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Micropayment Wars Are Over... PayPal Wins?
Posted by
CmdrTaco
on Thu Aug 31, 2000 02:42 PM
from the it-certainly-is-convenient dept.
from the it-certainly-is-convenient dept.
Snocone writes "Cringely's latest column asserts that PayPal is now sufficiently dominant that it is pretty well certain to achieve de facto standard for micropayments over the net. Goes into the history of PayPal and why their model works where no one else's has. Even if you don't agree with him, there's some good insights into digital currency infrastructure to be found here." I now use paypal to pay my girlfriend back when she picks up dinner and my roommate pays his share of the rent using PayPal. Its great... although with the $5 they pay in referrals, plus the $5 they pay to new users, ya gotta wonder ... (if anyone wants to use me as their referral, thats cool *grin*). its actually making the Tipping Jar concept practically feasible. I mean, can I tip artists a few bucks when I enjoy their MP3? Can I tip a few bucks when I enjoy reading someone's website? The potential to change a lot of things is within reach.
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Micropayment Wars Are Over... PayPal Wins?
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What about anonymous payments? (Score:3)
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Re:Tipping (Score:3)
I tip for every personal service that I receive. Cab rides, pizza deliveries, restaurant service, lap dances, and full-service fueling. Failure to do so would feel rude - unless my server was incompetent.
Re:paypal is not micropayments, look at mojonation (Score:3)
Re:e-gold... hrm... (Score:3)
It's not subject to inflation per se - but in a world of multiple, competing currencies, in which few things people are interested in buying are priced in gold, it's hardly a rock solid store of real-world value. Look at, say, this chart [the-privateer.com], best I could come up with in 10 seconds on Google
In an environment where gold (or some other designated commodity) were the standard currency that everyone used, e-gold might make sense. But as things stand now, where everything you want to buy is priced in dollars (or Euro or pounds or yen etc.), the friction of buying and selling e-gold and the metal storage costs make e-gold impractical.. and the stuff about gold being a valid inflation hedge and it not being subject to government manipulation is IMO hooey (see above).
I was talking about this with people at a conference [reason.com] I was at earlier this year... as I recall, I think what I said was e-gold would make more sense if the e-gold marketplace itself were open - so that the buying, selling, and storage or metal was handled by multiple competing companies, rather than the one gold firm that was behind e-gold. I can't check the site to see if the market has been opened up - I doubt it given the absurd spreads they were charging. With real competition spreads (the difference between buy and sell) might go down and using e-gold as an exchange medium behind real-world transactions would start to make sense. I still wouldn't use it unless there was a way to, say, earn interest on my idle cash, er, gold, and do other things I can normally and easily do with dollars. 'Till then, I think it's just for the gold bugs.
There is, or used to be, a great, and active, discussion section on e-gold over at Free-Market Net [free-market.net].
Re:What I'd like to see in an online payment syste (Score:3)
http://www.privatebuy.com/ from ecount.
This looked great right up until I got to the part where you can only load your account using an existing credit card.
Somebody else in this thread mentioned that one thing that holds back anonymous payment methods is that they could be used for money laundering, and I have to begrudgingly admit that that's a valid point. Even with limits such as those established by privatebuy ($500 worth of transactions per day, no more than $1000 in your account at one time), somebody could still hack a system where money was chanelled through a large number of accounts under different names. After all, the crime syndicates of the U.S. Government and credit card companies do need to protect their interests against the machinations of lesser crime syndicates.
For anyone who hasn't seen it, Neal Stephenson's short story The Great Simoleon Caper [uidaho.edu] is an entertaining, thought-provoking look at the topic of anonymous e-cash.
What I'd like to see in an online payment system (Score:3)
So far, all of the online payment systems I've seen, including Paypal and Yahoo's payment service, are lacking in at least two areas:
What I would really like to see is a payment system where, as a user, I could set up an anonymous account and send the company a money order along with a note to "please deposit in account XYZ123". I would then have that much money to spend online. The payment company would collect a 1% service charge on everything I purchased, and all transactions are guaranteed to be as anonymous as practically possible (i.e. they would only collect enough data to prevent fraud and abuses, and never to share the data or use it commercially). People who wanted to receive payments through the service would have to identify themselves, of course.
