Filed by eBay Inc. Pursuant to Rule 425
                                                Under the Securities Act of 1933
                                                  Subject Company:  PayPal, Inc.
                                                   Commission File No: 000-49603

     This filing relates to a proposed merger between eBay Inc. (the "Company")
and PayPal, Inc. ("PayPal") pursuant to the terms of an Agreement and Plan of
Merger, dated as of July 7, 2002, among PayPal, the Company and Vaquita
Acquisition Corp.

     On July 8, 2002, Meg Whitman, the Company's Chief Executive Officer, sent
the following e-mail to the employees of PayPal regarding the proposed merger
described above:


As you know by now, this morning PayPal and eBay announced eBay's plan to
acquire PayPal. I want to be the first to welcome you to the eBay family.

The reason we sought to acquire PayPal is straightforward. Through your hard
work, PayPal has built the world's best online payments solution for individual
consumers and small businesses. PayPal and eBay share the same basic mission -
to enable online commerce. As a team, we will fundamentally strengthen the user
experience and allow buyers and sellers to trade with greater ease, speed and
safety. In short, working together, PayPal and eBay can dramatically expand
their platforms.

Following the close of the deal around year-end 2002. PayPal will remain an
independent brand and continue to serve its customers both on and off eBay. With
your help, we will integrate PayPal's functionality into the eBay marketplace.
At the same time, we will phase out the operations of eBay Payments by

At the end of the day, a core reason why one company decides to acquire another
comes down to people. All of you have helped build a fantastic company. Like
eBay's employees, you foster a culture of excellence and passion for the brand
you love and the work you do. I'm certain that the combination of PayPal and
eBay will continue to change the world.

I hope to meet many of you today and in the weeks and months ahead. If you have
any questions about eBay, please feel free to drop me a line at
I'll do my best to answer.

Again, welcome to eBay. We couldn't be more excited to have PayPal as part of
the team!


Investors and security holders are urged to read the proxy statement/prospectus
regarding the business combination transactions referenced in this email, when
they become available, because they will contain important information. The
proxy statement/prospectus will be filed with the Securities and Exchange
Commission by eBay. Investors and security holders may obtain a free copy of the
proxy statement/prospectus, when available, and other documents filed by eBay
and PayPal with the Commission at the Commission's web site at Free copies of the proxy statement/prospectus and eBay's
other filings with the Commission may also be obtained by directing a request to Free copies of PayPal's filings may be obtained by
directing a request to