PayPal has issued an alert after a data breach saw customers exposed for several months.

According to a notification seen by BleepingComputer and sent to affected customers on February 10, the breach was caused by an error in the firm's PayPal Working Capital (PPWC) loan application.

This saw personal data belonging to a "small number" of customers exposed to unauthorized individuals between July 1 and December 13 last year. Data exposed in the incident is believed to have included business contact information.

Some customers did have unauthorized activity on their accounts as a result, although PayPal said it's refunded those people.

"Our investigation determined that some of your personal information was affected by this incident," the letter read.

"This could have included your business contact info: name, email address, phone number, business address combined with your Social Security number, and date of birth."

The company said it has launched an investigation into the incident and terminated the unauthorized access to PayPal’s systems - rolling back the code changes that caused the breach in the first place.

Affected PayPal accounts have also had passwords reset, requiring customers to create new login details. The payments giant also confirmed it has implemented enhanced security controls.

Free credit monitoring services will be offered to affected customers through Equifax, and customers are being told to be on the alert for any suspicious activity or fraudulent transactions.

PayPal data breach could have downstream impact

While PayPal has implemented changes in the wake of the breach, Kevin Knight, CEO of Talion, warned the incident could have downstream implications for customers, particularly given contact information was exposed.

“PayPal has said it has refunded customers for the fraudulent transactions and updated the passwords on impacted accounts, but the attacker still has access to information that can’t be easily changed, which can still be of value to them in phishing scams and to sell to initial access brokers,” he said.

Phishing scams are a common occurrence in the wake of data breaches, with threat actors using exposed contact details such as email addresses to target victims.

Notably, Knight said the timing of the letter is also concerning, with the incident having first occurred months before and the fact it was discovered in December.

"What is most concerning about this breach is that an organization as large and reputable as PayPal, which holds highly sensitive data on its customers, has waited two months to notify individuals about this incident," said Knight.

"While credit monitoring has been offered, victims were left in the dark, while the actor behind the incident was able to access their financial and personal data and conduct fraudulent transactions."

In its customer notification, PayPal insisted it had not delayed the notification "as a result of any law enforcement investigation," it reads.

ITPro has approached PayPal for comment.

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PayPal has announced the appointment of HP chief Enrique Lores as its new CEO, in a move the payments giant said will help it maintain its industry standing in the era of AI.

Lores – who has served on PayPal’s board for nearly five years and as board chair since July 2024 – will succeed Alex Chriss from March 1.

Chief financial and operating officer Jamie Miller will act as Interim CEO until Lores formally assumes the role. The leadership reshuffle also sees David W Dorman appointed as independent board chair, effective immediately.

The move follows what PayPal described as a detailed evaluation conducted by its board of directors on the company’s competitive position set against the wider industry landscape.

While the firm acknowledged that “some progress had been made” over the last two years, it added that the pace of change and execution was not in line with expectations.

In an announcement, David W Dorman said Lores’ wealth of experience and customer-centric focus will now provide the leadership required to lead PayPal into its next chapter.

"Enrique is widely recognized as a visionary leader who prioritizes customer-centric innovation with demonstrable impact,” he commented.

“His strong track record leading complex transformations and disciplined execution on a global basis will ensure PayPal maintains its leadership of the dynamic payments industry now and into the future."

‘Culture of innovation’

Lores arrives following six years as president and CEO at HP, where he led the company’s transition beyond traditional PCs and into services, subscriptions, and AI-enabled future-of-work solutions.

During his time in the role, the Lores played a pivotal role in the separation of HP and HPE, credited with strengthening operating discipline, simplifying cost structure, and positioning the business for long-term innovation.

Commenting on his new role as CEO, Lores highlighted the importance of balancing long-term transformation with short-term goals.

"We will further strengthen the culture of innovation necessary to deliver long-term transformation and balance this with near-term delivery, executing with greater speed and precision, and holding ourselves accountable for consistent delivery quarter on quarter, to further assert PayPal's industry leadership position," he said.

Lores also noted the rapid changes sweeping the commerce industry, driven by a combination of new technologies, evolving regulations, increasing competition, and the ever-increasing presence of AI.

"PayPal sits at the center of this change, and I look forward to leading the team to accelerate the delivery of new innovations and to shape the future of digital payments and commerce," he added.

Long-term success

In the announcement, PayPal reiterated its belief that its long-term success is grounded in global scale, data, and the strength of its consumer, merchant, and partner relationships.

The company also thanked the outbound Alex Chriss for his two and a half year tenure as CEO, citing his role in monetizing Venmo and expanding the BNPL business.

"I am proud to have had the opportunity to lead such a great company and work with such a talented team,” Chriss commented. “Now is the right time to make a transition to a seasoned leader who can take the company through its next phase of transformation.

“I have enjoyed a great working relationship with Enrique, and I am certain he is the right person to meet that challenge."

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PayPal has confirmed that it's planning to cut more than 200 jobs from its workforce in Ireland as part of a global staff reduction.

The move will see the company's head count in the country reduced to 1,600 as part of a plan to cut its global workforce by 2,500.

"PayPal is going through a strategic transformation to position us for our next chapter of growth. This week, PayPal president and CEO Alex Chriss announced plans to reduce our global workforce," says the company in a statement.

"We are doing this to allow us to move with the speed needed to deliver for our customers and drive profitable growth. At the same time, we will continue to invest in areas of the business we believe will create and accelerate growth."

The company is promising staff that the job cuts will be subject to consultation, and that no redundancies will take effect until after this process has concluded.

"PayPal is committed to ensuring that colleagues who leave under the proposed changes are treated fairly. We are offering discretionary enhanced redundancy and support packages to help them as they move to the next step in their careers," it says.

PayPal closed its Dundalk office last year, moving its entire headcount to remote contracts and relocating its Dublin office, laying off 62 jobs.

The 30-day consultation process is expected to start in the next week, with the redundancies to be completed by March 25, split equally between the former Dundalk site workers and those in Dublin.

Sinn Féin Teachta Dála for Louth, Ruairí Ó Murchú, said he was dismayed by the news.

"It is disastrous news for the workers and their families, particularly at the start of the new year. It is imperative that PayPal fully consults with their staff in a meaningful way and puts in place the help and supports that it has promised for those who are affected," he says.

"All the arms of the state should be used to support those who are losing their jobs to find alternative employment and be assisted through this very difficult time."

Meanwhile, Labour’s enterprise spokesperson, deputy Ged Nash, called on the company to try to identify potential cost savings and redeployment as an alternative to the 'nuclear option' of redundancies.

"The proposed redundancy being contemplated should not be a done deal and neither should the 28-day formal consultation be treated as a token process by the company," he says.

"PayPal must recognise the human impact of these decisions and engage with staff representatives in a meaningful and constructive manner."

Over recent months, a number of other tech companies have announed plans to lay off staff in Ireland, including Meta, Google, Amazon, eBay, Dell and Salesforce. Last week, Microsoft, too, announced job cuts for its gaming divisions, including Activision Blizzard, which are believed to impact staff in Dublin and Cork.

Digital payment giant PayPal has concluded its search for a new CEO with the appointment of senior Intuit executive Alex Chriss, effective from 27 September.

Chriss will lead the business as president and CEO, as well as join the board of directors, following a months-long search for a leader with the necessary global payments, product, and technology experience.

He joins the business having served as executive vice president and general manager of financial software specialist Intuit’s Small Business and Self Employed Group since January 2019, where he was responsible for more than half the firm’s revenue.

With the unanimous support of the board and CEO search committee, PayPal said Chriss is capable of driving growth across its platform “for years to come.”

"With his depth of experience in product development, his passion for serving customers and his longstanding commitment to empowering and enabling small businesses, and his proven track record of developing and inspiring his team, Alex is the perfect leader to take PayPal forward and accelerate the company's growth opportunities," said John Donahoe, chair of the PayPal board. 

