Palo Alto, California-based X.com served as one of the first online banking sites from its launch in December 1999 through October of 2001, when founder.
The firm merged with online payment services provider PayPal in March of 2000, and those operations are what remain of X.com.
The largest Internet-based payment network in the world, PayPal offers its services to roughly 8 million customers.
many of whom use the online payment provider to conduct person-to-person (P2P) transactions on auction site eBay.
X.com was create by the 28-year-old founder ofZip2 Corp., Elon Musk, in late 1999. Musk envisioned X.com as a full-scale banking and investment services site that offered everything from checking accounts to insurance services, mortgage lending, and bonds.
He hired investment banker John Story as executive vice president and former Intuit Corp. CEO Bill Harris as president and CEO. Musk took on the role of chairman.
The firm employed 15 staff members when the site-powered by Sanchez Computers Associates’ e-PROFILE Internet bank solution—became operational.
Roughly $25 million in venture capital had come from Musk and Harris, as well as from Sequoia Capital.
To attract new clients, X.com offered $20 to anyone who opened a free online checking account. Members who refer new customers to X.com were award $10 for each referral.
Instant credit was also available to those who qualified. To make money, the firm planned to do what traditional lenders did—rely on the interest rate spreads between what it earned on loans and what it paid on accounts.
Within two months, X.com had secured 100,000 customers, compared to Etrade Telebank, the largest World Wide Web-based bank, with 130,000 customers.
However, according to Forbes columnist Elizabeth Corcoran, cash incentives were not enough to ease consumer fears regarding virtual banking, particularly after X.com was force to admit its initial site design hadallow for fraud.
“In January X.com conceded that it had designed its system. in a way that made it too easy to siphon other. people’s money into an X.com account. from traditional bank accounts.
X.com detected about half a dozen questionable transfers and the money returned.” To prevent this from happening in the future. the firm required new clients to submit a canceled check. if they planned to withdraw money from an account.
In March 2000, merged with PayPal, which had been in operation since November of 1999, retaining the name. At the time, PayPal was brining in nearly 15,000 new clients a day with its P2P payment services.
To register, PayPal visitor were simply ask to input their name, daytime phone number, home address, and email address.
PayPal members were then able to email funds to any other PayPal account. holder via an automated email message titled, “You’ve Got Cash!”
The fund could be charge to a credit card. via an online form at the Pay-Pal site. or could withdrawn from a bank account. providing the user had supple adequate verification. of account ownership.
In June, expanded PayPal services to allow for payments between businesses and consumers (B2C), including those made on cell phones.
Clients who deposited funds into an account by electronic. fund transfer, credit card transfer, or check. were able to pay bills either at the. Web site or by pushing the letter “x” on their cell phones and then entering. the email address of the payee.
Businesses that accepted payments made via PayPal were assess no monthly fee. compared to the typical 2.9 percent fee charge by credit card firms. Instead.
Pay-Pal levied a 1.9 percent charge for each transaction completed. compared to the industry standard of 30 cents per credit card transaction.