Wednesday, August 5, 2009

PayPal Hangups and Rumors on Apple Entering the Payment Business

E-Commerce payment giant, PayPal, went down yesterday causing several e-merchants who accept PayPal payments to howl in uproar. The outage affected credit card processing for several online merchants.

PayPal provides payment processing for 75 of the 500 largest online retailers in North America, and 205 of those Top 500 retailers accept the PayPal electronic payment method, according to the Internet Retailer Top 500 Guide. PayPal says it processed an average of $2,000 in online payments every second in the second quarter; 55% of payment volume comes from its Merchant Services unit that processes credit cards and other payment types on behalf of e-retailers.

The downtime comes on the heel of another giant payment processor,, woes just last month. In the case of, the problem was caused by a fire in its data center. Several online merchants were also inconvenienced with the outage. This highlights the importance for maintaining multiple payment gateways no matter how reliable they present themselves to be.

On a stranger twist, Apple is rumored to be contemplating entering the game of online payment processing. Their strategy seems to be similar to Amazon's -- that is, to leverage their store accounts payment into a general payment platform for others. But I kind of doubt that kind of payment system will gain any popularity outside of their own iTunes store in the same way that Amazon's payment is not really used by anyone outside of Amazon.

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