You’ve probably got the app on your phone right now. Maybe you use it to pay for eBay finds or to split a pizza tab with friends. But if you’re asking when did paypal start, the answer isn't just a simple date on a calendar. It’s actually a chaotic mess of ego, genius, and a couple of very different companies smashing into each other at the end of the 1990s.
Most people think of PayPal as a singular entity that just appeared. Honestly, it was more like a science experiment that refused to die.
The Real Origin Story (1998-1999)
Technically, the roots of the company go back to December 1998. This wasn't "PayPal" yet. It was a company called Confinity. Max Levchin, Peter Thiel, and Luke Nosek started it with a wild idea about palm pilots. They wanted to "beam" money from one handheld device to another. If you remember PalmPilots, you know how clunky that sounds today. It was niche. It was nerdy.
🔗 Read more: Who Owns J. Crew: What Most People Get Wrong
But then there was the other side of the coin.
In 1999, Elon Musk—before he was the "SpaceX and Tesla" Elon—started X.com. It was an ambitious online bank. Musk wanted to change how the entire world handled money. He was aggressive. He had millions from selling his previous company, Zip2. By late 1999, Confinity and X.com were neighbors in Palo Alto, and they were basically at war. They were burning millions of dollars trying to out-subsidize each other, literally paying users $10 or $20 just to sign up.
It was unsustainable.
In March 2000, they realized that if they didn't stop fighting, they’d both go broke. So, they merged. For a while, the combined company was actually called X.com. It wasn't until 2001 that they officially rebranded the whole thing as PayPal. So, if someone asks when did PayPal start, you can tell them it was born in '98, merged in '00, and named in '01.
Why the eBay Connection Changed Everything
You can't talk about the early days without mentioning eBay. It was the "killer app" for PayPal. Back then, if you bought a vintage Pez dispenser on eBay, you usually had to mail a physical check or a money order to a stranger. Then you'd wait a week for the check to clear. Then they'd ship it. It was slow. It sucked.
✨ Don't miss: Where Is The Dow At Right Now: Why Blue Chips Are Bucking the Trend
PayPal fixed that.
The "PayPal Mafia"—a term coined for the early employees who went on to start basically everything else in Silicon Valley—realized that eBay users were their bread and butter. They built tools specifically for eBay sellers. By the time eBay realized PayPal was taking over their platform, it was too late to build their own competitor (Billpoint). They had to buy PayPal. In 2002, eBay dropped $1.5 billion to acquire the company.
That was the moment PayPal went from a startup to a global giant.
The Struggles Nobody Talks About
It wasn't all easy growth and champagne. PayPal almost died a dozen times. In the beginning, fraud was rampant. Russian hackers and organized crime syndicates realized they could use stolen credit cards to "clean" money through the system. Max Levchin famously stayed up for days at a time building "Igor," a system to track these fraudulent patterns.
They were losing millions.
Regulators were also a nightmare. Since PayPal wasn't a traditional bank, states like Louisiana and New York didn't know what to do with them. They were threatened with being shut down constantly. They were basically building the plane while it was already in the air, trying to stay ahead of the law and the hackers at the same time.
✨ Don't miss: Richest Zip Codes in USA: Why the Top 1% is Moving to Florida
The "Mafia" and Why It Matters
The reason people still care about the timeline of when did paypal start is because of who was in the room. Look at the roster of people working there in 1999 and 2000:
- Elon Musk: Went on to found Tesla and SpaceX.
- Peter Thiel: Became a massive VC and Facebook’s first big investor.
- Reid Hoffman: Co-founded LinkedIn.
- Steve Chen, Chad Hurley, and Jawed Karim: These guys literally founded YouTube.
- Jeremy Stoppelman and Russel Simmons: Started Yelp.
It’s arguably the greatest collection of business talent ever assembled in one building. The culture was intense. It was argumentative. It was definitely not "corporate." They didn't have HR departments or formal meetings. They just solved problems.
The Evolution: From Web to Mobile
After the eBay acquisition, PayPal kinda went quiet for a few years. It became a utility. But the world changed again when smartphones arrived. PayPal had to pivot from being a website you used on your desktop to a mobile wallet.
They bought Venmo (through the Braintree acquisition in 2013). That was huge. Venmo became the way younger generations moved money, while PayPal stayed the king of e-commerce and business transactions.
Today, PayPal is a behemoth. It handles billions of transactions. It supports crypto. It has "Buy Now, Pay Later" features. But at its core, it's still doing what Max Levchin and Peter Thiel dreamed of in a small office in 1998: making it possible to send money to someone else without needing a physical bank branch or a paper check.
Real-World Takeaways for Your Money
Understanding the history is cool, but how does it help you now? PayPal has changed a lot since the '90s, especially regarding how they protect you.
1. Watch your "Friends and Family" payments.
One of the biggest misconceptions is that all PayPal payments are protected. They aren't. If you use "Friends and Family" to pay for a product from a stranger on social media, you have zero buyer protection. Scammers love this. Only use "Goods and Services" if you aren't 100% sure of the person.
2. The 2FA Rule.
Because PayPal is linked directly to your bank account or credit card, it’s a massive target. Enable two-factor authentication. Don't rely on just a password. The hackers from the 1990s might be gone, but their successors are much more sophisticated.
3. Dispute windows are real.
You generally have 180 days from the date of the transaction to open a dispute. If you wait 181 days, you're out of luck.
4. Fees aren't just for sellers.
While buying things is usually free, if you’re using PayPal for international transactions, the currency conversion fees can be a silent killer. Always check if your credit card offers a better exchange rate than PayPal’s internal converter.
When you think about when did paypal start, remember that it was a product of the "Dot Com" era that actually survived. Most companies from 1998 are long gone. PayPal stayed because it solved a fundamental human problem: moving value across the internet is hard, and people need to trust the system doing it.
How to Secure Your Modern PayPal Account
If you haven't touched your settings in a while, do these three things right now. First, go to your "Security" tab and check your "Logged In" devices. If you see an old phone or a computer you sold three years ago, boot it off. Second, update your recovery email. Third, consider using a dedicated credit card for PayPal rather than linking your primary debit card. This adds a layer of separation between a potential hacker and your actual rent money.
PayPal’s journey from a PalmPilot "beaming" app to a global financial powerhouse is one of the weirdest success stories in tech history. It’s a reminder that great ideas often start out looking like toys or niche tools before they take over the world.