PayPal, the e-commerce business formed in 2000, is the hypothetical middleman that common wisdom would have you cut out. In the world of online payments, though, it can be quite handy to have a barrier between a seller and your bank account. PayPal processes payments for commercial vendors and auction sites for a fee. The buyer pays money to PayPal, and the vendor is then paid in the form of a check or a deposit (into their own PayPal account or bank account). At no point does the vendor see the buyer’s bank information.In 2002, eBay purchased PayPal, recognizing the applications such a business would have to their online auctions. PayPal is now a wholly-owned subsidiary. Since then, PayPal has made some acquisitions of its own, including the Israeli start-up Fraud Sciences, which they are using to develop new fraud detection tools, and Bill Me Later, a service similar to PayPal which offers transactional credit at online vendors.The business has embraced some of online banking’s features, especially by offering a Student Account for teenage consumers. The account, which is set up by parents, gives teens a Debit MasterCard which they can use for purchases. In fact, internationally, PayPal is regulated as a bank in Luxembourg.With the popularity of online payments in today’s society, PayPal should remain a powerful force. Google has even offered its own alternative, Google Checkout, although in 2006 eBay added Google Checkout to its banned payments list.