Outage nearly over, PayPal says

As of Wednesday morning, PayPal's site appeared to be functioning properly again, after several days of intermittent performance. The company has acknowledged that the problem was related to a software code update that it made to the site Thursday. As the issue began to proliferate, customers of PayPal's parent company, online auctioneer eBay, began filling that site's message boards with complaints.

In an e-mail sent to CNET News.com on Tuesday night, PayPal spokeswoman Amanda Pires wrote that the company has made progress with its site issues and that performance has "improved significantly." Pires said most PayPal customers should now be able to use the site without incident and that the company continues to monitor the situation and will offer further updates Wednesday.

eBay also posted a notice to its members, informing them that the issue had been resolved. According to the memo, PayPal's site performed well during peak traffic levels Tuesday evening, and most of the company's registered users were able to access all of the site's online payment tools. The company's online debit cards, which were also affected by the technical hiccup, were also working properly, eBay said.

The outage underscores how dependent eBay members have become on PayPal, specifically people running businesses over the auction site. Since eBay purchased PayPal in 2000, it has increasingly integrated the two businesses and encouraged its auction users to adopt the online payment system in lieu of using credit cards or money orders. Many individuals with items posted for sale on the auction site list PayPal as their preferred means of collecting funds.

In June, PayPal reached a preliminary settlement with customers who accused the eBay unit of illegally freezing their funds. It promised to pay a total of $9.25 million to settle the suit, $3.4 million of which would go toward paying the customers' lawyer fees.