PayPal Password-Issuing Device Goes Beta

Written by Evan Schuman
February 15th, 2007

EBay’s PayPal unit has gone to public beta with its SecurityKey two-factor authentication unit, a product of its acquisition of Verisign Payment Services.

EBay is taking a loss by selling the devices for $5 to anyone who wants to participate in the public beta program, said Dan Levy, PayPal’s senior director of consumer protection. PayPal Business accounts can get the device for free. Levy wouldn’t promise that the $5 price would be maintained after the program moved beyond the beta phase. “We’re looking at a few months’ worth of feedback,” Levy said.

In the contract Ebay signed with Verisign, it targeted purchasing a million of the tokens over three years. To put that number into context, PayPal alone has about 133 million customers and EBay has about 222 million registered users.

Clearly, PayPal does not intend for a significant percentage of its users to purchase the device. “We don’t think the typical consumer” will adopt it, Levy said. “The typical consumer already feels pretty comfortable with the security of our service.”

One hesitation he expects some users to have about the device is convenience. “It’s one extra thing they need to carry around,” he said, adding that PayPal is also considering several formfactors.

The device?which generates a new six-digit security code every 30 seconds?is not new, as marketing material for it started appearing on EBay and PayPal sites in December.


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