Problems with online payment service PayPal persist for fifth day

Tuesday, October 12th 2004, 8:22 pm
By: News On 6

SAN JOSE, Calif. (AP) _ Despite furious repair efforts, intermittent service outages at the online payment service PayPal continued Tuesday for the fifth consecutive day, affecting payments, log-ins and account creations.

The technical glitch plaguing the eBay Inc.-owned company has affected an untold number of users, making it hard for some online sellers to complete deals, according to the eBay Web site.

Since some people are able to log in while others are not, eBay spokeswoman Amanda Pires said the total number of affected users remains unclear.

Meanwhile, financial analysts were monitoring the problem to see what financial impact, if any, the glitch would cause the online auction giant.

Caris & Co. analyst David Garrity said he was growing more concerned each day with PayPal's technical troubles. ``It is certainly something that needs to get resolved,'' he said Tuesday. ``If the outages continue much longer, it will hurt them in the fourth quarter.''

PayPal is a common method of payment for buyers on eBay and is gaining in popularity among customers of other online retailers as well as in money transactions between individuals in the off-line world.

The payment service has more than 50 million user accounts worldwide. It processed almost 78 million transactions worth $4.4 billion in payments during the second quarter, a 53 percent increase from the same period a year earlier.

In July, eBay boosted its outlook for the rest of the year, citing in part the strength of the company's PayPal division. Company officials said they expect 2004 sales to be as high as $3.185 billion, $35 million higher than it previously predicted.

The PayPal problem comes at the start of the season when many online sellers are ramping up for the holiday season.

Users began experiencing some glitches on Friday following a software upgrade to the PayPal system, eBay officials said. Ebay has posted numerous apologies to users on its Web site and reassured them that their account data and personal information have not been compromised.

``eBay and PayPal technical teams are working at full force to fix the underlying problems,'' the company said.

Shares of eBay closed Tuesday at $93.49, down 24 cents, on the Nasdaq Stock Market.