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The Almighty Buck

PayPal Announces Intent To IPO 180

seek31337 was the first to write to us with the word-direct-from-the-mouth that PayPal has announced its intention to IPO. Not much other details, but interesting nonetheless.
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PayPal Announces Intent To IPO

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  • Didn't know they were private. Hope it goes well for them. Great service.

    • I agree. PayPal is a revolutionary service. With their new ATM/MasterCard that pulls directly from my paypal balance, I think I might start using their service for offline commerce too.

      I wonder how profitable (if at all) they are. Fees are only charged when you receive money from another paypal user, so a lot of people use the service entirely for free.
      • Re:Didn't know... (Score:2, Informative)

        by Cuthalion ( 65550 )
        They also have a large amount of money floating around in their system earning THEM interest.
        • Re: Didn't know... (Score:2, Interesting)

          by Inthewire ( 521207 )
          Floating is the correct term...company I work for processes billions of dollars of bills for our clients each year...we make a bit on each transaction, about enough to cover overhead...the actual profit comes from the interest on that money (the float)...the bills we pay are typically due 60 days from the date of service...so we hold our clients funds for an average of 50 days...interest is a wonderful thing!
      • That sort of means they make money off every transaction, doesn't it?

        Obviously double-dipping would make them more per transaction. but people wouldn't want to use them to pay quite as much, and usually the person buying gets to choose the method of payment.
        • That sort of means they make money off every transaction, doesn't it?

          No. For small ammounts of money on personal accounts even receiving money is free. Also, with their new ATM/MasterCard option, you can spend money in your paypal account without fees (there is a $1 fee if you use an ATM but if you just run the card as a creditcard it's free).
      • Cringely (the PBS one) wrote about these guys a year or two ago (and mentions them again this week as part of a larger story) and at the time the plan was to make all their money off the float, but I'm getting the impression that there hasn't been as much money in that as they expected and some of the eBay sellers I've bought stuff from lately have some not so kind things to say about the way Paypal does business with them.

        I've noticed that they're pushing hard to get people to pay directly from their bank accounts instead of their Visa or MC, and I've noticed that some of the times I've done it that way my bank account available balance was reduced by twice what I was paying for 2 or 3 days and then things straightened out, so I don't know if they have a way to "borrow" from my account and collect the interest, or if it's some quirk of my bank.

        • I know some banks do some really odd things to available balances....

          i.e. you deposit a $20 check into your account, and up to $60 of the money in your account is placed 'on hold'

          shouldn't happen when money is taken out of your account, but who knows.

          if your bank has decent customer service and hold times, it might be worth calling and asking.

          • Actually I've got a great bank, 'cause it's a state employees' credit union, so the depositors are the owners and all the profit goes into better rates and services for the "owners".

            If you ever work as a lab monitor for a state owned school, see if you can qualify for a credit union membership. Unlike regular banks, they don't think that they're doing you a favor letting you bank there.

      • With their new ATM/MasterCard that pulls directly from my paypal balance, I think I might start using their service for offline commerce too.

        Interesting - so it's basically a credit card where you can set your own limit? That'd be nice for buying from companies I don't entirely trust. If they say they're only going to charge me $20, and then attempt to take more, they'd be screwed if I only gave PayPal $20 as my balance, right?
  • This can only mean their impending doom.
    • This can only mean their impending doom.

      Agreed, just because the VCs are hungry to make up all of their losses.

      Time to watch another company get raped.

  • Hrm... (Score:5, Funny)

    by Bob McCown ( 8411 ) on Friday September 28, 2001 @08:06PM (#2366630)
    I wonder if I can buy shares using my PayPal account?
  • My mother (Score:2, Funny)

    by Inthewire ( 521207 )
    warned me about robbing Peter to pay Pal
  • Great... I thought that they were doing just fine as is. Maybe even on the way to having a decent standard central payment system that wasn't restricted to the Microsoft Passport system.

    Now an IPO.

    They're going to fold in 12-18 months just like all the others now.

    • They're going to fold in 12-18 months just like all the others now.

      I doubt it.

      They have 10 million users [paypal.com] and are the standard payment method for online auctions.
    • Perhaps the IPO is a way to let the VCs get their money back without having to sell out to MS.

