By Bob Sullivan Technology correspondent
msnbc.com
updated 10/27/2004 6:03:43 PM ET 2004-10-27T22:03:43

Online payment service PayPal on Wednesday announced a financial mea culpa to millions of users impacted by a service outage earlier this month. All transactions performed on Thursday, Oct. 28, will essentially be free, part of what the company calls a "Thank You Day."

The announcement follows a severe outage at the site that left many customers unable to perform transactions, make payments, or even spend money using PayPal-issued ATM cards. Troubles began on Friday, Oct. 8 and continued through the following Tuesday night.

"This is a thank you for the ongoing business and the patience our customers showed in us," said PayPal spokeswoman Amanda Pires. She said the firm has not seen an exodus of customers, but did receive a number of complaints.  "We certainly had feedback ... We were very upset that we had disrupted people's businesses."

There's no limit to the free transactions, Pires said.  All transactions performed between 12 a.m. PT and 11:59 p.m. PT on Thursday are eligible for the refund. Generally, users pay a sliding fee scale from between 2 and 3 percent per transaction, plus a small transaction fee.

Users will still see the transaction fees as they conduct business on Thursday, but PayPal owner eBay.com will keep track and credit the amounts back to user accounts by Nov. 25.

The company has blamed a botched software upgrade for the extended outage. 

PayPal is an important cog in eBay.com. The company claims it has more than 50 million account members and is available to users in 45 countries around the world. Last year, the firm handled $12 billion in transactions. 

Pires wouldn't say how much the giveback would cost the company, but added "it will not have a material impact on revenue for the quarter."

Last quarter, which ended Sept. 30, PayPal garnered $166 million in revenue, almost all of it from user fees, suggesting the "Thank You Day" might cost the site between $1 and $2 million.

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