Peter Thiel, Max Levchin, Luke Nosek, and Ken Howery co-founded PayPal in 1998. The company began as Confinity, a software business created to develop security software for handheld devices.
Confinity shifted its focus toward digital payments, especially money transfers using email and Palm Pilot devices. In 2000, it merged with X.com, an online financial-services company founded by Elon Musk. The combined business eventually adopted the PayPal name.
PayPal became especially prominent through its integration with eBay, where buyers and sellers used it to send and receive money online. eBay acquired PayPal in 2002, making it a major part of the online marketplace before PayPal became an independent public company again in 2015.
A common mix-up is identifying Musk as a PayPal founder. He founded X.com, which merged with Confinity; the four people named in the question founded Confinity, the company that became PayPal. PayPal is also distinct from Venmo, which it acquired in 2013.