PayPal outage hits eBay merchants

PayPal has become the latest high-profile online service provider to suffer an embarrassing outage, after its web site went down for around four hours yesterday.

The incident occurred at around 10.30am Pacific time (6.30pm BST), one of the busiest times of day for the payments service.

Scott Guilfoyle, senior vice president of technology at PayPal, said in a blog post that the interruption, which affected users worldwide, was down to a " network hardware failure".

"Everyone in our organisation focused immediately on identifying the issue and getting PayPal up and running again. We accomplished that in about an hour. By approximately 3pm Pacific time [11pm BST] full service was restored across our platform," he said.

"We are now working to fully understand how we can prevent such a service interruption from ever happening again. We are also reaching out to merchants to discuss the impact this interruption had on their businesses."

The incident follows an outage in June, and will have angered buyers and merchants on auction site eBay, which bought PayPal in 2002 and uses it as its preferred payment service.

Graham Moore, e-retail specialist at traffic management firm Zeus Technology, warned that online firms cannot afford to suffer even the smallest periods of downtime.

"The knock-on effect in terms of missed sales and damage to brand reputation could be huge," he said. "This is particularly so given the rise in popularity of social networking tools such as Twitter, which means it doesn't take long for the world to know when a brand is experiencing an outage."