      Unfortunately the pressure to keep the share price rising to keep stockholders happy will probably lead to short-term thinking at the boardroom level and increasing user fees (at which point I and a lot of other users will probably start looking for alternatives).

  • Most of Paypal's profits come from busisness to busisness transactions and even bank to bank. Most people only think of the small transactions from consumers but paypal actually eats a bit of money there. They are actually on their way to profitability anyway ... this just sweetens the pot. Ever since they signed E-Bay as a partner things rocked for em.
  • Paypal has a dedicated cashflow from Ebay. I have personaly handed over hundreds of dollars to them. they will be around a while, Although the IPO is a huge mistake
    • Depending too much on that eBay cashflow could be a mistake. I think they should go IPO and invest that money in growing the share of small/medium businesses that can't afford a merchant account.

      Make it a standard everywhere, not just for auction sites, and I'm a buyer. I'll have to sell my now worth $20 CMGI stock though...
  • What for? (Score:1, Redundant)

    I don't know to much about PayPal's operations, but I thought their technology and all worked just fine.

    The point of an IPO is to get a huge infusion on cash, so I can't help but wonder what they hope to do with that money that they aren't doing now?

    Unless of course it's just some greedy execs that are hoping to make a small fortune and then abandon the company.
    • by GregGardner ( 66423 ) on Friday September 28, 2001 @08:28PM (#2366707) Homepage
      You forgot another reason why companies go public. To appease and put the "golden handcuffs" on the employees, not to mention trying to attract top-notch potential employees. Having worked for several dot-coms in the last few years I can say that there isn't that much company loyalty out there. Many employees stay at companies hoping to make a lot of money off of their stock options.

      Now in the last year, a lot of this has changed and more people are sticking around at companies for fear of not getting another job, but there are still a lot of people out there hoping to "strike it rich" off of stock options and you never will without going public.

      Also, at one company that I was at that was on the verge of an IPO increased head count by 30-40% two weeks prior to the IPO. This was a few years ago when finding good employees was quite a battle. Again, probably not as much of a concern for companies these days.
    • In my (2) dot-com dealings, "IPO" was basically the exit strategy for the initial investors, their attempt to recover their money and let someone else shoulder the risk.

      Often, it goes "try to sell the company; if we can't find a buyer, do an IPO." Not that this should worry anyone. You have to be currently healthy during an IPO, at least.

      • I know of at least one internet company (name available on request) that mostly killed itself by trying to do an IPO.... the ran out of money in the middle of the waiting period, and couldn't make it to the IPO... and mostly sucked from then on.

    • In some cases, the private owners of a company want to GET OUT. They have a successful business, but they don't want to run it their whole lives.. they want to move on. SO.. they sell it.
      You can either sell the company privately... or.. PUBLICLY.. which means an IPO.
      And an IPO is generally more profitable.

      Doing an IPO so you can get money so you can build a dotcom is one thing.. going public when you have a company that's actually worth something is a different matter.

  • by dmarcov ( 461598 ) on Friday September 28, 2001 @08:12PM (#2366654) Homepage
    It always amazes me how investors seem interested in tiny little companies that have a neat idea, but if it ever really takes off could be entirely duplicated by a larger, more well known company, do it all for "free" (ie: ads, having an account, whatever) and not even look back twice at the dark smudge they just ran over.
    • HAHA

      Investors aren't interested in the company or what it does, they are interested in making money. If an investor really cared to support them, he'd bankroll them directly rather than buying common stock that can be dumped whenever it suits him.

      People buy into IPOs because they know they can dump the stock 3 hours later and have made a profit. What the price does in that beggining has little reflection on the company at all; the only thing that matters is where the price ends up a week later. Though, even then shareholders are more concerned with making a profit for themselves than whether the company they "own" is any good in the long term.
    • The ironic thing is that patents are supposed to prevent this kind of thing, but when a software company patents anything the whole net community screams bloody murder.

      Duh.

      • If patents actually worked to protect the little guy, we'd scream a little less (though we'd still scream for other good reasons). Rest assured that no number of patents would protect PayPal if Microsoft decides to roll that functionality into .Net. Go do a bit of research, the evidence is abundent.

