1. PayPal as an Additional Payment Option How Merchants Can Benefit When They Accept PayPal on Their Site

2. © 2006 PayPal Inc.  105M PayPal accounts — 47% growth  Significant online payment mark  Adding 8M+ accounts per quarter  $35B annualized payment volume — 41% growth  10% of US e-commerce  5% of global e-commerce  Accepted in 55 countries & 6 core currencies  14% of payment volume from International  Core currencies: $US, €, ¥, £, $CA, $AUS  Processes 1.2M+ transactions daily The PayPal Value Proposition PayPal user accounts Millions 2000 2001 20022003 2004 47% YoY growth 20052006

3. © 2006 PayPal Inc. PayPal Can Drive Incremental Volume 1.Satisfied Customers 2.New Customers 3.Increased Conversion 4.Increased Sales 5.Lower Costs Transaction Volume Over $32 Billion/Year* PayPal Transaction Platform Buyer Interest Merchant Results 1.Customer Preference & Convenience 2.Safety & Security 3.Multiple Methods - “Wallet Effect” *Annualized volume based on Q4 2005 TPV

4. © 2006 PayPal Inc. Offering PayPal Can Drive Incremental Sales  Websites that offer PayPal as a way to pay reach a wider audience and can provide an uplift in sales on their site.  For small-to-medium sized businesses, accepting PayPal as a payment option in addition to credit cards increased sales an average of 14% *  Over 80% of the surveyed merchants reported a sales increase, and the increase typically started within two months *  The increased sales were incremental lift, and did not take away from current credit card volume *  According to an Internet Retailer study, 42.2% responded that accepting alternative payments (such as PayPal) have increased sales + * Source -- Q1 2006 PayPal phone survey of 110 small and medium sized business doing a minimum of $120K in annual online sales + Internet Retailer, November 2005 14 % average sales lift

5. © 2006 PayPal Inc. PayPal Drives New Customer Acquisition “86.8% of the people who paid with PayPal were new customers to Tiger Direct…” Lonny Paul Director of eCommerce, Tiger Direct “30% of PayPal transactions generated new customers for Go Daddy” Michael Zimmerman CFO, Go Daddy “83% of customers paying with PayPal were new customers to PETCO.com” Heather Blank Dir. of Business Development and Marketing, PETCO.com

6. © 2006 PayPal Inc. PayPal Users Shop More Frequently and Spend More than Non-Users Frequency of Purchasing Online (once per month or more) Source: August ’05 IPSOS RDD (random direct dial) survey of 800 past 90-day online shoppers Knowledge Networks RDD Panel, Dec. ’04; past 90-day online shoppers Average Monthly Spending Online

7. © 2006 PayPal Inc. Major Online Payment Option PayPal is more popular than debit cards for online payments

8. © 2006 PayPal Inc. Online shoppers are concerned about identity theft % of PayPal shoppers who worry about … Source: PayPal, Q3 2005. Survey of PayPal buyers. N = 584

9. © 2006 PayPal Inc. Leading Global Brands Accept PayPal

10. © 2006 PayPal Inc. PayPal as an Additional Payment Option now Integrated with the Payflow Gateway  Benefits of using the Payflow gateway integration:  Easier integration that leverages Payflow Pro SDK  Consolidated reporting  “Reference Transaction” functionality on credit card payments  “Recurring Billing” functionality on credit card payments  Combination of gateway’s Fraud Protection Service and PayPal’s internal fraud models  More options  SDKs for additional operating systems and programming languages  Reporting API for retrieving scheduled and ad hoc reports

11. © 2006 PayPal Inc. PayPal Express Checkout Banner in Manager -- What a Merchant Sees

12. © 2006 PayPal Inc. Adding PayPal as an Additional Payment Option  Two Integration Options 1.PayPal Express Checkout 2.PayPal Standard Checkout

13. © 2006 PayPal Inc. PayPal Express Checkout  PayPal’s Express Checkout lets your customers pay quickly and conveniently.  With PayPal Express Checkout, your customers get the fastest, most streamlined PayPal checkout experience. PayPal Express Checkout is highly recommended for merchants familiar with API programming.  Your customers select items to purchase and proceed to check out. When your customers choose to pay with PayPal, they are securely transferred to PayPal.  Your customers also have the option of using your existing checkout for credit card payments.

14. © 2006 PayPal Inc. PayPal Express Checkout  With PayPal Express Checkout, customers who choose to pay with PayPal are sent to secure PayPal-hosted pages to approve using PayPal to pay. The PayPal-hosted pages can be customized to match the look and feel of your website.  Once your customers approve the use of PayPal, they are automatically returned to your website to complete their order and pay. PayPal accepts, authorizes, and processes the payment instantaneously.  Once the payment is successfully processed, the funds are deposited directly into their PayPal account and can be withdrawn or transferred to their bank account easily.

15. © 2006 PayPal Inc. Benefits of using PayPal Express Checkout  Can be used as additional payment method with an existing merchant account, and as a stand alone solution for merchants without a merchant account  Available for domestic and international merchants (7/06) to sell in US, Canadian, Australian, Euros, Pounds, and Yen.  Economical pay as you use it model  Instant processing and there is no approval process  Integrated to the Payflow Pro gateway  Merchant owns more of the check out and confirmation pages

16. © 2006 PayPal Inc. PayPal Express Checkout Flow API

17. © 2006 PayPal Inc. PayPal Express Checkout – Merchant Placement Options CheckoutShippingBilling Order Done Review Order ORDERCHECKOUT CONT PayPal Review CONTINU E PayPal Login LOGIN Payment request made to PayPal. CheckoutShippingBilling Order Done Review Order ORDERCHECKOUT CONT PayPal Review CONTINU E PayPal Login LOGIN Payment request made to PayPal. CONT PayPal placed before shipping and billing address. PayPal placed with other payment methods.

18. © 2006 PayPal Inc. Example: PayPal Express Checkout In Express Checkout, PayPal as an Additional Payment Option can be placed before the shipping and billing address information is collected. The buyer uses the shipping address and financial info stored in PayPal and PayPal passes the shipping address to the merchant.

19. © 2006 PayPal Inc. PayPal Express Checkout Flow

20. © 2006 PayPal Inc. PayPal Standard Checkout Flow HTML

21. © 2006 PayPal Inc. PayPal Standard Checkout PayPal Standard Checkout is when PayPal is listed with other payment options. It can be with option buttons, sectioned off, or in a drop-down list.

22. © 2006 PayPal Inc. Summary: PayPal as an Additional Payment Option -- Benefits to Your Merchants  Increase Acquisition & Drive Incremental Sales  Offer a global and trusted payment solution  Access PayPal’s growing user base worldwide  Benefit from strong brand association initiatives  Attract customers who do not have a credit card or are located internationally  Increase incremental sales by offering PayPal as a way to pay  Increase Conversion Rates  Fast and Easy Payment Flow  Address users’ security concerns  Customers shop without sharing financial information  Reduce costs of Service  Reduce charge-backs  Reduce fraud  Reduce Customer Support requirements