Does anyone know if there is anything like this already in existance? Would you use it if it were available?
Fine, if you live in the USA... (Score:3)
"Soon" has been quite a few months now..
Adam
storage fees irrelevant, transaction fees bearable (Score:3)
All in all, if you're careful and willing to wait a while for your deposit to get in, you'll lose maybe 5-7% between putting money in and getting money out. The nice thing is that 5-7% holds no matter whether you're transferring pennies or thousands. Of course, that's assuming the precious metal market doesn't go nuts (of course it could go either way, but in the long term... well, asteroid mining can't help the price of gold much). Also, if you're in a rush, or you're lazy about shopping around, you can expect to lose closer to 15% through the transfer. Ironically, the best combination of price and convenience comes from funding your e-gold account with PayPal!
I think it's a pretty good deal if you want to send nickels and dimes all over the place, and you never keep more money in it than you are willing to lose. I think a fair assumption of risk is that your account will zero once every 2 years (yes, I pulled that number out of my hat; more below), at least unless they make some major changes to their security model. No big deal for a micropayment account, as long as you keep it in mind.
Obviously, I don't think much of the security. You have to remember that these people don't know you. With a bank, you go and create an account face-to-face, they have all sorts of nice meatspace backups and redundancies to make sure you are you when you go in to do something with your money. With something like e-gold, if you have the password, you must be the right person, and your account can be emptied, laundered through an anonymous e-cash system like digigold [digigold.net], and safely in the account of the thief in an eyeblink. You might be able to get your money back, but only if you could prove you didn't transfer it.
I also don't like the way they've eroded the legal foundation of e-gold. They keep talking about replacing the user contract, and they've got a clause which allows them to make any changes if you don't object within a week of them posting it on their website... whether you read it or not within that time. They made a big deal about the "unconditional right of redemption", which was your only last-ditch guarantee: if everything goes wrong, you can always have the metal in your account (having the cash value sent to you is not a guaranteed service; they have no contractual obligation to provide any service but that of returning your gold). In the proposed changes to the contract, they changed it to "conditional right of redemption", and they only have to give you your gold in neat bar-sized increments. Since a gold bar is worth something in the region of a year's pay, obviously this isn't a lot of help to the typical user. In the past, they dealt in coins, right down to silver coins worth under $20, so you could redeem practically any account. If the system ever becomes so insecure that everyone wants out, and nobody wants any e-gold, there's no guarantee that you'll get your money out. Basically, under the new plan, the emergency escape clause only works as long as there isn't any emergency.
It isn't secure, it isn't terribly convenient, and it isn't really cheap, but it works, it works all over the world, and it works now (that is, at least when the servers are up
Here's an e-gold discussion forum that goes way back. [free-market.net] It covers the good, the bad, and the ugly of e-gold, with tasty sprinklings of marketroidese and paranoid ranting.
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lol (Score:3)
#----------------------------
$mrp=~s/mrp/elite god/g;
paydirect.yahoo.com? (Score:3)
~d
PayPal doesn't do Micropayments (Score:3)
Micropayments involve incredibly small amounts of value. How much does a single HTTP request for 20K of data cost? We're talking about thousandths to millionths of a cent here. The smallest transaction you can make with PayPal is one cent.
As others have mentioned, you can't use PayPal outside of the US...
Mojo Nation is trying to create a mircopayment "barter system" backed in disk space, CPU, and bandwidth. It's bootstrapping the process with a distributed filesystem. You exchange your system resources for "Mojo" which you can exchange with other people consuming their resources (i.e. for downloading data from them). A single Mojo represents an incredibly small amount of value. In the long term we hope that Mojo will float on it's own and people will buy and sell it (possibly by using PayPal for settlement). We also hope people will build other services and charge Mojo.
Check it out, it's really cool, Mojo Nation [mojonation.net].
Burris
PayPal won't win because... (Score:3)
The recipient gets an email that says "You've Got Cash!"
Do they really expect people not to dump such an Email directly to
First mover advantage? (Score:3)
The net has over 100 million users, the big three credit card companies have nearly a combined billion cardholders, yet according to Cringely the 3.3 million customers of PayPal makes them "unassailable".
In fact, I'd say that 3.3 million users is a very small set of net users, and that the real challenge is to reach those who are not geeks nor addicted to online auctions.
