The PayPal Phenomenon 184
An Anonymous Coward writes: "Pretty interesting and thorough history of PayPal." Not really the usual fare on Slashdot, but this is a very readable account of one of the few dot-com successes. I find PayPal pretty annoying today - a lot of the anti-fraud, privacy-invasive measures which this article applauds make Paypal much less enticing to me than it used to be. And they've been accused of squatting on people's funds at the slightest excuse. But maybe that's the way to success: start off with a very appealing product, then slowly tighten the screws.
eBay was crucial here (Score:5, Interesting)
eBay provided the fluid marketplace that created the situation where that convenience overrode the inherent mistrust of a newcomer like PayPal.
eBay brought the idea of the auction as a sales model to the forefront of the net, they also pioneered community based trust mechanisms that let their model survive even though they don't back transactions directly (something that would have quickly invalidated their business model).
What was supposed to be a concept that allowed high-brow concepts like online media micropayments seems to have come about largely because of the requirements of some people to sell $5 pens and beany babies.
Probably important not to forget that no matter how large the venture capital some firm gets to change the internet, most likely it won't succeed unless we decide it will.
Re:eBay was crucial here (Score:2)
Re:eBay was crucial here (Score:1)
Thus eBay sellers started hawking PayPal in their auction pages. Compared to CyberCash* who tried dotcom-style advertising blitzes, it was a genius marketing plan.
* I don't know if I got the name right here, but there was some Internet money place that bought cheezy softporn-looking ads on half the city buses in San Francisco.
Buzzwords and Factoids (Score:2)
Micropayments are much smaller than that. The oldest micropayment project I know of, Millicent [millicent.com] originally hoped to process payments as small as one-thousandth of a cent (hence the name), though now they talk in terms of tenth-cent to $10 payments. And obviously such small payments would not be individually authorized! A typical merchant would be a web site seeking an alternative to ads (the money's not there) and subscriptions (not enough people willing to pay in advance).
And your description of EBay's role in PayPal's success ignores the facts. EBay has its own transaction system, remember, and do all they can to encourage buyers and sellers to use it. It says something about the strength of PayPal's service that they can steal customers from a competitor with such a built-in advantage.
Re:and it runs on LINUX (maybe) (Score:3, Informative)
no, the webservers are running the abovementioned OS/servers. What the back end is could only really be stated by someone familiar with PayPal's back end structure. For all we know the back end DBs could be Alphas, AIX.. or even eNpTy.
.. and even the webserver info string could be falsified; it's trivial in the code or config. Don't assume simply by a webserver version response.
-'fester
I dunno... (Score:4, Interesting)
I've never really had anything but a good experience with PayPal (and I've used it *heavily* for two years now). Maybe it's just my good fortune.
Well, okay, I do have one small gripe. Apparently, their site cannot be convinced that a certain customer of ours is browsing from the U.K., and as a result he's having to send us a check (brits read: cheque
Hopefully their money market fund will see a bit of a recovery soon (1.9% == blegh), but hey, there's a whole slew of investment vehicles that aren't doing so well at the moment. Such is the state of the economy.
As for "overly tight fraud prevention measures", I'd like to hear from people who've simultaneously run a company basing his/her online transactions on "true" merchant account methods. Most e-based merchant account providers/processors don't place nearly the emphasis on security that PayPal does, and chargebacks are a real bitch (not to mention quite bad for P.R. if the customer who got ripped off is particularly angry about it).
Just my brief experience in these matters. Replies are very welcome!
Re:I dunno... (Score:5, Informative)
The page lists all sorts of articles with negative comments about Paypal. Apparently it has gotten a 3 out of 7 on Reseller Ratings [resellerratings.com] (where everything is scored by customers). They also have a Paypal Wall of Shame with "unedited horror stories".
The thing that grabbed my attention the most, however, was the following on the front page:
WARNING:
Your Paypal account can be frozen at any time, without advance notice leaving you without your money for weeks (if not forever), and there isn't much you can do about it.
Any thoughts, folks?
