PayPal began in December of 1998 as Confinity, which was a security software company aiming to transfer money between handheld devices, explains PayPal's website. Confinity merged with X.com in March of 2000, taking its name. X.com became PayPal in June of 2001, renaming itself after its most popular service.
PayPal was founded by Max Levchin, Peter Thiel, Luke Nosek and Ken Howery, according to PayPal's website. The original company name Confinity came from the combination of the words confidence and infinity, according to Levchin and Thiel. The company first developed the ability to send money online in October of 1999 but continued to make use of its security roots by developing fraud-prevention software to assist in its operations.