Digital Transactions Authoritative, insightful and timely information for payments professionals
By John Stewart
It was bad, but it could have been much worse. Just as the celebrated Cyber Monday online-shopping frenzy was gearing up to full blast, PayPal Holdings Inc.’s payment service, a major processor for e-commerce, began hiccupping. Merchants reported problems with processing orders and customers complained about long load times and even trouble logging in.
It isn’t clear just how long the problem lasted or how many merchants and consumers were affected. Contacted by Digital Transactions News, a PayPal spokesperson would say only that “PayPal experienced a brief, intermittent interruption in our service. We have resolved the issue and customers can pay with PayPal on Cyber Monday.” PayPal says it is accepted by 73 of the 100 largest online retailers, as ranked by Internet Retailer magazine.
A source close to the matter says that while PayPal’s payment service never actually failed, “some customers experienced issues.” The source adds that it is reasonable to infer that the heavier loads brought on by the Cyber Monday rush played a role in the problem. Cyber Monday is so-called because consumers take to the Web in droves on the Monday after Black Friday to buy gifts for the upcoming holidays. The National Retail Federation says it expects 121 million shoppers to be online on Monday.
Downdetector.com, a service that tracks site performance, says the problem at PayPal began at 8:36 a.m. Eastern Time. It was roughly noon by the time the PayPal spokesperson told Digital Transactions News the issue had been “resolved,” though scattered reports of continued problems were still being posted on downdetector.com after that.
For the duration of the issue, log-in problems accounted for 40% of complaints, followed by site-loading times at 30% and trouble sending payments at 28%, according to downdetector.com.
While PayPal is a prominent e-commerce processor that might have been expected to have geared up for the Cyber Monday rush, Gil Luria, who follows PayPal as a managing director for equity research at Los Angeles-based Wedbush Securities, says the intermittent problems Monday shouldn’t come as a surprise. “Even though you plan for higher traffic, you never quite know what it looks like to have that traffic,” he tells Digital Transactions News. “Preparation only goes so far.”
Indeed, PayPal’s Web site wasn’t the only one to have trouble with the Monday spike in traffic. Target Corp.’s site suffered enough delays that it was forced to post a notice asking customers to “please hold tight” and thanking them for their “patience.”
A final count for the actual number of online shoppers Monday isn’t known yet, but it was expected to be somewhat lighter than last year owing to the spread of online holiday spending into other available days, including Thanksgiving Day itself. “That would lead us to believe there would be less likelihood for a failure, but evidently that wasn’t the case,” notes Luria.
Had the problem lasted longer, it might have had serious consequences for PayPal, Luria warns. “It’s an issue not only because it slows down transactions but because it causes a shift in payments from one site to another or from PayPal to credit cards,” he says.
PayPal earlier this year completed a major overhaul of back-office systems that included a switch to an in-house cloud-based platform. Such systems can be stressed in controlled trials, but Luria says it’s difficult to predict how they will perform in real-life situations until the real-life traffic turns up.