        In fact, it's hard to find a recent example of the little guy truly winning; in all instances I've ever seen, the only way the "little guy" wins is to sell his rights to a big guy who can afford the fight. Hardly an example of patents preventing little-guy abuse.

        • Hmm this guy *sounds* as though he knows what he's talking about.

          But then again in this other one [tinaja.com] (written 1991) he says the following :)

          "Other obvious sucker bets today include the NeXT computer, the UNIX operating system, that TrueType absurdiosity, DVI video, and Teletext services."
      • From Don Lancaster's web site at http://www.tinaja.com/patnt01.html [tinaja.com]:

        For most individuals and small scale startups, patents are virtually certain to result in a net loss of time, energy, money, and sanity.


        One reason for this is the outrageously wrong urban lore involving patents and patenting. A second involves the outright scams which inevitably surround "inventions" and "inventing".

        A third is that the economic breakeven needed to recover patent costs is something between $12,000,000.00 and $40,000,000 in gross sales. It is ludicrously absurd to try and patent a million dollar idea.
    • If company has a good idea AND manages it right they can stay ahead of the competition.

      Sometimes existing companaies are too ignorant or too tied up with their own self importance to consider new markets.

      Sure mastercard or someone could do something similar, but they wouldnt do it for free, and they probably have no real understanding of the market. They would probably want to just treat it like normal retail transfers... which it is not.

      Its not an easy job to buy people who understand a new market, they will be playing catchup for a while.

      In the long run for paypal to defend their market against mastercard type people it will require good managment, they need to keep the momentum going.

      An IPO will help them grow.
    • Never underestimate the power of laziness.

      The other company would have to come up
      with "1-click" paypal account conversions
      to ever have a chance.
  • by Desus ( 253573 ) on Friday September 28, 2001 @08:13PM (#2366658) Homepage Journal
    Far from being your average "no value, pointless" dot com, PayPal serves a purpose to users of On-line auctions. I remember the days of yore when I had to walk about 20 miles ;) to go buy a money order because nobody wants to accept a check on-line (are u serious? Do u know what kind of people use the net LOL)
    Paypal takes all the extra steps out of this process and to those who's tech skills aren't enough for them to wade through Billpoints sign-up process, PayPal is the DE FACTO online payment service. Just do a quick check on eBAY for the number of auctions that only accept payment through paypal.
    Good luck with this IPO. I'll buy some shares.
    • Just do a quick check on eBAY for the number of auctions that only accept payment through paypal.

      Indeed. In my auctions, I accept payment via PayPal and money orders. Of the several hundred auctions I have run this year, I've had about 10 people pay with a money order. The rest paid with PayPal.

      PayPal's a great service. A while back, I bought 1K plat of Everquest money on eBay. Thanks to PayPal and the fact that the goods were deliverable online, the entire transaction from auction close to delivery of goods took 38 minutes.
    • Anyone online... I've seen people paying each other via paypal... websites taking fees...
      Online Casinos & Sportsbooks, for sure, use paypal a great deal now.

      Paypal is in a position that previous to the net, only banks & amex, visa, & Mastercard occupied: they are acting successfully as a financial transaction broker.
  • Isn't this an awful time to have an IPO?
    • Re:One thought... (Score:1, Insightful)

      by Anonymous Coward
      Isn't this an awful time to have an IPO?

      That depends on what you're selling. If you're still trying to be the premiere online provider of stinky fish in a jar, then yes. But if you're PayPal, you're profitable, and you have a legitimate claim to being a future player in ecommerce, well, no.

  • by perdida ( 251676 ) <thethreatproject@@@yahoo...com> on Friday September 28, 2001 @08:32PM (#2366719) Homepage Journal
    PayPal provides services like a bank, and can operate offshore accounts and stuff (all you need is a credit card and a paypal account in Moscow or wherever you are) and should be regulated like a bank before it goes all IPOing on our ass.

    see here. [wired.com]

    we need to figure out what kind of business it is before we buy shares of it.
    • PayPal is not a bank. Hear it straight from the horse's mouth:

      (i) PayPal is not a bank and the Service is a payment processing service rather than a banking service, and (ii) PayPal is not acting as a trustee, fiduciary or escrow with respect to your funds, but is acting only as an agent and custodian.

