PayPal Back After Rough Week

After six difficult days, PayPal is back in business.

Full site functionality, as well as the ability to make money transfers, is
back online after a scheduled site architecture update crashed the system
last Friday, according to a statement on the site Thursday afternoon.
Access throughout the bug fix process was sporadic
— some members were able to access their accounts at various points, while
others were not.

Developers from PayPal and eBay , which owns the
online transaction service, have been working since the initial outage, with
mixed results, to resolve the situation.

EBay President and CEO Meg Whitman, PayPal General Manager Matt Bannick and
eBay Senior Vice President of Technology Marty Abbott released a statement on
eBay’s announcement page: “Thank you for your patience during this process.
Although we didn’t meet your expectations — or our own —
in the past few days, we look forward to the opportunity to regain your
faith in our service.”

Details surrounding the outage have been sketchy since the site first went
down last Friday. Throughout the week, officials stated
that unforeseen problems associated with new back-end architecture code
on the site caused the crash, but wouldn’t give any details.

While reliable service resumed later in the week, the sporadic downtime
affected thousands of individuals and online businesses who rely on the
service to conduct business online. Earlier this week, a PayPal official
said it would be difficult to determine how much business was lost during
the outage, as some users were able to log on and conduct transactions
throughout the week.

Aaron McMahon, owner of, depends on PayPal for the majority
of his business, though he does offer more traditional merchant accounts
like Visa, MasterCard and American Express on his Web site. He said that
of his $55,000 to $60,000 in annual sales of novelty LED products, 99 percent
of his transactions come through PayPal.

Between Friday and Tuesday, he said he racked up one sale the entire time, a
PayPal transaction he chalks up more to luck than anything else during the
sporadic uptime at the site.

“I do have to say that I started out as a really big PayPal fan, [but] this
really soured me a little bit,” he said of the experience. “But now that
it’s fixed up, I’m just sort of hoping that it stays fixed. I like how easy
PayPal is to use, and they’ve treated me well; I want to stay a fan but I’m
more guarded now and wary about the future. If this is the only big, major
screw up they have then I’m okay, [but] if they do one more like this,
that’s going to be it — I can’t afford for that to happen again.”

Sara Bettencourt, a spokeswoman at PayPal, said that while the problems
affected access and transactions during the outage, the net effect on sales
would be minimal.

“A lot of the people could complete their sales after this happened,” she
said. “We don’t really expect this to have an affect on sales actually
going through, especially on eBay, where users can pay whenever they want
to. So we expect that most of the sales actually ended up going through,
which is why we really don’t expect a big material impact.”

One of the unintended consequences of the outage has affected customers in
non-monetary ways. One member on the forum complained that
his membership at PayPal was changed to a limited account because, he said,
a surge in sales on Wednesday — when service to the site was largely fixed
— flagged PayPal security officials.

Bettencourt said that PayPal’s technical team was looking into any customer
impact issues and resolving them as soon as possible.

Stephen O’Grady, an analyst at research firm RedMonk, says the outage
shouldn’t send PayPal users to other services or look into developing their
own system. A recent spate in services outages by outfits like blog monitor
Technorati and blog publisher Gawker Media, just reinforces the importance
of network reliability for online companies, he said.

“As with any outsourcing, reliability needs to be there,” he said. “As far
as I know, PayPal’s uptime has been pretty good but really what this comes
back to is that the network and network services are not 100 percent
reliable. That needs to be factored in when you’re looking at what these
services can and can’t do for you.

“Does that mean you should forgo that and build your own or build something
that you can control?” he continued. “No, because it’s just as possible
that you could have an outage or problems; but it is an important risk
factor that you have to consider when looking at Web-based applications.”

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