The PayPal outage cost its users between 7 and 32 million USD

As you may know, PayPal suffered from downtime yesterday. Overall, the problems lasted approximately 4.5 hours before being fully resolved. Since a significant number of e-commerce sites and online services handle some or all of their transactions through PayPal, how much money did the PayPal outage end up costing its users?

According to eBay (which owns PayPal), about $2,000 in payments flow through PayPal’s systems every second. This means that PayPal processes about $7.2 million in payments every hour for its users.

On its official blog PayPal has stated that the service was completely down, globally, for about one hour. So the outage cost PayPal users at least around $7 million. But PayPal also admits that it took an additional 3.5 hours after that before the service was fully restored, something we also need to take into account.

This means that the outage and following service problems cost Paypal users somewhere between $7 million and $32 million in lost payments.

Exactly where the actual cost landed between those two extremes is hard to tell, but judging by the comments we have seen in blogs and on Twitter, the problems were significant even after the initial one-hour service outage.

8 comments

  1. I don’t agree. You’re assuming that if you can’t pay, you won’t buy it at all. If I wanted to buy something and wouldn’t be able to, I’d try again next day.

  2. An excellent point, Zr40. All too often businesses fall into the RIAA-style trap of claiming “we’re not making this money (that we assume we should be making) right now, so we’re losing money, and it’s the fault of fill-in-the-blank.”

  3. Yup. There will be a percentage lost for sure, however, the sales did not simply vanish. To use $7m-$35m, it should read something like “PayPal was unable to process between $7m and $35m in payments during the 4.5h it was down”. Also, with the source being eBay, if the transaction fails, the sale is not lost and were likely recovered within 24h.

  4. And I would disagree, because if I can’t buy through you via paypal I’ll surely go somewhere else that offers the same product through a different payment processor.

  5. As some of you have pointed out, some people who can’t finish a transaction will try again later, but let’s face it, a LOT of people will simply take their business elsewhere. That said, since there are so many unknown factors involved this was of course a simplified calculation. It’s just an estimate, based on the little data available.

  6. PayPal has been under-investing in its platform in recent years. It is unstable and nearing capacity. But the company prefers to gobble up as much market share as possible rather than take time and capital to improve the quality of service and uptime. They continually tout that their site is secure and so is your data….big, big lie.

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