Have you bought anything using PayPal in the last week? Keep an eye open for delivery, as the merchant may be unable to promptly process the order due to a bug in PayPal’s Instant Payment Notification (IPN) system. The problem all began when PayPal made an update to the IPN system some time early Thursday morning Pacific Standard Time. Later that morning PayPal’s ecommerce customers began reporting problems.

Although this is at heart a communications glitch in the way that PayPal responds to the ecommerce sites, there is an impact on the end customer. From the end customer’s perspective it appears that they have ordered and paid for their item successfully, but because of the IPN problem, the ecommerce site doesn’t receive a correct notification of payment. What should be, and was, an automated transaction, needs the ecommerce site to resort to human intervention until PayPal can fix the problem. Hence, delays and possibly dropped orders.

Compounding the issue are complaints from users that PayPal issued no information about this glitch until Friday afternoon, 24 hours after users first started complaining.

PayPal is now reporting the problem as resolved, but we have to ask two questions. Firstly, how did such a serious issue escape through the test and qualification procedures in place at PayPal? These really need to be upgraded with some urgency in order to provide a more robust and resilient product. Secondly, once PayPal had confirmed what their ecommerce customers reported, that there was indeed a problem with the recently-installed IPN upgrade, why could they not back out the upgrade out and return to the IPN system they had running previously, while they fixed, re-tested and re-installed the upgrade?

Has this affected you, either as a merchant or customer? Let’s hear your stories.