"The Board search committee worked diligently and thoroughly to find the right candidate to take PayPal into its next stage of growth and expansion, and we are confident Alex is that person."

As part of Intuit’s executive leadership team, Chriss helped lead the organization’s global team that delivered its QuickBooks and Mailchimp to millions of users around the world, helping to fuel growth for small and mid-market companies.

The industry veteran began his journey with Intuit 19 years ago and has risen through the ranks of leadership across the business. 

During that time, he helped create the firm’s Partner & Development Platform, led the Self-Employed Solutions team, and served as the Small Business Group’s chief product officer between 2017 and 2019.

He is also credited with overseeing and implementing multiple strategic initiatives designed to transform businesses inside Intuit into sustainable growth engines for the company.

Across Chriss’ five-year tenure leading the firm’s Small Business segment, he successfully grew its customers and revenues at a compound annual growth rate of 20% and 23%, respectively. 

In 2021, he also led the company’s successful $12 billion acquisition of Mailchimp, which significantly expanded the capacity of the Intuit platform and customer base.

The Small Business and Self-Employed Group continues to thrive too, with Intuit’s May Q3 2023 earnings report updating its full fiscal year growth guidance from 19-20 percent to 24 percent.

At PayPal, Chriss replaces outgoing CEO Dan Schulman, who will remain on the company’s board until its next annual meeting of stockholders in May 2024.

"Throughout my career, I have championed small and medium businesses and entrepreneurs, who are the backbone of every economy in the world,” Chriss said. 

“I am proud to take the baton from Dan and thrilled to have the opportunity to work with PayPal's talented and committed team to build on PayPal's remarkable history and draw on its unique capabilities to deliver outstanding products and services to businesses and consumers."

Microsoft has launched a new feature for Teams allowing small and medium businesses (SMBs) to collect payments from within meetings.

The capability comes in the form of a Microsoft Teams app that can be downloaded and installed from within the Teams platform.

Microsoft partnered with payment firms PayPal and Stripe, as well as GoDaddy, to bring the application to the platform. 

Currently in public preview, available only to US and Canada customers at present, Microsoft envisions the Teams Payments app to be used by a range of SMBs to make collecting work-related payments easier. 

“Our partnership brings Stripe into one of the world's most popular collaboration platforms and will help millions of companies accelerate their online revenue growth,” said Mike Clayville, chief revenue officer at Stripe. 

“With Stripe, more businesses can now accept payments as easily as launching a video conference, chat, or virtual presentation within Microsoft Teams.” 

Teams can be used for workplace meetings, but also for running virtual appointments, classes, and webinars, for example, and these can now be paid for inside Teams itself, potentially allowing for a smoother transaction experience.

“For example, a lawyer or financial advisor can collect payments for consultative appointments, a real estate instructor can do the same for license-renewal sessions, or a teacher for tutoring classes – all while the customer is engaging with them,” said Microsoft in a blog post.

SMBs looking to take advantage of the new feature will have to connect their Microsoft Teams instance to their respective PayPal, Stripe, and GoDaddy accounts.

From there, they can send payment requests to customers from within the meeting itself. Customers are able to send money via credit and debit cards, digital wallets, and more.

The Payments app also allows SMBs to track payments that have been made and those that remain outstanding from a dedicated pane inside the Teams application.

Microsoft has made the Payments app free to all users including both Teams Essentials and Microsoft 365 customers. It’s now available in the Teams Store with support for Stripe and PayPal, while the GoDaddy integration is “coming soon”.

“Small businesses continue to face many, many challenges. Whether dealing with a cash flow crunch, finding new customers, or expanding to new channels, small businesses need partners to help them solve these problems,” said Bernardo Martinez, vice president of microbusiness at PayPal.

“Our collaboration with Microsoft allows us to address a common pain point – accepting payments for virtual customer interactions – by providing them with a trusted method that both consumers and businesses know well.”

Security researchers have discovered that the value of hacked PayPal accounts have spiked by 293% during the pandemic, almost tripling in a matter of months.

In an analysis of listings on 13 dark web marketplaces, researchers at pro-consumer website Comparitech found criminals were paying around 9.2 cents for every dollar in a hacked PayPal account. This is compared to a similar study conducted eight months prior, when buyers spent an average of 3.13 cents per dollar in the account.

The researchers found the average price of a PayPal account across all the marketplaces we examined was $196.50, with an average account balance of $2,133.61.

PayPal accounts have different tiers. Researchers found that individual accounts cost $161.59 on average and had an average account balance of $1,732.85, or 9.32 cents per dollar. Premier accounts, on the other hand, cost $186.31 on average and had an average balance of $2, 029.95,or 9.18 cents per dollar.

Business accounts were even more valuable, costing an average of $246 and carrying an average balance of $2,684.29, equating to 9.18 cents per dollar.

This contrasted with credit cards, including the credit card number, CVV, expiration date, cardholder name and postal code, which sell for $17.36 on average. While researchers said this is double the average price recorded from earlier this year, its value is decreasing.

Previously, cyber criminals would pay out 0.42 cents for every dollar on the stolen card. Today, they pay 0.33 cents per dollar, or 306 times the price of the stolen card.

The report said the average price of a cloned, physical card is $171, or 5.75 cents per dollar of credit limit. Researchers noted there was a positive correlation between a cloned card’s credit limit and its price. The correlation was less strong but still apparent in sales of credit card details. The average credit limit on the listings researchers examined was $2,980.

The researcher also looked at the average price for cloned copies of each major brand of credit card to find out which types of credit cards are worth the most to criminals. MasterCard was worth the most at 6.47 cents per dollar, then Discover at 6.27 cents per dollar, Visa at 5.75 cents per dollar, and American Express at 5.13 cents per dollar.

Researchers said that while brand was one consideration, other factors can contribute to a higher price on the dark web, such as whether the product is a physical card (usually cloned) or digital (just the number and other information on the card), the expiration date (newer cards are more likely to be valid), and credit limit.

PayPal is launching a project investigating how hate groups and extremists use online financial platforms to fund themselves. It hopes to discover and disrupt the online financing of various white supremacist and anti-government organizations.

In this initiative, PayPal will partner with the nonprofit organization Anti-Defamation League’s (ADL) Center on Extremism.

PayPal will also investigate online financial networks profiting from racism, antisemitism, or Islamophobia, according Reuters.

PayPal pledged to share its findings with other firms in the financial industry, as well as the appropriate law enforcement officials and lawmakers.

“We're hoping to have an impact on fighting hatred and extremism, which sadly seems to be surging in society across the globe,” said Aaron Karczmer, PayPal’s chief risk officer. “As the son of a Holocaust survivor, I know all too well the real world impact that come from hatred and extremist groups.”

Over the years, PayPal has worked to develop systems to help prevent illegal activity on its platform. The company said it has worked to shut down various extremist groups’ attempts to use PayPal.

The online payment giant has a partnership with non-profit group Polaris to combat human trafficking. And last year, it teamed up with criminologists and academics to research the payment systems used in illegal firearms trafficking.

The company says it hopes to have a positive social impact by sharing some of its capabilities.

“We have a unique opportunity to further understand how hate spreads and develop key insights that will inform the efforts of the financial industry, law enforcement, and our communities in mitigating extremist threats,” said Jonathan Greenblatt, the ADL’s CEO.

PayPal users have reported signs of suspicious behaviour on their payment history that originate from their linked Google Pay account, with hackers thought to be exploiting an unknown flaw to commit fraud.

The payment service allows users to make contactless payments via Google Pay on a smartphone, through a virtual credit card which deducts money from their PayPal accounts.

According to a German security researcher, this mechanism is being exploited through an unknown flaw by hackers in order to make fraudulent transactions.