      • PayPal is not a bank. Hear it straight from the horse's mouth:

        I can say I'm not a bank either, but if I meet the qualifications as set out in Federal and State bank regulations, I will and should be regulated as such.

        What the company says is not as important as how the government acts.

  • PayPal is a good service. Just like Google, it is not yet a good time to go IPO, in the current market situation. Everything looks dim and dimmer. Going IPO now will ruin one of the few "more successful" e-payment services after the dotcom gold rush.
    • Actually, the comparison with Google is a good one -- both companies have been:

      • (relatively, in this market) slow to play the IPO-cash-in card; and
      • both have built up huge loyalty bases before going to the public markets for capital.
      • I don't have a specific opinion on whether either company will do well once they go public, but they both occupy very similar space: They are staking out a small point of time, mindshare and convenience in a transaction -- an information transaction in Google's case, and a financial one with PayPal.

        They're more than enablers and less than guarantors (info you find on Google might be crap, as might the crotchless panties you picked up on Ebay).

        As a meta-model for a business, it's a good one -- Realtors, some attorneys and certainly non-IT consultants of most stripes make their living by getting in between a desire and a thing/idea that will realize that desire.

        Hell, it's easier than selling widgets.

  • Just like Ebay will be the goods exchange of the future, Paypal will be the currency exchange of the future. It's a lot of money if you run your own credit card transactions, why pay it when paypal does it for less.

    Western Union used to perform this function. But someone came around that does this for less.
    • No way dude. Paypal is visible and has it's best account in EBay, but Checkfree, based in ATlanta, controls 80 percent of the online billing market. Almost all the major financial institutions use Checkfree's infrastructure. They simply prefer to remain behind the scenes, but if you are using your bank's online services, then I (almost) guarantee you that's Checkfree. No shit.

      the thing about payPal is they charge 2 or 3 percent to use their services so what's the advantage over using your credit card? Same thing Course, I work there so I guess I'm biased, but this info is pretty much the truth.

      heh, sorry but i felt obligated to post in this thread.........go Checkfree! ;-)
  • by helloRockview ( 205000 ) <chris@cju . c om> on Friday September 28, 2001 @08:48PM (#2366760) Homepage
    Not surprisingly, a lot of Slashdoters doubt PayPal...which is understandable, since it's so difficult to believe that any pure-play dot com can survive these days.

    However, I've had the pleasure of working closely with many of PayPal's senior management over the past two years, back since they merged with X.com. I can tell you three very important things:

    1. The P2P space is actually a loss leader. Most of their profit is made in the B2B and B2C space - not pure P2P as most people believe. They do very well in these spaces and recent analysts predict that their revenue was between $80 and $100mil last year. That's a heck of a lot better than most of the not-coms we've seen over the past several years.

    2. They have an incredibly intelligent, dedicated and savvy staff that understands their market and industry.

    3. They have a business model that works.

    In my opinion, these three items equal success.

    I love their service and I enjoy working with the company. If I didn't enjoy my current job so much, I'd probably apply for a job with them.

    • by OmegaDan ( 101255 ) on Friday September 28, 2001 @09:45PM (#2366860) Homepage
      Wrong wrong and WRONG! Many of my friends have been ripped off by paypal. Paypal is a security disaster, and when you are ripped off, they won't be interested in helping you.

      http://www.consumeraffairs.com/online/paypal.htm l

      http://www.salon.com/tech/feature/2001/02/23/pay _p al/

      Paypal victim site: http://chips.dyndns.org/~xcomvic/

      http://www.zdnet.com/zdnn/stories/news/0,4586,26 05 840,00.html

      etc etc etc ... One scam goes like this : The victim sells an item, are paid via paypal -- they ship the item, once the scam artists has recieved it, they can force the CC company to reverse the charge because theres no signature ... Paypal is debited the money, and paypal *TAKES THE MONEY FROM YOUR BANK ACCOUNT* without your authorization. A buddy off mine lost 350$ AND his DX7 keyboard this way ... fuck that

      • TAKES THE MONEY FROM YOUR BANK ACCOUNT* without your authorization

        1. You don't grant access to your account on a transaction-by-transaction basis; you grant access to your account PERIOD. I'm sorry if your buddy didn't understand this fact of banking. Kind of an expensive way to learn it; clearly you've learned from his mistakes.

