PayPal is in the process of recovering after a widespread outage that affected most of its members, preventing them from using the online payment service to conduct transactions.

PayPal went down for over an hour on Friday, stalling transactions for all its customers. The technical problems, which prevented PayPal members from using the online payment service to conduct transactions, began at about 11am US Eastern Time and were prematurely declared solved around 1pm, although issues lasted until about 3:30pm.

Outages and availability problems with online payment systems such as PayPal inevitably cost merchants money in lost sales, dissatisfied customers and tarnished brands.

In its blog postings about the issue, PayPal hasn't given a reason for the outage but said it plans eventually to provide details about what went wrong. "I'd like to apologize on behalf of the company to anyone who was affected," wrote a PayPal official identified only as Anuj.

PayPal, with more than 87 million active PayPal accounts - and growing - in 190 markets and 24 currencies worldwide, is increasingly important to the financial health of parent company eBay.

Last week, parent company eBay reported PayPal's third quarter revenue was up 22 percent rom a year earlier, to US$838 million. 

Revenue for all of eBay increased just one percent, eBay said last week. PayPal made up 37 percent of eBay's overall revenue, up from 31 percent in 2009's third quarter.