November 4, 2010, 3:46 PM

PayPal services crash for two hours

The payment service used its blog and updates to keep e-retailers up to date.

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PayPal Inc. services went down for about two hours in two separate instances last Friday, a spokesman for the payment processor says. PayPal could not process payments for online shoppers around the world that wanted to pay with PayPal during that time. PayPal.com remained live, although customers who logged in could not complete transactions.

Despite the outage, retailers that use PayPal Merchant Services to process purchases made with credit and debit cards could still complete those transactions; it was only payments with PayPal that were affected, PayPal says.

The company says a network hardware failure cause the first outage, which knocked out most services from 8:07 a.m. to 9:24 a.m. Pacific time on Oct. 29. The company then shifted operations to a back-up system. An issue that occurred during the hand-off appears to have caused the second outage, which began at 11:30 a.m. Pacific. The company says it fully restored services by 12:21 p.m. Pacific that day.

Some PayPal merchants were more aware than others of the outage while it was occurring. A PayPal spokesman says the company’s largest merchant accounts have account managers who informed their retailer clients about the outage.

Consumer electronics retailer Abt Electronics Inc, No. 143 in Internet Retailer’s Top 500 Guide, received no direct notification of the outage, says company co-president Jon Abt. He says the number of PayPal transactions on Oct. 29 remained in line with what the firm does on a typical Friday. Abt would not reveal the number of typical PayPal transactions.

At LifePics.com, vice president of marketing Ken McDonald contacted his PayPal representative as soon as he noticed problems that morning. He says his account rep was aware of the problem and responded to his inquiries quickly until the system was back. LifePics processes orders and payments of photo products for RitzPix.com, No. 447 in the Top 500 Guide. He says about a third of RitzPix photo orders are paid for using PayPal. He says the company has not tried to quantify how many sales were lost during the outage but assumes that there were some.

It was more likely that most of the more than 8 million merchants that use PayPal services around the globe received information about the outages through live status updates they accessed online or subscribed to via RSS feeds or e-mails, the spokesman says. PayPal automatically generates those updates when something out of the ordinary occurs.

PayPal also posted information to its merchant and developer web sites and the company’s blog. “The live status updates are kind of technical. When we find out more information about a problem we write the PayPal blog in real language to make people aware of what’s going on,” the spokesman says.

Two blog posts about the outage appeared on Oct. 29, including one by chief technology officer Scott Guilfoyle, who provided some detail on the outage and apologized to customers. Updates on Twitter also directed readers to the blog. The company says its internal customer service staff was made aware of the issues so it could respond to telephone inquiries.

A company spokesman says it will investigate the outage. Once complete, the company will share that information and its fixes with its large managed accounts. “We don’t proactively push that information out to the smaller merchants but they are welcome to have that information if they request it,” a spokesman says.

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