        2. If someone defrauds you, you prosecute them. I'm sorry if your buddy's DX7 keyboard and his $350 weren't worth his time; that was his choice. It's not PayPal's problem if you are defrauded; it's your problem.

        I use PayPal. I know the risks. If they foul up my account I will pursue fraud charges against them. If someone else rips me off, I'll pursue fraud charges against THEM. Everybody needs a hobby, and from time to time it becomes my hobby to make people responsible for their actions.
        • It is paypals problem if you're defrauded -- they claim to be a safe and secure way to transfer money. Even if you want to argue that they aren't in the business of making sure TRADES go ok, someone clearly has found out how to defraud the monetary transfer itself. IMHO paypal was ripped off in the previous scenario, not my friend ... however-- paypal sidestepped the monetary damage itself by commiting fraud on one of their customers. Paypal is a joke :)
          • Bupkis.

            How is being ripped off by someone using PayPal different than being ripped off by someone cashing a money order? I would think with the money order you have that much *less* protection because who knows when the crook received it, cashed it, etc. But with PayPal, you receive notice when the bad guy has accepted your payment. At least that way you can have a more calculated guess at whether you're being screwed or not.

            Analogously, PayPal is the messenger service delivering the money order. When's the last time you heard someone bitching at the postal service because they sent a money order to someone and didn't get their expected goods?
        • This isn't a question of someone not understanding of how PayPal works, this is a question of someone understanding how PayPal works and concluding that its conditions are unsuitable for P2P transactions.

          The point is whether or not individuals in P2P transactions should be exposed to the risk of a buyer backing out of a transaction by abusing the credit card system. Businesses have large enough volume to absorb those risks, individuals don't. Furthermore, because individuals traditionally don't take credit cards in P2P transactions, there are no protection mechanisms (your suggestion of "prosecuting" them is obviously impractical).

          There are many traditional payment methods by which the seller is not exposed to the risk of the buyer backing out after having received the product. If PayPal can't figure out a way to provide similar protections to its customers in P2P transactions, then maybe PayPal really isn't the right payment method for many P2P transactions.

        • by Anonymous Coward
          Paypal covers up to $5000 a year on "chargebacks". YOu need to ship to a confirmed address (US only then) and use a shipping service that is traceable (UPS Ground will do). There is a list to follow to ensure you're covered (as a seller). I don't know if this applies to the personal accounts, but anyone can apply for the premier account and get the sme coverage.
      • You know your articles are a bit out of date.

        There are good ways to protect yourself on Paypal. One is to make sure that you only deal with people who have verified accounts. This means that they have linked a bank account to their Paypal account and (presumably) can be traced. In fact, if you pay someone for an eBay auction with Paypal AND they don't send the goods you can get up to $200 from eBay and $200 from Paypal.

        Look here [paypal.com] for up-to-date information on Paypal's fraud policy.

      • holy hell.. i had no idea this kind of thing was going on. I've never personally used paypal, but have had friends who have (a while ago). I'd never heard of such problems. Thanks for the links, though, I'll be sure *NOT* to use paypal at anytime in the future, ever.
      • > I think we need to transition to a non-magic-fish based economy.

        Out of curiosity what does that mean?
      • Sorry Dan but I have to say that your friend would get modded down as:

        -1: Idiot

        Seriously. I know we all blame software and website TOS for all the ills in the world but when it's your CC# and bank account it pays to read the fine print. Paypal is a middle man. End of story. Everyone has a sad tale of getting fucked selling something over the internet. Fortunately it is generelallythe exception and not the rule.

        OK its late I'm sorta drunk (ok really drunk) so I apologize for my grammar and the standard IANATroll apply.

        Fool me once shame on you. Fool me twice shame on me. Sounds like the former in this case.

        Pete
        (pardon the blatant American centric nature of my sig. I thought everyone would get it, but...)

