SAN JOSE, Calif. – The need was direct: How to facilitate the exchange of money and goods between a consumer and an online merchant.

The concept was simple: A service that would allow the shopper to purchase an item without sharing financial information, and at the same time, give retailers, small-business owners and individuals a guaranteed quick and sure payment for a small fee.

PayPal, the San Jose company that revolutionized the way payments are made online, marks its 10th anniversary this year.

“We have a tremendous, big, recognized brand with 60 million customers now,” said Scott Thompson, 50, on PayPal’s Web site. He has been PayPal’s president since January. A Boston native with a well-known love of the Red Sox, he adds, “But I like to say we’re at the top of the first inning in a nine-inning baseball game.”

Founded in 1998 by Max Levchin, Peter Thiel and Elon Musk as a way to transfer money via PDAs, PayPal’s start is the quintessential Silicon Valley start-up story – complete with a $1.5 billion happy ending, the price eBay paid to acquire the company in 2002.

PayPal has 7,000 employees around the world. It earned $582 million in the first quarter of 2008, up 32 percent from last year.

Soon after merging with eBay in 2002, PayPal went worldwide, becoming available in euros and pounds. It can be used in 190 countries and in 17 currencies. Its active accounts total 60.2 million globally, a 17 percent increase from last year.

In the United States, 12 percent of all payments through the Internet are made via PayPal, which charges a 2 to 3 percent transaction fee to sellers.

But the company has had some glitches. Integrating PayPal’s technology into the existing Web sites of retailers and merchants, for instance, has been difficult because of coding issues. Phishers and hackers have compromised security.

To enhance protection for buyers and sellers using PayPal, eBay announced last month that starting in the fall, customers using PayPal for their eBay purchases will be covered for 100 percent of the cost if the item doesn’t arrive or differs significantly from its description.

While PayPal depends on e-commerce, current chief Thompson said he’s not worrying about the economic slump.

“What happens in a down cycle is that they move more cautiously,” he said.

“If they want the best deal, they move to the Internet, they don’t go from mall to mall. What’s predictable is that more and more purchases will happen on the Web.”