PayPal has apologised to New Zealand customers who have not received payments for the past nine days and says problems should be fixed by Friday.

The company's Sydney-based director of merchant services Simon Banks said the company "screwed it up" and was talking to all major customers who have not received expected payments because of a fault in the interface between the PayPal system and NZ banks.

"We uploaded a file which effectively fixes the issue and sends the payments to the NZ banks today, which means the money should show up tomorrow [Thursday]," he said.

"There is a chance, depending on the bank you are with, that it could show up the next day, but it will be by the end of the week."


He said the fault occurred in the process of "something we were releasing technically that created an issue in how our ability to withdraw in New Zealand worked, and it was a bigger issue than we thought".

"We thought it might have been a sporadic thing," he said.

"It was not till Monday US time that we realised that it was a really widespread issue that was related to the same problem.

"We are really sorry, We are supposed to be an enabling business, that's why people use PayPal. Kiwis sell all over the world on our platform."

Although Banks refused to say how many transactions were affected, technology commentator Paul Brislen said the number would have been in the thousands.

"Certainly in New Zealand you are talking about thousands of transactions a month, if not tens of thousands," he said.

He said PayPal's share of online payments had shrunk as credit card companies expanded, but it was "still probably the largest of the international money exchangers that is not a credit card company".

"For new stuff people use a credit card, but certainly in the second-hand goods and boutique market PayPal is probably the largest of the providers by a long chalk," he said.


He said most online payment providers had full backup systems and fixed any problems within minutes.

"To have something develop and not have anyone notice for nine days, that's a really long time. That is quite alarming," he said.

Owner of Hamilton food company Muscle Fuel Hamish Coulter said he had to organise an
emergency loan after he transferred $25,000 through the site 10 days ago.

Hamilton photo retoucher Allison Crene had to dip into her savings to pay her mortgage after her transfer still hadn't come through seven days later.

She uses the service to collect money from her American clients. The clients transfer the money to PayPal and then Crene moves the money to her personal bank account. She transferred two amounts totalling $1200 seven days ago but hasn't seen the money in her bank account. She said the money normally turned up after two days.

Crene felt sorry for those who didn't have savings.

"Some people are concerned with how they're going to put food in their kids' mouths," she said.

"Up until this point I thought it was a good business and that my money was safe. I've always trusted them and now I'm wondering if I should go to my bank and get something linked through a website."