Streams of users are complaining about mysterious payments appearing on their PayPal payment history, according to German publication Golem, with deductions made ranging between as much as €500 and €1,000. There are also a series of one-cent withdrawals, with hackers likely testing the exploitation to see whether the method works.

The researcher suggested that due to the flaw, anybody near a PayPal user’s phone has access to the virtual credit card that deducts money from their account without authorisation.

He added that he disclosed the vulnerability to PayPal a year ago, and has followed with disclosure now due to the fact the company apparently hasn’t yet fixed it, despite paying out a fee through its bug bounty programme.

The company, however, told IT Pro that the issue has now been fixed.

Those affected appear to be based largely in Germany, although the fraudulent activity has allegedly been billed to US shops like Target and Starbucks. One user, for example, was charged €923.93 via the virtual credit card in Google Pay, which showed in their history as Target T-1401 in Brooklyn, New York.

"We never lose sight of the fact that we are entrusted to look after people’s money," a PayPal spokesperson told IT Pro.

"The security of customer accounts is a top priority for the company. We use advanced fraud and risk management tools to keep our customers and their payments safe.

"We quickly addressed and fixed this issue, which affected a very small number of PayPal customers using Google Pay in Germany. No personal or financial information was compromised, and no PayPal accounts were accessed by third parties."

PayPal’s security was previously thrown under the spotlight in 2018 when a teenage hacker revealed he could easily bypass PayPal’s two-step authentication procedure to access user accounts.

The Australian teen said he was able to bypass the multifactor authentication (MFA) process by spoofing a browser cookie created when users linked their eBay and PayPal accounts together.

Facebook's efforts to bring its Libra cryptocurrency to the world has hit another hurdle in the guise of MasterCard and Visa pulling their support for the digital coin project.

The Financial Times reported that following a meeting between backers on 14 October, the two payment companies abandoned the Geneva-based Libra Association. The two firms were joined by eBay, fintech startup Stripe and payments company Mercado Pago, in pulling support for Libra.

There is increasing scrutiny and pressure from financial regulators and politicians in the US and Europe over the potential impact Libra could have on the stability of the global financial world, alongside concerns over the potential for Libra and its link to Facebook to undermine its would-be users' privacy.

A Visa spokesperson told the Financial Times that Visa has decided not to join the Libra Association "at the time". And added: "We will continue to evaluate and our ultimate decision will be determined by a number of factors, including the Association's ability to fully satisfy all requisite regulatory expectations."

MasterCard has yet to release a statement and eBay effectively echoed Visa's sentiments.

Libra Association's policy chief Dante Disparte shed little light on the impact of the suite of companies withdrawing their support of the upcoming cryptocurrency.

"We are focused on moving forward and continuing to build a strong association of some of the world's leading enterprises, social impact organizations and other stakeholders," said Disparte. "We look forward to the inaugural Libra Association Council meeting in just three days and announcing the initial members of the Libra Association."

07/10/17: Facebook Libra's future in jeopardy after PayPal pull-out

Facebook's nascent cryptocurrency has suffered another blow after major financial partner PayPal withdrew its support for the project on Friday.

The company did not specify why it was withdrawing its support for Libra, but reiterated its ongoing support for Facebook as a strategic partner in other matters.

"PayPal has made the decision to forgo further participation in the Libra association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratise access to financial services for underserved populations," a statement from the company read.

"We remain supportive of Libra's aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal and we will continue to partner with and support Facebook in various capacities."

Online payments firm PayPal is one of 28 founding members listed on the Libra website, alongside financial firms such as Mastercard, Visa and Stripe, as well as various tech companies, venture capitalists and others. In exchange for an initial $10 million contribution to the project's budget, these members are set to form the governing council of the Libra Association, which will steer the ongoing development of the project once it gets up and running and Facebook relinquishes control.

However, multiple partners are thinking of following PayPal's lead, according to rumours. The Wall Street Journal reported that Mastercard and Visa were among those eyeing the door, spurred in part by the increasing interest from regulators and lawmakers.

According to the Financial Times, EU regulators have put a number of tough questions to the social media company, covering issues from money laundering and financial predictability to data privacy risks. US lawmakers have also been questioning whether the digital currency would be subject to securities regulations, and whether it would be able to comply with them.

Paypal has joined with Bouncepad to bring contactless payment technology to smaller businesses at a lower price, using the PayPal Here card reader and Bouncepad tablet enclosure to create a custom solution.

Users just need to bundle the new PayPal Here card reader with the Bouncepad PayPal tablet enclosure and custom card reader cradle which, once they are registered with PayPal Here, enables small businesses to offer a contactless payment solution to their customers.

Tobi Schneidler, CEO of Bouncepad, said: "We're excited to extend our long-standing relationship with PayPal to continue helping small businesses innovate their POS systems. Working together, we're able to offer a sophisticated tablet POS solution that helps small business owners across industries like hospitality and retail make it simple and affordable to join the contactless payment revolution."

Other contactless payment hardware has often proved to be out of reach for many start-ups and small businesses, mainly due to the cost of licenses, long-term contracts and processing fees. PayPal and Bouncepad's collaboration aims to provide a different, cost-effective solution, the firms said.

Last month, it emerged that use of contactless technology is on the up, with Visa announcing that 1bn contactless payments have been made in Europe over the previous 12 months and 8.92 billion spent using it since launch.

"Contactless momentum continues to build as more and more people discover it's often the quickest and most convenient way to pay for everyday things," Sandra Alzetta, executive director of Core Products at Visa Europe said.

"Across Europe, usage levels have soared, with more than one billion contactless transactions made by Visa cardholders in the last 12 months alone. The popularity of contactless will only increase in future as we experience the next generation of digital payments, where the simplicity and convenience is extended to mobile and wearable NFC technology."

PayPal was fined $25 million (16 million) back in May, for apparently luring customers to sign up for its PayPal Credit service by offering promotional rates and then forcing them to use the service regardless if whether they wished to use another payment option.

PayPal has announced the acquisition of digital money transfer startup Xoom in a bid to help it grow its global payments business.

The company is currently unable to offer international remittance payments, but integrating Xoom's technology will make it possible to make sending money abroad and receiving money from overseas a faster, cheaper and more secure process.

Dan Schulman, president and CEO designee at PayPal said: 'We believe this acquisition will allow PayPal to quickly expand into the large and growing global money transfer market.

"The acquisition aligns with our strategic vision to make the movement and management of money better for people, helping our customers find new and exciting ways to use PayPal, everyday."

Xoom already has 1.3 million customers in the US, helping them send money and pay bills in 37 other countries around the world. Between April 2014 and March 2015, it allowed $7 billion (4.4billion) worth of payments to be processed, with the majority sent using mobile devices.

Schulman continued: "This deal brings significant expected benefits to both PayPal and Xoom. For PayPal, acquiring Xoom will allow us to offer more services to our global customer base and help accelerate our expansion in key international geographies, including Mexico, India, the Philippines, China and Brazil".

"For Xoom, joining PayPal will help increase how quickly it can expand into new markets and accelerate the ways the company can innovate for customers. PayPal will also help Xoom grow by offering Xoom's services to our 68 million active US customers," he said.

The acquisition is expected to close by the end of this year and Xoom will act as a separate service from within PayPal, with staff moving across to the online payments company.

Image credit: Sagar Savla

PayPal claims the future of security lies in human embedded chips for authentication rather than giving hackers the opportunity to guess obvious word and letter strings.

The company said even emerging tech such as fingerprint scanners - as seen on Apple's iPhones and iPads and Samsung smartphones and tablets - will be phased out alongside retina scanning technology before payment processing services like PayPal will even consider using them.

The reason? They create too many false negatives, so a valid user can't log in, in addition to false positives, allowing unauthorised users to log in.

The answer is authentication devices that can be ingested by humans, it claims. These devices already exist for a range of different medical applications including glucose detection, blood pressure monitoring and digestive health, but Jonathan LeBlanc, global head of developer advocacy at PayPal, has suggested it could be used as an identity validator too.