Re:I dunno... (Score:4, Insightful)
Thank you for the reply! I definitely see where you're coming from on this topic, and think that all cases of abuse at the hands of a financial institution (or pseudo-institution, as the case may sometimes be) deserves close scrutiny.
However, the situation is always more complex than that. For example, a couple of quick minutes on Google yielded the following unto mine Konqueror:
Basically, pick any financial institution or payment processing company "X" and search for a hate site associated with it. You're almost certain to "win" each time. Now, I'm not saying that these companies are blameless by any stretch of the imagination. Case in point, I actually got messed over by Bank of America while I was working on the development team that wrote their telephone banking system software. Needless to say, I got the errors corrected rather quickly.
The problem is simple: any company doing business of any sort will come up against opposition, disgruntled customers, angry stockholders, etc. It's oftentimes difficult to weed out the "fact from fiction" in a lot of cases involving complex issues. I don't think there's a major national bank in existence that hasn't dealt with a major class-action lawsuit over policy issues.
That's where the trick comes in. These days, almost all institutions, from banks to brokerage houses, have strict and specific verbiage allowing them to "hang on to your cash" in the case of a perceived conflict. PayPal isn't even close to the worst I've seen of that sort of practice.
I suppose it really does come down to individual experience (and group communication of experience, very valuable). As for the sites that report on the misdeeds of these organizations, I say rock on. But, we've got to balance everything out. Frankly, PayPal has taken a heck of a lot less heat than is typical of a "newcomer" in the field, especially given the unsteady ground they started out to build their revenue stream on initially.
I attribute their success to good management. That doesn't mean they'll always have the benefit of intelligent people at the top, but as long as that's reasonably enough the case, I'm okay with them.
On the other hand, if they burned me badly I'd probably be first in line to register "GodIHateThoseScrewyBastards.com" too. It's just human nature to attempt to right wrongs, and I could even be in the wrong in that case without knowing it... almost makes my brain hurt trying to wrap the grey matter around that part.
Thank you again for the thoughtful reply!
The only difference is Banks (Score:2)
Re:The only difference is Banks (Score:2)
And I don't have much confidence in the government keeping banks fair for consumers. If you make a mistake with your account, you pay penalty fees. If the bank makes a mistake with your account, you spend hours arguing to get it corrected, and you don't get a penalty fee. The regulations are tilted heavily in favor of banks. Maybe it has something to do with the amount of money banks spend on election campaigns, or politicians' hopes of cushy positions after they get tired of running for office.
Banks have been heavily regulated since (Score:2)
Re:I dunno... (Score:2, Interesting)
Since in the credit card world (maybe it is different now) you don't see your statement until almost 45 days after some transactions, we had no idea this happened.
I called the bank. They looked into it and refunded the two charges from the stolen credit cards (so there goes $3000 out of my account) froze my account until further notice. And said it was all fixed. My contact at the bank could not understand why I was upset.
But what about the $3000 we refunded? I talked to their security guy, he said their system was secure and a red flag went off in the system when the fraud happened. When he traced it back, he reported the agent that found the fraud was Chet... my name. Yes! I am their security. That money was gone.
Our account was frozen for over 2 months. We lost both the refunds and magically, though they could give those people their refund, they could not refund us our stolen money.
This from a major bank, the Huntington. Paypals warning is only they act like every other bank when it comes to processing charges. The customer is right, the merchant is wrong. The merchant be damned.
I think the paypal outcry is only louder because many of these people have tiny little business, that had never experienced this lovely situation before. Ask a merchant about credit processing and watch the veins in their forehead grow.
Chet
Whatever happened to the Palm program (Score:1)
I was looking on the PayPal website, but could not find anything.
Anybody any ideas ?
How they succeed... (Score:5, Interesting)
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.
Re:How they succeed... (Score:1)
Is it just me, or is this just as bad as those paste trolls? Maybe worse, because he's getting karma for no effort?
Gosh, you think? (Score:4, Funny)
Wow, have you thought about writing an e-commerce strategy book? No-one's ever come to that conclusion before. Incidentally, how much are those /. subscriptions going to cost?
Re:Gosh, you think? (Score:2)
Sadly, your comment is rated as funny, and it is funny sadly because it is true. Great job!