Re:Tipping (Score:3)
This may be changing as their culture becomes increasingly Westernized, but I wonder how many other parts of the world have never really included tipping as a part of their heritage.
Maybe I just don't get it... (Score:3)
It sounds like a great service -- except where do I use it? I don't give money to friends that often.
I mean, I want micropayments for online web sites. It doesn't look like this has made any penetration into that market. According to the PayPal web site, eBay is accepting PayPal, but I haven't seen it anywhere else.
Apparently there are 3.3 million customers -- that have signed up to get a free $5. The float is $40M. That's only $12/person. That doesn't sound like it's getting a lot of "real" use to me.
On another subject, I remember that there was a guy in the early digital cash space that was trying to create anonymous digital cash. He considered it important from a privacy standpoint that digital cash should be untraceable, just like regular cash. I would imagine PayPal is not that, but does anyone know what happened to that guy or what happened with his technology?
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Re:Perhaps, but the United States Alone... (Score:3)
Online banking and money transferring in general varies a lot between different countries. Being a Finn, the primitive system of the States sometimes amuses me.
Here in Finland online banking has been available for over 15 years. Today, over 50 percent of the country's internet users use online banking. Nobody uses checks. I doubt they even exist in this country.
As far as domestic e-commerce is concerned, nobody uses credit cards. We have several payment options, one of which is an advanced money-transfer system. It basically is a normal online money transfer from one account to another, but allows the retailer to verify the transfer automatically, instantly.
What I'm trying to say is that PayPal has a long way to go to make it globally.
Re:hardly. (Score:3)
Give me a payment system, preferably anonymous, which doesn't claim the right to change the terms I've "agreed" to (using that term loosely) whenever they wish to, and I'm interested. Alternatively, how about I make the agreement subject to modifications documented on my web site and e-gold gets 10 days to dispute them.
My intent isn't to pick on e-gold, but on this practice in general. "I agree to $foo, $bar, and $baz, but you can change them any time you want." Why do you accept this?
How Pay Pal Makes $$$ (Score:3)
It very similar to the way American Express makes a fortune on their travelers checks. All those unused travlers checks out there = $$$ in AMEX's pocket which it can invest to make more $$$.
Not that travelers checks/paypal are bad. They both make it more secure to make transactions in unfamilar environments.
My advice is to transfer your $$$ out of your account ASAP and for you to make the $$$ not them.
Cash in those unused travlers checks also!
That is all -click!-
PayPal killed their PalmOS product (Score:3)
hardly. (Score:4)
But on the subject: e-gold is managing fine, and at least they don't have problems with people not from the US.
Does not make too much sense to Europeans (Score:4)
Within Norway, you can wire money to anybody with a bank account, regardless of which bank I, or they, use. To pay bills, I go online to my bank's Internet service, enter the account number of the person to transfer to, the amount, and the date at which the transaction should execute. Setting up recurring payments is also possible. Transferring between countries is also quite simple using the SWIFT system.
Now, I can appreciate why PayPal appeals to Americans, if only as a temporary stopgap until all your banks allow sending money to each other. In the meantime, my American friends keep "writing checks". Sheesh. Welcome to the future, guys :)
(I once cashed an American check in my home country. It took one month to clear, and the intermediates took a huge bite out of the total amount. Next time I used SWIFT and it took three days and the money were more or less intact.)
As an aside, PayPal only works with American credit cards. I am currently in the US, and in a recent eBay payment my Norwegian credit card was rejected because they could not verify the billing address (and there was no country field available for the billing address). I have also totally failed to buy stuff from MassMerchandise, where they consider my Norwegian email address to be "high risk" (duh!) and their billing-address verification system has problems even verifying American cards.
Re:You lose your rights if you use cash, too. (Score:4)
That's what paypal's for. Not the huge stuff where you NEED a non-performance garauntee. There are other safeguards in place to make sure your eBay product works (eg, the eBay feedback system). For the big stuff, I'll still use plastic, ThankYouVeryMuch.
And about paypal stealing your money once you give it to them: if too many people complained about this (in other words, if they did it often enough to make it worth their while), there would be an uproar and they wouldn't stay the "de facto standard" for very long. There are still alternatives...
PayPal is not about micropayments (Score:4)