Another option is a brain chip implant that would allow humans to authenticate themselves to access services.

LeBlanc showcased a presentation entitled 'Kill All Passwords' which explores how passwords will be phased out in years to come.

He listed the most frequently used passwords, including '123456', 'password', '12345678', 'qwerty' and 'abc123', saying 40 per cent of people have a password included in the top 100 passwords list and 14 per cent have a password from the most used 10.

People use these obvious strings is because they often forget them, so want something easy to remember, he said.

"As long as passwords remain the standard methods for identifying your users on the web, people will still continue to use 'letmein' or 'password123' for their secure login, and will continue to be shocked when their accounts become compromised," he explained.

Update, 23/04/15:

PayPal has since been in touch with a statement to make it clear it has no plans to develop such technology itself.

A spokeswoman said: "We have no plans to develop injectable or edible verification systems. It's clear that passwords as we know them will evolve and we aim to be at the forefront of those developments.

"We were a founding member of the FIDO alliance, and the first to implement fingerprint payments with Samsung. New PayPal-driven innovations such as one touch payments make it even easier to remove the friction from shopping.

"We're always innovating to make life easier and payments safer for our customers no matter what device or operating system they are using."

PayPal has agreed to pay a $7.7 million (5.1million) fine for allowing transactions involving items being sent to and from Cuba, Iran and Sudan, despite sanctions against the countries.

The US Treasury Department said PayPal failed to check the identities and details of those making the payments, one of which was a payment for $7,000 that was linked to weapons of mass destruction.

It also believes PayPal allowed around 500 'illegal' payments to go through, totalling almost $44,000 (29,500). However, PayPal did voluntarily tell the Treasury's Office of Foreign Assets Control (Ofac) about the payments.

PayPal said the reason these payments went through was because there was a delay in scanning the transactions between 2009 and 2013.

PayPal's chief compliance officer Gene Truono said in a statement: "We recognise that prior to April 2013, PayPal did not have a system that could scan payments in real time in order to block prohibited payments. There was a delay in the scanning, which allowed some prohibited payments to be processed."

A PayPal representative told the BBC: "Since then, we've taken additional steps to support compliance with Ofac regulations with the introduction of real-time scanning of payments and improved processes."

One of the most concerning events was the allowing of payments by Kursad Zafer Cire, who had been identified by the US State Department in 2009 as someone involved in weapons of mass destruction. PayPal allowed 136 payments to or from an account associated with him throughout the period.

Truono said: "Government compliance is a priority and a central component of how we do business around the world."

Apple is now allowing customers to pay for purchases online and in shops using PayPal, in a complete u-turn.

Both US and UK stores are also accepting payments over 99 via PayPal credit, allowing customers to pay for their items in monthly installments, without paying interest, over six, 12 or 18 months. It will hopefully boost sales of the company's more expensive products, such as Macbooks and iMacs.

Earlier in the year, Apple launched its own payment service, called ApplePay. However, one of the partners missing off the list was PayPal, leading to speculation the two companies had fallen out.

Adding fuel to the fire, rival manufacturer Samsung started using PayPal as its fingerprint sensor authorised payment option, meaning a partnership between Apple and the eBay-owned company looked pretty far off.

Innovation Bank's Ian Kar speculated in a blog post: "Apple was said to be absolutely furious that PayPal did the deal with Samsung, which led Apple to cut PayPal out of the Apple Pay process entirely. (One source said: "Apple kicked them out of the door.") This dust up with Apple was a big reason that David Marcus ended up leaving PayPal for Facebook."

Previously, Apple customers could only opt to use PayPal for payments on Apple's app and content stores on a computer, not on its iOS app, but it seems the two giants have kissed and made up, making things a lot easier for customers to buy products.

PayPal has long been the secure payment of choice, with its PayPal guarantee meaning both buyers and sellers have an extra layer of security should a fraudulent transaction take place.

News that eBay would be spinning PayPal off into a separate business broke this week, and now information regarding why PayPal may have been excluded from Apple Pay has emerged via Bank Innovation's Ian Kar.

PayPal is not one of Apple Pay's launch partners, despite talks between the two companies being reported before the payment service's launch, and this is reportedly due to a previous deal made between PayPal and Samsung.

According to the blog post, Apple was on the path to making PayPal a "preferred payment process" for Apple Pay, yet it has emerged that PayPal isn't included in the list of partners. Said list does include many big retailers, banks and credit card companies, such as Visa, MasterCard and American Express.

Negotiations stalled when PayPal partnered with Samsung on the Samsung Galaxy S5 fingerprint scanner instead, however, with Bank Innovation's source describing the situation as Apple kicking' PayPal "out of the door."

eBay CEO John Donahoe was reportedly behind the decision despite resistance from former head of PayPal David Marcus, and the company has now been shut out of Apple Pay as a result. Marcus subsequently left the company for Facebook in June of this year.

The blog post also claims other card company partners of Apple Pay had requested PayPal not be included, which may have given Apple additional reason to end negotiations.

It was announced on Wednesday that eBay and PayPal would be continuing as separate companies from 2015, with John Donahoe saying: "The industry landscape is changing, and each business faces different competitive opportunities and challenges... keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively."

Regarding the story, eMarketer added: "Breaking off from eBay will provide PayPal with more autonomy to compete in the payments space, particularly with respect to Apple Pay and other emerging mobile wallet providers."

eBay and PayPal will split to become two companies next year, because PayPal's revenues are climbing too fast for eBay to keep up, the company has said.

"The industry landscape is changing, and each business faces different competitive opportunities and challenges...keeping eBay and PayPal together beyond 2015 clearly becomes less advantageous to each business strategically and competitively," eBay's chief executive John Donahoe said.

"We and our board believe the best way to drive long-term shareholder value is to keep eBay and PayPal together, to capitalise on the opportunities."

Although PayPal's revenues are lower than eBay - in the last year revenues for the payment site were $7.2 billion (4.5 billionn) while eBay's eclipsed $9.9 billion (6 billion) - the auction site is only growing at a rate of 10 per cent year-on-year.

Last year, hedge fund investor Carl Icahn tried to convince the companies to split, encouraging eBay to sell off PayPal, but they refused to. He said of the recent announcement: "We are happy that eBay's board and management have acted responsibly concerning the separation - perhaps a little later than they should have, but earlier than we expected."

The move is notable, since it's likely PayPal will start to see some pressure from rival payment services such as Apple Pay, which was announced earlier this year.

eMarketer commented: "Breaking off from eBay will provide PayPal with more autonomy to compete in the payments space, particularly with respect to Apple Pay and other emerging mobile wallet providers."

The website thinks smartphone mobile payments will reach $3.5 billion (2.15 billion) this year, soaring to $118 billion (73 billion) by 2018.

eBay bought PayPal in 2002 for $1.5 billion and since then, it has become the main accepted payment option on the auction site.

A teenage hacker who spends his time trying to find security flaws to help companies has revealed he could easily bypass PayPal's two-step authentication process to access user accounts.

Joshua Rogers, a 17-year-old Australian, says he would be able to hack PayPal's system by spoofing a browser cookie created when users link their eBay and PayPal accounts together - something that is encouraged by the online auction site.

When the cookie is active, the authentication is hacked. This means the accounts can be accessed if a hacker gets hold of a user's login details, without having to input the six-digit one-time authentication password sent to the user's registered mobile phone number.

It's a set-up many websites use to protect customers against hacking if someone uncovers website passwords.

Rogers reported the vulnerability to PayPal in June, but failed to receive a response from the online payment service, so he announce the flaw publicly on his blog.

He said in his announcement: "Once you're actually logged in, a cookie is set with your details, and you're redirected to a page to confirm the details of the process. And this is where the exploit lays. Now just load http://www.paypal.com/ and you are logged in and don't need to re-enter your login."