      • Congratulations! You just discovered a hole in CC Protocols. It is called MoTo (MailorderTelephoneorder) and you are correct that you can reverse such transaction. I guess every single eTailer out there suffered from this "loss". BUT, first of all, these rules are there for a reason. If I am your underpaid waiter in the little restaurant around the corner just pin down your 16-digit PAN and expiration date from your credit or debit (Visa/MC) card, guess what, I can go shoppingWohooo. What big of a deal. Now, if I, being the bad guy, accepted the delivery of my little shopping experience (using certified mail, signature required UPS or whatnot), I AM IN TROUBLE. And if your friend sent a 350$ item without a signature upon delivery, he is a f&((% idiot and should not sell stuff on eBay anyway. Phhhhhhhh ...
    • Do you have any idea how they book revenue? For instance if I use paypal to pay a friend $10, is that ten dollars of revenue?
  • by surfcow ( 169572 )
    ... and shares will no doubt be available on ebay.

    =brian
  • That is so two years ago.
  • I have bought and sold (mostly sold) on eBay over the past year or so, but I've never used PayPal because their business model looked somewhat like a pyramid scheme to me. Besides, with all the dot-bomb craziness last year, I knew the sh*t was gonna hit the fan anytime soon. Folks invented products that nobody needed, wrote fancy business plans, made glossy presentations and websites, and (foolish) investors put tons of money into these companies in hopes of getting rich quick. (Choose when to work; Make more money; have more free time...) In other words, I knew something serious was going to happen, and I didn't want to become dependant on any online services.

    As it turns out, PayPal, eBay and some of the other related auction services survived the dot-bomb mess--I guess the auction is one of the killer apps of the web. Anyway, every time I hear about a technology company getting an IPO, I can already see where it's going. People tell about a nice little company with a nice little product. Management and engineering worked in harmony (because management were themselves engineers). The product developed successfully and a community developed around it. Finally, the company had an IPO, and greedy shareholders took over. From that point, it was all downhill. Suddenly the company puts more innovation into legal proceedings than anything else. The product becomes bloated and buggy. Customer service goes down the tubes. The shareholders milk the company for every penny it's worth, and if it happens to survive, they continue to milk it (but they don't actually care about the underlying principles of the company). In some rare cases, enough "good" folks buy shares to invest in the company for the long run, and when that happens, the company might actually remain caring (even if it becomes bloated and inefficient).

    I'm not saying this will happen in PayPal's case... but I've seen this happen to quite a few good small companies, with technically superior products, before they prostituted themselves, er, had their IPO.

  • by maggard ( 5579 ) <michael@michaelmaggard.com> on Friday September 28, 2001 @09:16PM (#2366814) Homepage Journal
    Of course the synchronicity of Robert X. Cringley [pbs.org] having a PBS special [pbs.org] on digital money next week is entirely coincidental...

    (Is it considered part of the pre-IPO quiet period to be featured on a nationial television special?)

    • Of course... When you file for an IPO, you can no longer toot your own horn, so let Cringely do it for you!!



      So, let's see... Cringely worked for Apple in the early days, he has had close ties with the founders of Excite and PayPal... That man is the unluckiest 'almost-millionare' ever... (Then again, I'm sure he makes a good living, and he doesn't have to worry about stock market fluctuations.)



      Hey, I may be anonymous, but I'm no coward.

  • The fine print.. (Score:2, Insightful)

    by Sheyala ( 520936 )
    Have you ever read the details about your account? I did, because I wanted to know if they made any kind of statement garunteeing that my money will stay mine.

    They dont.
    • They also keep any money you get in your "PayPal account" (which always made me wonder what their urgent need for my bank routing info was...they never put anything into my bank) to collect interest. I never had a problem with that, as it was part of their business model, but what I *did* have a problem with was when I needed that money and found out it would take them up to five business days to transfer it into my bank account. What, they can take money out immediately but not put it in until a week later? Unless there's some subtlety of wire banking I'm not aware of, this seems a rather shady way of squeezing as much interest revenue as possible out of my money. Fuck PayPal.

      -Legion

  • by Brian Stretch ( 5304 ) on Friday September 28, 2001 @09:28PM (#2366833)
    Yahoo! should buy PayPal and integrate it into their Yahoo! Store and Auctions infrastructure. Their existing PayDirect service was too late getting into the game, ditch it and convert its users to PayPal. The cut the credit card companies normally get for Store purchases could flow to Yahoo! when payments are made from a cash-positive PayPal account. The additional users from Yahoo!'s existing services plus advertising would be a big boost to PayPal. And no need for an incredibly poorly timed IPO. Win-win situation.

