Paypal's system upgrade turned into a meltdown

EBay said on Tuesday that it had "made good progress" in restoring the service to most members and was continuing to monitor the situation closely.

"Account data and personal information have not been compromised," said Ebay.

Payments totalling $4.4bn (�2.4bn) went through Paypal's 50 million accounts in the April-to-June period.

Problems easing?

It is not the first time the global payment system has run into problems, though in the past these have tended to centre on the honesty and reliability - or otherwise - of buyers and sellers.

If the outages continue much longer, it will hurt them in the fourth quarter David Garrity, Caris & Co

EBay was unable to say how many Paypal users were still unable to use the system by late Tuesday, the Associated Press reported, citing eBay spokeswoman Amanda Pires.

Paypal service continued to be "intermittent" on Tuesday with "very slow system responses", eBay said on its website.

Some account holders were unable to log on, some buyers had problems with their debit cards and were having problems paying sellers while sellers were having problems shipping products to their buyers, eBay said.

"It is certainly something they need to get resolved," said Caris & Co analyst David Garrity. "If the outages continue much longer, it will hurt them in the fourth quarter."

Paypal is already the focus of websites where disgruntled users vent their feelings about the service.

Most moans centre on the non-arrival of paid-for goods, a built-in risk with online auction services.

In March 2004, Paypal agreed to pay $150,000 to settle a case brought by the New York attorney general which alleged that the service had overstated the level of protection for buyers whose goods fail to turn up.