Commenting on the news, PayPal said in a statement that it is aware of the issue, but played down the risk it poses to users.

"2FA is an extra layer of security some customers have chosen to add to their PayPal accounts. We are working to get the issue addressed as quickly as possible. It is important to clarify that 2FA provides extra assurance to keep accounts secure, however usernames and passwords are still required to gain access to all PayPal accounts," it reads.

"Customers who do not use the PayPal security key (physical card or SMS codes) as an additional step to log into their accounts are not impacted in any way. If you have chosen to add 2FA to your PayPal account, your account will continue to operate as usual on the vast majority of PayPal product experiences.

"We have extensive fraud and risk detection models and dedicated security teams who work to help keep our customers' accounts secure from fraudulent transactions, everyday. We apologise for any inconvenience caused to affected customers who use our 2FA process and we will continue to work hard to address this issue."

He told Australian security website CSO: "I don't care about the money, no. Money isn't everything in this world."

This story was published earlier today, before being updated at 13:45 to include PayPal's comments on the issue.

The US Department of Justice (DoJ) has come under pressure from a slew of human rights groups to drop its four-year investigation into Wikileaks and its founder Julian Assange.

The DoJ began its investigation into the website in November 2010 after more than 200 confidential American diplomatic cables were posted on Wikileaks, which is famed for providing sources with a means of leaking information anonymously.

Shortly afterwards, cloud giant Amazon stopped hosting the site on its web servers, while PayPal seized processing payments used to support the site's operations.

Four years on, 52 press freedom and human rights organisations have called on the US Attorney General Eric Holder to close the investigation into Wikileaks and its founder Julian Assange.

The latter has spent the past two years holed up in the Ecuadorian embassy in London, and faces the risk of extradition to Sweden should he leave, where he is wanted over allegations of sexual misconduct.

The letter calls on the DoJ to stop the "harassment" and "persecution" of Wikileaks, given that Holder is reportedly to have vowed in a recent media briefing that "as long as I am attorney general, no reporter who is doing his job is going to go to jail."

The group claim this statement is at odds with the DoJ's decision to pursue the criminal investigation into Wikileaks and its editor-in-chief Assange.

"Well-respected legal scholars across the political spectrum have stated that a prosecution of WikiLeaks or Mr. Assange for publishing classified material or interacting with sources could criminalise the news-gathering process and put all editors and journalists at risk of prosecution," the letter states.

It then closes by claiming that taking action against Wikileaks would "undermine the commitment of the US Government to freedom of speech."

Time will tell if the group's missive has any impact on the DoJ's ongoing investigation into Wikileaks and Assange.

Meanwhile, in a news conference yesterday to mark the second anniversary of the start of his stay in the embassy, Assange claimed to have a stash of documents primed for release on Wikileaks pertaining to 50 countries and their "international negotiations."

He also said his legal team will contest the Swedish extradition case against him next week, in the light of new, undisclosed evidence, coming to light.

The president of PayPal is jumping ship to Facebook to oversee the social network's messaging app.

David Marcus will become VP of messaging products at Facebook with focus on the firm's in-house Messenger app and not the newly acquired WhatsApp.

Using Marcus' experience, Facebook is looking to add e-commerce capabilities to its social network. Google has already rolled out its own Google Wallet and lets US users transfer money using Gmail. Chinese messaging service, WeChat also allows users to book taxis through the app.

Facebook's Messenger app currently exchanges 12 billion messages a day and has over 200 million users. However, last month the firm removed the ability to send private messages from within the Facebook app, requiring them to install the standalone Messenger app to instant message.

Marcus claimed that it was Facebook CEO Mark Zuckerberg who convinced him to join.

"Mark shared a compelling vision about Mobile Messaging. At first, I didn't know whether another big company gig was a good thing for me, but Mark's enthusiasm, and the unparalleled reach and consumer engagement of the Facebook platform ultimately won me over," he posted on LinkedIn.

"[I'm] looking forward to getting my hands dirty again attempting to build something new and meaningful at scale."

The Syrian Electronic Army (SEA) has followed up its recent spate of attacks on Microsoft by hacking the UK home pages of eBay and PayPal on Saturday night.

The hacking collective reportedly redirected site visitors to a separate web page, which featured the familiar "Hacked by the Syrian Electronic Army" message, along with the words "Long live Syria" and "F**k the United States Government."

The SEA confirmed its involvement via a post on Twitter, but its @official_SEA16 account has since been suspended and the message removed.

In a series of posts before the account was shutdown, the group said the attack was in sympathy to Syrians with no access to online payments.

"If your PayPal account is down for a few minutes, think about Syrians who were denied online payments for more than [three] years," the tweet stated.

The group also used the social networking site to post screenshots depicting the control panels for eBay and PayPal's French operations, but no user data is thought to have been taken.

Anuj Nayar, senior director of global initiatives at PayPal, confirmed the attack in a statement to tech site Mashable.

"For a brief period today, a very limited number of people visiting certain PayPal and eBay marketing pages in the UK, France and India were redirected," said Nayar.

"The issue was quickly detected and resolved. No customer data was accessed by these redirects, and no customer accounts were affected.

"We take the security and privacy of our customers very seriously and are actively investigating the reasons behind the temporary redirects."

The attack on PayPal and eBay comes hot on the heels of the SEA's targeted campaign against Microsoft, which saw hackers attack various Microsoft-owned web resources last month.

Thriteen members of hacker collective Anonymous have pleaded guilty to taking part in a cyber attack on PayPal. The Distributed Denial of Service (DDoS) attack took place in 2010.

The accused admitted the attack and said it was in retaliation to PayPal's decision to suspend the account of anti-secrecy website WikiLeaks. "Citing violations of the PayPal terms of service, and in response to WikiLeaks' release of the classified cables, PayPal suspended WikiLeaks' accounts such that WikiLeaks could no longer receive donations via PayPal," US Attorney Melinda Haag in San Francisco said, in a statement.

"WikiLeaks' website declared that PayPal's action tried to economically strangle WikiLeaks.'" Of the 11 men and two women, ten of them pleaded guilty in federal court in San Jose, California, to one count of conspiracy and one count of damaging a protected computer. These ten will be allowed to change that to a misdemeanour next year if they do not violate terms of their agreement before sentencing. The remaining three pleaded guilty to one count each related to the attack, according to the statement released by the US Department of Justice.

All thirteen of the defendants have been released on bond, with the sentencing hearing scheduled to take place on 4 December in San Jose.

In a Huffington Post blog post earlier this month, eBay founder Pierre Omidyar said prosecutors should look at the actual damage caused by each defendant and it would be unjust to hold the defendants "accountable for the actions of a thousand (or however many other people were part of the same attack). "Prosecutors should also look at the circumstances of each defendant, and examine whether or not they were aware of the excessive impact their actions might have," said Omidyar.

"They may have believed they were participating in a legitimate online protest and [were] not aware of the multiplicative effect of the tools they were installing." Omidyar stressed the views he gave were his own and not of eBay, which owns PayPal.

Shoppers in Richmond, West London, are being offered the chance to trial a new PayPal app that will allow them to pay for items using facial recognition technology.

Approximately a dozen Richmond-based retailers are thought to have signed up to the PayPal Check In trial, which will allow customers to pay for goods using their PayPal accounts.

The app, which works on iOS, Windows and Android devices, flags local shops and restaurants that accept PayPal payments, before asking users to check in. The person's name and photograph is then passed onto the outlet's payment system, and the retailer can then charge them for goods and services by clicking on their image.

To verify the transaction took place, users will receive a notification on their phone, and a receipt will be despatched to the email address linked to their PayPal account.

The company hopes the service will be rolled out to more than 2,000 locations before the end of 2013.

