, auction sites and other commercial users will be charged a fee and there is also a transaction fee when payment is received.
3) Safe shopping experiences with Paypal
We can search through thousands of websites linked to Paypal. The hassle of searching and looking for what you need has simply gone when there are 12 main categories divided neatly for us. Various categories like clothing, travel, entertainment and computers, with many famous brands like Guess, iTunes and Hotwire.com, choose to trust Paypal with their online transactions.
Paypal has an all-in-one online payment processing solution for online vendors, which is easy and time-saving for them and their consumers.
Commercial shoppers of Paypal do not have to worry about identity theft and frauds as their sensitive financial information is not given to retailers/vendors, only their email address will be provided for contact purposes.
4) Invest to get a competitive return of 2.36%
PayPal Money Market Fund is managed by Barclays Global Investors, international experts who oversee over $1.50 USD trillion in global assets.
5) Shop, send and request money anywhere with your mobile on hand
Paypal allows you to order things, split a bill with your friends and request for money, just by sending a text message. You can also check your Paypal account balance using mobile.
6) Paypal provide businesses with specialized solutions
Paypal help businesses to streamline their accounting processes, build successful affiliate programs, deliver digital files and add functionality to their website
Strength
1) Design safe online transactions
PayPal doesn’t expose or sell clients’ financial information to merchants. Sensitive financial information is securely stored on our servers. When user uses PayPal to pay online, user provide only his PayPal email address. The merchants/retailers receive payment from PayPal without ever seeing user’s financial information. To help safeguard against identity theft, every PayPal payment is followed by an email confirming user’s transaction.
2) Providing useful tips for users
Paypal’s website also comes with useful tips (such as preventing identity theft) that enables users to take further steps beyond what are already incorporated and enacted by Paypal to ensure secured transactions, For example, for the discerning user who wants to take more proactive steps to reduce the probabilities of having his/her personal information from being stolen, Paypal provides additional resources such as the “Paypal Security Key” that generates a temporary 6-digit security code every 30 seconds.
3) While merchant accounts regularly put buyers’ needs before sellers’ needs, Paypal believes in both the rights of the buyers and sellers.
Therefore in the time of disputes, there are proactive steps to be a concerned intermediary and arbitrator in the Paypal Dispute Resolution Centre. PayPal Dispute Resolution is an easy way for sellers and buyers to communicate with each other by posting messages on PayPal so they can resolve issues and avoid claims. When sellers resolve a buyer dispute amicably through PayPal Dispute Resolution or when they win a PayPal claim, they’re covered 100% against a chargeback or future claim on that transaction.
Seller Protection Policy covers most sellers for up to $5,000.00 USD on any transaction PayPal deems fraudulent, which is a beneficial procedure for the sellers as most merchant accounts do not provide such services. Buyer Complaint Policy and the PayPal Buyer Protection are used to resolve complaints and problems of the buyers.
4) Paypal works with certain partners to spread its convenience beyond online trades Partner solutions are pre-integrated with PayPal, making them easier to implement.
For example, clients can choose available Paypal pre-integrated shopping carts. Paypal partners have integrated PayPal into almost every kind of software clients need to run a sophisticated e-commerce business – from email marketing and event management solutions, to affiliate and order management software. For example, the Microsoft Office Accounting Software quickly sends professional invoices, tracks client’s time, and let customers pay with PayPal. Just choose a PayPal partner solution for accounting, invoicing, and billing. They're pre-integrated with PayPal, so clients can reconcile transactions and get paid faster. Once again, this shows that with the pervasiveness of the Internet, Paypal is able to exploit this vast, unrestricted space to offer its solutions to partners who are keen to build their e-commerce businesses, with Paypal being their core foundation and pillar.
Security
Paypal provides detailed descriptions of their techniques used to prevent fraud:
1) State-of-the-Art Technology
As a leader in security technology, Paypal uses state-of-the-art fraud prevention to help stop cyber crime.
2) 24/7 Transaction Monitoring
Its team of over 2,000 specialists worldwide includes former law enforcement officials who work with agencies around the world to help protect users from fraud and identity theft. Experts will contact user immediately if we suspect fraud in user’s account and work with authorities to shut down fraudulent websites.
3) Cutting-Edge Fraud Models
Every transaction is reviewed by industry-leading, proprietary models that help weed out fraudulent activity.
4) Industry-standard services
Company uses industry-recognized Address Verification Service (AVS) and Card Security Code (CSC, also known as CVV2) to help prevent credit card fraud.
5) Patent-pending Verification
Company’s proprietary bank account Verification helps reduce fraud by asking buyers and sellers to verify their bank and credit card accounts.
6) PayPal Verification System
Many account holders have verified their accounts and successfully established their identity with Paypal. This is possible through the use of encryption.
Industry-Leading Use of Encryption.
Safeguarding financial and personal information is one of every e-commerce business’s important priorities. Paypal automatically encrypts all sensitive information sent between the user’s computer and Paypal’s servers.
Below are the security measures implemented by Paypal in each stage of the online transaction:
1) Users’ computer
When registering or logging into Paypal, the company verifies that the user’s internet browser is running Secure Sockets Layer 3.0 (SSL) or higher.
2) In transit
Information is protected by SSL with an encryption key length of 128 bits (the highest level commercially available).
3) PayPal servers
Users’ personal information are stored on Paypal’s servers and heavily guarded, both physically and electronically. To further shield their credit card and bank numbers, Paypal does not directly connect its firewall-protected servers to the internet.
Conclusion
In the course of our research, we have come to a consensus that the security features that give online users bliss of mind in their transactions for both buyers and sellers is Paypal’s strongest feature yet. Moreover, the easy interface of the website is a testimony of its designers’ understanding of the common user’s needs for easy navigation. Coupled with the choice use of words that appeal to the understanding of the layman (without resorting to terminology) and illustrated with diagrams, Paypal gives potential and existing users of Paypal a sense of reassurance that their valuable information is protected.
There is a strategic foresight on the part of Paypal’s marketing, security and design teams as they have utilized the convenience of Paypal to cement itself as a household name. Now the brand and reputation associated with Paypal is ubiquitous and this offers exciting commercial opportunities both presently and in the future.
