Many PayPal Inc. customers lost access to their accounts — including offline use of their PayPal debit cards — after a software update Friday morning went wrong.
“The code worked well when tested and during the first hours of launch,” said eBay Inc., which owns PayPal, in a message to its users posted on its Web site. “Unfortunately, problems handling peak levels of traffic developed later in the day that created intermittent availability and errors for members.”
The San Jose auction giant said that the problem was preventing some customers from paying for items won at its auction Web site, though the company has not released an exact figure. In July, PayPal said that 91% of U.S. eBay auctions can be paid for with a PayPal account, and 70% of those auction transactions are paid that way.
PayPal has 50.4 million customers, of which 15.5 million transacted in the second quarter.
Analysts say that it is not just the size of PayPal that makes a service outage notable — it is also the worldwide demand on its services.
Gwenn Bezard, a senior analyst for the Boston market research firm Celent Communications LLC, said that after users in this country are asleep, “you still have millions of users using it around the world, 24 hours a day.”
This constant demand can present problems, he said. Major U.S. banks can schedule routine maintenance to their online banking systems or their automated teller machine network after midnight or on weekends, but PayPal rarely has such a slack period.
Mr. Bezard said that to PayPal’s credit, it has maintained its service through numerous past upgrades. “Typically they do it very well,” he said, “because if that happened every month, we would have an outcry among the users.”
Chris Musto, a vice president for research at Watchfire GomezPro in Waltham, Mass., said that this outage can be a serious inconvenience to users but will not threaten the company.
“What you have with PayPal is a financial service that is different from other means of paying people,” Mr. Musto said. Sometimes, he said, “it’s the only choice” for many customers,” and there’s a degree of tolerance that people will show over isolated incidences, because there is no alternative.”
As for the potential of losing clients, he said, PayPal customers behave like Internet banking customers. “If your online banking goes down for an afternoon, you don’t switch banks.”