Rob Harper, head of retail services at PayPal, said the trial is a significant step in the development of the "wallet-less" high street.

"Customers will be able to leave their wallet or purse at home and pay using their phone or tablet," said Harper.

"We predict by 2016 this will become a reality," he added.

He claimed the Richmond trial will also enable businesses in the area to provide customers with a more personalised shopping experience.

"Through our Richmond initiative, we're pleased to help local businesses of all sizes offer a new more personal experience, while never having to turn away customers who don't have enough cash on them to pay," he explained.

Online payment provider PayPal insists it has no plans to "rip and replace" VMware's software from its servers.

As reported by IT Pro yesterday, an IT consultancy recently claimed PayPal was planning to replace VMware on 80,000 of its servers with an open source alternative from OpenStack.

The claims were originally made in an article on Business Insider, and have since been played down by the CEO of the consultancy involved.

However, that hasn't stopped VMware's Bogomil Balkansky, senior vice president of the firm's cloud infrastructure platform, from speaking out about the case in a blog post.

In it, he reiterates VMware's commitment to supporting heterogeneous cloud environments (like PayPal's) that feature a range of products from different providers

"We engage across a rich ecosystem of vendors and open source solutions to give our customers the choice and flexibility they need to empower their people and their organisations," he said.

"To be clear, customers don't want their vendors at war, they want them focused on their success."

Nat Rajesh Natarajan, vice president of platform engineering and operations at PayPal, is also quoted on the blog, and uses it to reiterate his firm's ongoing commitment to VMware.

"Our initiative with OpenStack is intended to enable agility innovation and choice," he said.

"We're not interested in rip and replace'...[VMware] are a valued PayPal partner and we intend to continue leveraging their core strengths in our cutting edge cloud," he added.

Online payment provider PayPal has stressed that VMware still has a role to play in its IT infrastructure, following reports that it plans to pull the software from 80,000 of its servers.

PayPal is planning to replace VMware with an open source alternative from OpenStack across thousands of its servers, according to a report on Business Insider recently.

OpenStack is essentially a coalition of tech vendors and developers from across the world who have pooled resources to create open source software that can be used to build private and public clouds.

The article quotes Boris Renski, an OpenStack Foundation board member, who claimed his consultancy firm Mirantis is working with PayPal on the server software swap.

To begin with, PayPal will start removing VMware's software from 10,000 servers that are set to go live this summer, he claimed.

"The grand vision for the project is, over time, they will replace all of the virtual infrastructure with OpenStack, not just PayPal, but PayPal and eBay together," Renski said.

However, Mirantis CEO Adrian Ionel has since played down his comments, claiming Renski has "exaggerated the use case" of OpenStack at PayPal and that his knowledge of the work being done there is "limited" and "second hand".

In a statement to IT Pro, a PayPal spokesperson reiterated its commitment to the VMware brand.

"VMware provides important technologies for PayPal's platform. However, we do leverage a few cloud technologies, including OpenStack, VMware and Red Hat so that we can architect our infrastructure to enable choice and deliver agility for our business," the company statement read.

IT Pro contacted VMware for comment on this story and was still awaiting a response at the time of publication.

A Northampton student has been accused of taking part in a cyber attack that cost online payment portal PayPal 3.5 million.

Christopher Weatherhead is alleged to have joined forces with Anonymous hacktivists to stage an attack against PayPal over its refusal to process payments related to the funding of whistleblowing website Wikileaks.

Weatherhead, who was studying at Northampton University when the attacks took place, has pleaded not guilty to conspiring to impair the operation of computers between 1 August 2010 and 22 January 2011.

Those attacks caused unprecedented harm.

Several others, including Ashley Rhodes from Camberwell, South London, Peter Gibson, from Hartlepool and another male, who cannot be named for legal reasons, have already pleaded guilty to the same charge.

Weatherhead has been accused of using an Internet Relay Chat site to encourage people to take part in a Distributed Denial of Service (DDoS) attack on PayPal.

According to the BBC News site, prosecutor Sandip Patel is reported to have told the court: "It is the prosecution case that Christopher Weatherhead is a cyber-attacker and that he, and others like him, waged a sophisticated and orchestrated campaign of online attacks that paralysed a series of targeted computer systems.

"Those attacks caused unprecedented harm," he added.

The attack caused Paypal "enormous economic harm", he claimed, and more than 100 employees from PayPal's parent company eBay had to be enlisted to help repair the damage.

The company was also forced to invest in hardware and software to defend itself against similar attacks in future, which in total cost the firm 3.5 million.

The trial continues.

Hacktivist groups Anonymous and LulzSec have taken a different tack in their fight against PayPal by simply encouraging people to ditch their accounts.

In the past, the groups have fought their enemies with web attacks, namely distributed denial of service (DDoS) strikes, which are illegal in many countries.

If pace keeps up, over 9,000 PayPal accounts will be closed in the next week.

Now, however, the related groups have come together to tell people to finish with PayPal in response to FBI arrests of individuals suspected of involvement in cyber strikes on the eBay subsidiary.

Last week, an FBI-run operation led to the arrests of 20 individuals in the US, the UK and the Netherlands as part of an investigation into attacks on PayPal. It was believed a UK teenager was arrested on suspicion of involvement in Anonymous.

Anonymous' and LulzSec's actions were also made in retaliation to PayPal not accepting donations for WikiLeaks.

"We encourage anyone using PayPal to immediately close their accounts and consider an alternative," a post on Pastebin.com read.

"Join us in our latest operation against PayPal - tweet pictures of your account closure, tell us on IRC, spread the word. Anonymous has become a powerful channel of information, and unlike the governments of the world, we are here to fight for you."

Anonymous has already claimed success in its campaign, using a Twitter feed to promote the campaign.

"If pace keeps up, over 9,000 PayPal accounts will be closed in the next week," the group said.

It claimed a few hundred had been closed by 08.32 GMT today.

At the time of publication, PayPal had not confirmed any figures on account closures or responded to today's moves by Anonymous and LulzSec.

There was an indication the hacktivist groups would not stick to non-attack methods of protest, with Anonymous warning this was "just the beginning."

"We cannot only do more than DDoS we can do less than DDoS and both methods will cause you lots of headaches in the future. Expect us," the group added.

A 16 year old male has been arrested in the UK on suspicion of breaching the Computer Misuse Act 1990, as the FBI confirmed arrests as part of investigations into attacks on PayPal.

It is believed the teenager was apprehended in suspicion of being part of Anonymous. He remains in custody, the Metropolitan Police confirmed.

The FBI said 16 people had been detained for alleged hacking offences, 14 suspected of involvement in attacks on PayPal.

Anonymous claimed responsibility for a distributed denial of service (DDoS) hit on PayPal last year, saying it attacked the payments firm due to its withdrawal of support for WikiLeaks. Anonymous said the attack was part of "Operation Avenge Assange."

A total of 21 arrests across the UK, US and the Netherlands were confirmed yesterday as part of a coordinated operation with the FBI. Investigations into Anonymous and loosely related splinter group LulzSec are thought to be ongoing.

The teenager in the UK was arrested at a south London address yesterday.

The 14 individuals arrested in the US were found across the country in Alabama, Arizona, California, Colorado, the District of Columbia, Florida, Massachusetts, Nevada, New Mexico and Ohio.

Anonymous hit a number of organisations for dropping WikiLeaks support in 2011, including MasterCard and Visa, as well as PayPal.

The eBay subsidiary had its Twitter account hijacked earlier this month, as the perpetrators sent out messages criticising PayPal. Attackers put out tweets promoting paypalsucks.com.

Earlier this year, UK police arrested five males, all under the age of 30, in relation to pro-WikiLeaks Anonymous attacks.

Paypal has upped its mobile total payments volume (TPV) projection for 2011 to $3 billion (1.9 billion), the third update to the company's forecasts for this year.