    Credit my consulting fee to my PayPal account, please ;-).
    • I don't like the idea of Yahoo! owning everything. It makes it too easy to do unfair trade practices.

      What if they decided free auction payments would only apply to Yahoo auctions, and not eBay? I personally like PayPal, and I want it to stay free, although it seems they raise the bar more and more every year.

      I used to be nice and let my money sit in my PayPal account to earn them interest to "thank them for their free service." Now I was forced to convert to a Premium account and pay around 3% on each transaction because I bought something that was over $100. Blah! So now I quickly transfer my money to my bank account and pay their damn 3% charge.
  • I blurted out, "Uh oh."

    I can just see the history of this company as soon as they get their IPO. It's not the stock values that I'm worried about. PayPal is one online entity that actually has their shit together. They have the backing of the strongest commercial online market, eBay. Although there are other third-party online payment options out there, PayPal has emerged as one of the most viable, most stable ways to transfer money safely using the third-party option. So, what's so bad?

    Just look at Microsoft's business plan over the last comple years and where it's going. IE --> Passport --> .NET --> ??? Basically, PayPal is going to do one of two things for Microsoft: they're either going to fit in nicely with the strategies of Passport and .NET, or they're going to stand in Microsoft's way. I tend to support the latter.

    Everyone has seen that "partnerships" with Microsoft don't work out. AOL certainly proved this fact well. Basically, Microsoft either assimilates or annihilates anything in the way of it's "business strategies." I truly do not believe that Microsoft will try to partner with PayPal in trying to create a personal e-business market for the average Joe. Granted, they haven't announced this strategy directly, but just look at things for a second.

    We all know that .NET is Microsoft's solution for merging personal computing with internet applications. We also know that Microsoft has been working on integrating Microsoft Passport within their operating system as the way to encrypt personal information needed for any website. Add the two together, kneed in the fact that companies have been trying for the past five years to merge internet and business, sprinkle with Microsoft's many attempts to turn the desktop into an internet appliance, and we have a very good hypothesis for where Microsoft wants you to go tomorrow...using your own computer for your personal business needs. Sure, they might not be the actual car dealers, office warehouses, or grocery stores that want to sell you the goods, but they certainly want to be the gateway of that transaction.

    So, enter into the ring another contender as the gateway of personal commerce online, aka PayPal, and Microsoft has someone ready to duke it out with. Unless something bad occurs over at Redmond in the next year or so, PayPal's going to be fighting one huge battle with Redmond's executives (and I wouldn't be surprised if Redmond's lawyers also get into the ring waving around a couple patent papers as well).
    • Two comments, yes when miscrosoft wants something they usaly get it, but might not this time, first paypal is an astablished setup and lots of people have accounts with the. next this is something we can do, if we put something up on ebay, we can state what forms of payment we accept, and just don't accept .net payments, I know I will not, i don't what to deal with them, also I don't trust ms with my bank info, you remeber the passport EULA, any data you use on it belongs to ms, well my money is my money not theres.
  • by MSisNOT4Sale ( 183186 ) on Friday September 28, 2001 @09:35PM (#2366842) Homepage
    I have a paypal debit/mastercard card and I must say I absolutely love it. I could get a check card from my bank but they don't offer me 1.5% cashback like paypal does and I would hate to lose my check card. With the paypal card I can easily keep at least 120-180 in my account at all times to pay for stuff when I don't want to use real cash.

    I'm definitely going to buy a few shares from them
  • Their business model reminds me of that Saturday Night Live skit with the commercial for that bank that takes pride in how many ways they were making change.

    When asked, "How can you make money making change?"

