PayPal spokesperson Charlotte Hill said merchants affected by last week's outage should contact the company if they would like to discuss compensation. PayPal said it believed the root cause of the August 3rd outage was a bad piece of hardware. The site was down for 1 hour and experienced sporadic problems for another few hours.

Hill told AuctionBytes this week, "PayPal is working with our merchants to discuss the impact last week's outage had on their businesses. We do not publicly discuss the content of these conversations. Merchants who would like to discuss this issue should contact their PayPal representative."

According to an article in Cnet, "PayPal says about $2,000 in payments per second flows through the system, meaning that a one-hour outage would cut out about $7.2 million in commerce."

Update 8/16/09: We received a letter from a reader about their experience in trying to get compensation, please feel free to post your own experiences in the comments section of the Letters to the Editor blog