An initial speculation of $1.5 billion was increased to $2 billion in February but the latest estimate doubles the original figure.

Laura Chambers, senior director of PayPal Mobile, said on the company's blog the company is now seeing up to $10 million in mobile TPV per day up from $6 million in March this year.

"Mobile payments are growing at a rate we never could have imagined when we started processing them back in 2006," she said. "We're thrilled by this news."

The company cited recent Forrester Research data indicating the mobile commerce market could hit $6 billion in 2011 and reach $31 billion by 2016.

Part of this progress comes from an increase in the user base. Paypal said the total number of customers regularly using its mobile payment services had risen from six million to eight million.

Chambers claimed user trust was a big factor for the company's success in this area and reported merchants were seeing as much as a 30 per cent increase in sales on adoption of Paypal mobile payment technology.

Bye bye Ballmer?

Normally, it's the bolshie chief executive making the noise, but this week the head of Microsoft has had to deal with others shouting him down.

Prominent hedge fund manager David Einhorn has called on the CEO to step down, claiming he is holding the company back and should "give someone else a chance."

Ballmer gained the backing of his board after the comments, including Mr Microsoft himself Bill Gates, but now the debate has been sparked, will the CEO be joining the dole queue anytime soon?

Hello? Skype? Can you hear me?

From one negative Microsoft headline to the next this week, as its latest acquisition hit the headlines for its failures.

Skype, the internet video calling service bought by Microsoft for a massive $8.5 million, faced major outages yesterday, with users unable to sign in and dropping calls.

A new version for Windows has been rolled out today, with Mac and Linux versions to follow, but it was an embarrassing setback for the newly acquired firm.

PayPal's secrets unleashed

Google might have been trying to make the week about its launch of NFC mobile technologies with MasterCard but PayPal was quick to put the fly in the ointment.

The online payment service has launched a court case against the Silicon Valley giant, claiming it lured away one of its staff members to steal trade secrets on mobile payment plans.

Google has yet to comment but PayPal has made some pretty strong statements against the firm. Whose idea was it? It is for the courts to decide.

After a split in Google and PayPal's partnership to develop mobile point-of-purchase applications, PayPal has decided to sue Google for breaching the use of their trade secrets.

PayPal has launched a lawsuit against Google, claiming it brought one of their senior executives, Osama Bedier, over to the company to steal the work he had been doing for the past ten years on expanding online payment options to mobile applications.

PayPal dominates the industry

The growing US mobile payment industry, which is projected to reach $200 billion to $1 trillion within the next few years, and PayPal's knowledgeable success in online payments, prompted Google to partner with them on this project.

PayPal has dominated the online payment industry and built a $3.4 billion industry from 2006 until 2010. The company works with 57 financial networks and over 15,000 banks worldwide.

In the same timeframe, Google came out with their version of PayPal called Google Checkout. Unlike PayPal's extreme success, Google Checkout is virtually unknown outside the Google world.

From 2008 until April of 2011, PayPal provided education on mobile payments to Google and its employees.

Bedier

During the consolidated project, Bedier had been interviewing for job positions at Google while still holding his position at PayPal, where he was the executive of negotiations for the project. PayPal claims to have been unaware of the interviews that were being conducted at that time.

According to lawsuit documents, Bedier was offered a job on 31 October 2010. Bedier made no immediate reactions to the job offer but instead met with Andy Rubin, Google's executive in charge of negotiations for the project, to discuss how he could help Google compete with PayPal if he were to accept the position.

In December of 2010, Bedier admitted to having interviewed for a position at Google, but he promised PayPal he was committed to staying. PayPal warned Bedier that if he took the job at Google, "he would misappropriate PayPal's trade secrets" and there would be a "manifest conflict of interest" if he were to join their mobile department, according to lawsuit documents.

A turn of events

After the turn of the new year, Google announced Larry Page would take the position as CEO from Eric Schmidt, beginning 4 April 2011. Four days after this announcement, Bedier left PayPal for Google.

In late February, a finalised agreement for the partnership between Google and PayPal on the digital wallet project was signed by the CEO at the time, Eric Schmidt. Once Larry Page took over as CEO on 4 April, Google decided they were going to break free from PayPal to start their own version of the project as a competitor.

Leaking trade secrets?

The lawsuit filed by PayPal claims before Bedier leftl, research was conducted pinpointing Google's major weaknesses in their attempt to break into the mobile payment market - the analysis of which was shared with Bedier. Evidence has also shown that days before Bedier left for Google, he downloaded updates on PayPal strategies, which PayPal claims is suspicious if he had intentions to leave the company.

Bedier may now have taken this knowledge to Google and PayPal believes he was comparing the two projects with prospective retailers, as it is not likely that any retailer would choose to test both products, according to lawsuit papers.

Bedier has also been accused of soliciting PayPal employees to work for Google the way he had been recruited to work for Google by Stephanie Tilenius, a former eBay executive.

PayPal files suit

Amanda Pires, senior director of PayPal, wrote in her blog that appearing in court is not generally the way PayPal likes to handle complications, but they feel this time it's appropriate.

"We spend a lot of time and energy creating the things that make PayPal unique and a preferred way to pay for almost 100 million people around the world," she wrote.

"We treat PayPal's secrets' seriously, and take it personally when someone else doesn't. So we made a decision today. We filed a lawsuit against Google and two former colleagues who now work there, Osama Bedier and Stephanie Tilenius."

UPDATE IT PRO asked Google for a response to the case but a spokesperson merely told us: "We have not yet received a copy of the complaint and won't be able to comment until we've had a chance to review it."

PayPal is said to be in talks to embed its payment engine into Google's Android operating system.

PayPal is reported to be looking at the micropayments market, and trying to find a better way to process smaller payments.

A deal could mean substantial extra business for eBay's subsidiary. Analyst firm Gartner estimates that worldwide sales of smartphone apps will amount to $6 billion by the end of this year. With Android gaining increasing market share, the benefits for PayPal could be substantial.

For Google, working with PayPal, allowing it to compete more actively with other mobile commerce services, including Apple's iTunes store.

One area the companies could target is online gaming. Publishers are generating additional income by selling virtual items for use in the games they sell. Small payments for super guns or food for livestock, depending on the game, can amount to quite a healthy revenue stream.

At the moment these small payments are handled by purchasing a supply of credits for each game and topping up as each runs out. Services such as PayPal could smooth this cash flow by providing a central micropayment bank for online games. The service could also provide a virtual bank to pay for apps and other services.

With talks not yet confirmed, it is not known when or if these services will be made available but sources close to the companies believe a commercial service could start in late 2010.

PayPal has introduced Guest Payments, a service that will accept credit card payments without requiring the buyer to have a PayPal account.

The service, announced late last week, will enable developers to build payment processing directly into apps and software rather than having to route it through PayPal and the buyer's account.

Sites offering the Guest Payments facility will be able to collect name and card details, with payments then billed through PayPal immediately, rather than directing customers to the PayPal site to sign in before the purchase can be completed.

The latest addition to the PayPal Adaptive Payments API, which launched in November last year, Guest Payments allows developers to offer direct credit card payments in applications without requiring PayPal membership.

The system is designed for use in software on any platform, including mobile phones, and will be of specific benefit to app builders who typically charge small amounts of money per transaction, with PayPal believing customers will be more likely to complete purchases particularly small ones if the payment system is simplified.

"Guest Payments allows developers to collect credit card payments without requiring their customers to open a PayPal account, eliminating the complications merchants, developers and startups face in accepting credit cards," PayPal senior developer Naveed Anwar said on the PayPal blog.

The news comes not long after established credit card powerhouses Visa and Mastercard both announced their own moves into new ground PayPal's ground.

Visa has announced the pre-charged "PayClick" system in Australia, with other markets set to follow in the coming months. Rival MasterCard, meanwhile, announced last month that it would release Open APIs for third-party and independent software developers later this year.