    The answer (and intended as humor): "Volume."
  • Now get five free shares with ever new account opened!
  • "When I say 'capitalism', I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism - with a separation of state and economics, in the same way and for the same reasons as the separation of state and church. A pure system of capitalism has never yet existed, not even in America; various degrees of government control had been undercutting and distorting it from the start. Capitalism is not the system of the past; it is the system of the future - if man is to have a future." - Ayn Rand

    • You mean like with child labor, slavery, and indentured servitude. Yep, I don't see how any red-blooded American couldn't be on board with that.
  • by friday2k ( 205692 ) on Friday September 28, 2001 @10:12PM (#2366924)
    Please folks, before you get over exited, I would consider that there is some panic on PayPals side involved in going for IPO, getting new capital in and expand RAPIDLY before others catch up. PayPal used to be pretty unique and the banks (even if Deutsche Bank [db.com] was one of the original investors), especially big banking, pretty much stayed away from them. Why did the banks do that? They thought a technology driven company like Paypal (and DigiCash [ecash.net] (today known as eCash Technologies), CyberCash [cybercash.com](aquired by VeriSign and others), GlobeSET [globeset.com](acquired by Trintech) and many more ...) never posed a threat to the big banks. Then Paypal started to do something you shall not do . Disintermediate the banks. Now the banks think, wow, they are stealing customers from us. So there are various new initiatives on their way. Visa 3-D Secure ( See here [visa.com]), which is _first_ aimed to eliminate consumer fraud but has extensions in the protocol for later P2P use, NACHA [nacha.org] has several initiatives on the way: ISAP [nacha.org] which is again _first_ an internet payment protocol but will carry into P2P later, Project Action [project-action.org] which will aim directly at the eBay Payments of PayPal. So they are afraid. They are afraid for a good reason. They need money to compete (and, according to rumours they are pretty much running out of it). So an IPO is a logical step. Maybe they will even make it in these difficult times ...
  • Bad news (Score:4, Insightful)

    by Anonymous Coward on Friday September 28, 2001 @10:32PM (#2366970)
    The only reason a company would IPO in this environment is they can't get cash any other way.
    • I'm sure they won't be able to place a new bond issue in this environment, but that is exactly what those rate cuts by central banks around the world are trying to deal with.... lowering the cost of borrowing for *solid companies*..... c'mon there are still solid companies looking to IPO and issue stocks on a secondary issue basis.... for example .... look at all those insurance companies that are demutualizing....
  • I'd invest (Score:3, Insightful)

    by nilstar ( 412094 ) on Friday September 28, 2001 @11:19PM (#2367038) Homepage
    This is the only, and I mean only .com-ish type company I'd ever invest in.... because c'mon folks, they are a market leader of a required infrastructure type website/system that the internet needs.... where would ebay be without this?
    • What about eBay? One of the major underpinnings of PayPals business in the first place?
    • eBay had tremendous growth before PayPal, and if PayPal didn't exist, their next-best competitor would take over...

      Perhaps you were referring to the idea, which they pioneered (well, the "free" service anyway when other companies charged a ton).
  • I understand that some companies are confident enough in such an unstable market situation to go public, but is this the right decision right now? Generally, a company wants to IPO when investors are buying... However, I don't really know much about their business model or how they operate, but if they have put themselves into the best position possible for on-line payment services, it has to be half decent. Let's just hope that they aren't going to become another statistic of the dot-com meltdown. Who knows: maybe they can be a cornerstone of support for the Tech sector in the coming months. It'll be interesting to see how they come out of this.
  • they are (with the possible exception of eBay) the most unaccountable and uncontactable organisation on the planet. Fucking PENDING, these pricks have got $300 of my money right now which I have been trying to get back for over a month. It's fucking organised crime. SHUT THEM DOWN.
  • PayPal is featured in the PBS special "Electric Money" on PBS next Wednesday. This special looks at the recent history of money as it mostly now exists as electronic transactions. The series was made by Mark Stephens who made the two PBS "Revenge of the Nerds" series and writes the Cringely column on the PBS web site.
  • I hadn't used my account for some time and had no idea it was no longer free until I sold something on eBay. When the buyer paid me I checked my paypal account and found out they took 3% without notice. Without asking. I have closed my account and now use the pay service yahoo provides. It is free. Any company doing an IPO is clueless. Either the folks at PayPal are greedy or stupid or they are hurting for cash. If they're hurting for cash then that's a good sign that their current business model is not sound. So
    by charging people for the use of their service isn't working what will?

    nuff said.....

  • Doesn't it cost money to ipo? Underwriting costs, marketing costs, etc...

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