And with most app stores already having their own payment systems in place, it remains to be seen how successful PayPal's attempts to reposition itself will be.

Nevertheless, the company itself remains confident. "We're thrilled to provide this new functionality to meet this need and look forward to seeing the ground-breaking apps our developer community will create with this," Anwar said.

PayPal claims it processed $141 million in mobile transactions last year, a six-fold increase on 2008's $25 million.

Facebook users will soon be able to use PayPal to buy advertising as well as credits for virtual gifts and games.

At the moment, anyone wishing to advertise on the site needs to use a credit card.

"For businesses in areas where the payment process can be difficult and expensive, the option to pay with PayPal makes it even easier for advertisers, particularly small international companies, to run campaigns on Facebook," the site said in a statement.

Facebook said this was important as 70 per cent of its 400 million users aren't based in the US.

PayPal will also be accepted for the new Facebook Credits system, the social networking site's own internal payment system. While it's still in testing in just a few games and applications, Facebook is hoping to roll it out across the site to buy virtual gifts or items in games.

Ethan Beard, director of Facebook's developer network, told IT PRO in December that Facebook Credit could one day be rolled out across the Connect network - a move which some think could lead to the system being used for micro-payments for access to pages like news articles.

PayPal will be available for a small number of users soon, a Facebook spokeswoman told IT PRO, and will "roll out more broadly over the coming weeks."

This week in the world of IT, the government's "unforgeable" ID card comes under scrutiny, Southampton University investments in a supercomputer, and the world's largest internet payment service shuts down globally for an hour.

4.89 - Orange this week unveiled its new credit crunch-busting mobile web offer. Priced at 4.89, and available to existing pay monthly and pay as you go customers, the offer will allow users 50Mb monthly allowance at 3.6Mbps, and is available on 18 month contract.

12 - The claimed number of minutes it took security researcher Adam Laurie to hack the government's supposedly "unforgeable" UK ID card.

25 per cent - A report claimed 25 per cent of all tweets on Twitter are generated by bots - and Jonathan Ross makes an average 37.08 tweets a day.

40 - TalkTalk began testing its 40Mbps fibre broadband in London and Wales this week.

60 - PayPal, the world's largest internet-based payment system, shut down globally this week for one hour. The 60 minute shut down, according to a spokesperson, was caused by "internal problems" - normal service was resumed by 3:30 the same day.

74 trillion - The University of Southampton invested 3 million into a supercomputer that is capable of doing 74 trillion computations a second this week.

While most companies are struggling to see six months down the road, eBay told investors of three-year growth plans that have its revenues rising from $8.5 billion last year to $10 billion to $12 billion in 2011.

Saying that PayPal "has become a second core business," chief executive John Donahoe said he expects it to become "the next leading online global payments network" and "one of the most exciting and high-potential opportunities anywhere online today."

That's not to say eBay doesn't expect its other core business, e-commerce, to grow, too. But the company is unabashedly acknowledging that PayPal has the potential to meet or exceed the performance of its eBay Marketplaces.

"Increasingly for online consumers, there's no paper, no plastic there's just PayPal. We believe this business is one of the most exciting and high-potential opportunities anywhere online today," Donahoe said.

PayPal last year brought in $2.4 billion. But Donahoe expects that could as much as double by 2011 to somewhere between $4 billion and $5 billion.

At the same time, the company's other big-name brand, Skype, is expected to more than double its revenue to more than $1 billion in 2011. With more than 400 million registered users already, and roughly 350,000 coming on board every day, Skype continues to dominate internet-based voice and video communications.

Nonetheless, Donahoe freely admitted that eBay's acquisition of Skype has not gone quite the way he had anticipated.

"We were wrong," he told analysts. "We thought it would reduce friction in commerce and payments." But it has skyrocketed and may well become eBay's next "core business"; it's expected to handle more than 100 billion calling minutes in 2009.

Investors responded cautiously to eBay's announcements, noting that it was exactly one year ago today that Yahoo, attempting to show why Microsoft's takeover bid for the company was too low, laid out a similar three-year growth plan. Since then, of course, the global economy as well as the stock market have tanked, dashing Yahoo's hopes.

Independent hacker Moxie Marlinspike has unveiled new techniques to defeat SSL encryption, which would leave common web applications such as online banking or secure website logins vulnerable to attack.

This would mean that the padlock icon in the corner of supposedly safe' websites and touted as optimal security by companies like Verisign may not be as safe as people generally believe.

Marlinspike revealed his findings at the Black Hat security conference in Washington DC, showing a number of ways where the "chain of trust" fell apart around SSL encryption.

He looked at the possibilities for new vectors of attack against HTTPS, the combination of HTTP and a network security protocol, which are often used for payment and sensitive corporate transactions.

Marlinspike also revealed a free software tool called "SSL Strip", which could be deployed on a network and used for a man in the middle attack on all potential SSL connections.

It stripped away the SSL encryption, substituting a look-alike HTTPS site, while still convincing the user and website the security was in place.

He claimed that by using a real world attack on several secure websites such as PayPal, Gmail, Ticketmaster and Facebook, he garnered 117 email accounts, 16 credit card numbers, seven PayPal logins and 300 other miscellaneous secure logins.

Click here for a video interview with Marlinspike.

The SSL encryption hack wasn't the only threat highlighted at Black Hat. Zscaler security researcher Michael Sutton sounded a warning against features that allowed offline access to websites.

He stressed that offline web applications such Gmail and Gears were secure, but warned that other sites with poor security risked visitors losing their data.

As well, Vietnamese researcher Duc Nguyen also demonstrated how he and his partners cracked the facial recognition technology used by Lenovo, Asus and Toshiba on their laptops.

They cracked the tech simply by using a picture of a person instead of their real face, as well as by presenting multiple phony facial images.

The researchers concluded that it was sufficient evidence that the biometric authentication used by the manufacturers was not secure enough.

Internet users in the UK now have extra security on their PayPal accounts after Verisign implemented a system which uses a text message or physical security token.

When PayPal customers log into their online accounts, they will have the option to start using an additional security credential, such as a one time password for every time they sign in.

During an online session, the generated password is texted to them to be entered into the user's log-in interface along with the user's usual account name and password, a form of two-factor authentication.

Users will be able to authenticate using two different methods - a physical security key token or a mobile device, which will both generate the one time password needed.

Garreth Griffith, head of risk management at PayPal, said: "Offering the security key via text message is really important as we want to make it as convenient and quick as possible.

"You just need your mobile phone to use it, which prevents having to carry another gadget with you."

Users whose devices support SMS text messaging and subscribe to SMS services with mobile providers can receive the one time passwords without special software.

In addition to the SMS functionality and token, the authentication service could support a wide range of credentials, including stand-alone tokens, software tokens for mobile phones and credit card-size form factors.

Revenue and profit at eBay have dropped, as even bargain hunters take cover during the credit crunch.

Net profit during the fourth quarter, typically eBay's strongest period due to the Christmas holidays, fell to $367 million (266 million) from $531 million for the same period last year.

Revenues were down seven per cent to $2.04 billion, significantly below the $2.11 billion expected by analysts. The firm was particularly hurt by falling sales at its auctions sites, which were down 16 per cent for the quarter.

The online auctioneer has been increasingly pushing towards fixed-price sales, putting it into direct competition with industry giant Amazon. However, eBay claimed the economic environment rather than its strategy is to blame for falling profits.

"We've been operating in an almost unprecedented external environment," said eBay chief executive John Donahoe. "There is no doubt that eBay was impacted by the macro economy and our fourth quarter results reflect this."

There were a couple of bright spots for eBay, with revenue at its Skype and PayPal divisions growing 26 per cent and 11 per cent respectively.

The company is forecasting revenue for the first quarter of 2009 to be between $1.8 billion and $2.05 billion.