PayPal. Nice idea, but it has it's problems. (Score:5, Informative)
Here's a nice outline of why PayPal's implementation is NOT very conducive to regular transactions.
http://www.gamers-union.com/paypal.html [gamers-union.com]
Also interesting to note, a few days after this page went up, PayPal yanked service on the W3 storefront they'd been providing for this individual.
And now he will no longer accept PayPal transactions.
Unfortunate, but very necessary to protect himself and his customers.
Re:PayPal. Nice idea, but it has it's problems. (Score:3)
If you're unwilling to do this, I can only assume you're in the wrong.
Paypal Doublebilled me BIG. (Score:1)
There was NO procedure to rectify the situation in a timely fashion-they blamed their software, of all things.
I was double-billed over $500.
I will ***NEVER*** use Paypals again.
Vinylone.
You should have called your credit company. (Score:3, Informative)
You should have read the PayPal agreement. (Score:1)
I suggest you _read_ their agreement. You cannot refuse a charge from Paypal, you agree to settle it on THEIR terms.
People have reported in the past that PP just recharges their CC - as they are allowed to do per your contract.
Addison
Re:You should have read the PayPal agreement. (Score:1)
Did you read the article? As it notes, they can't enforce that term due to their contracts with VISA/MC (and, probably, legal requirements). If they could, then any other merchant could do the same thing by printing such language on a charge slip.
That said, there's nothing to prevent PP from coming after you for a legitimate charge that you've disputed. For that matter, there's no guarantee that a chargeback will be resolved in your favor--if PP can convice your card issuer that the charge is legitimate, it stays.
Re:You should have read the PayPal agreement. (Score:2)
Paypal is concerned about people, say, depositing money from credit card, paying an auction with it, then, because they feel they are getting scammed or something, cancelling the credit card charges (which they should NOT do, because, as far as the transaction with paypal goes, the charge was completely legit.)
All PP would have to show is that you deposited the money (as opposed to, say, your account being stolen and the card being abused). Period. Because if you did, regardless of what happened after, the transaction was legitimate.\
Re:You should have read the PayPal agreement. (Score:1)
Re:You should have read the PayPal agreement. (Score:1)
They might not go to the trouble, but I think they would.
Addison
Re:You should have read the PayPal agreement. (Score:2)
If PayPal fraudulently charged your card, ie: double-billing you for a deposit, and you cancel it.. yes, paypal can refuse to do business with you again. But they cannot hold YOU responsible for any fees; the charge they made was illegal in the first place. Regardless of what a contract says.
Now.. if you were cancelling it for some OTHER reason, not related to paypals' actions, ie: you think you are getting ripped off by someone in an auction... yes, I can see paypal's point. They acted in good faith; the billing wasn't fraudulent, so why should you be able to cancel it?
Re:You should have called your credit company. (Score:2)
Re:PayPal. Nice idea, but it has it's problems. (Score:3, Insightful)
- If you're unwilling to do this, I can only assume you're in the wrong.
Or maybe, just maybe, the cost to rectify the situation through legal channels just isn't worth it. By costs, I mean time invested (several hours at a minimum), financial costs and the frustration of dealing with the system. Couple that with the fact that you don't know if you're actually going to get your money back, let alone any compensation for having to fight the system and all the heart-ache, its little wonder that most people don't resort to doing the right thing. Just because you're morally right, doesn't mean the system is going to back you up.From your arguement, I can only assume that you have righted every wrong through all necessary channels, and that you are hiding behind your real name, which is Super Man, Buffy or Mr T.
Re:PayPal. Nice idea, but it has it's problems. (Score:1)
Oh my goodness, how right you are! NOW I've learnt the error of my ways. I shall never again fight injustice, nor implore others to do the same. I shall sit in my little veal stockade, moving three inches forward and back and two inches side to side. I will thank the farmer for the alfalfa hay, and silently bow my head when they bring the humane killer.
Not.
Look, I'm fully aware of the FACT that sometimes when you go up against the big boys, you lose and get bruised. You need to be aware of the FACT that your actions and inactions have repercussions beyond your own life. So forcing someone to acknowledgte that they're wrong is a hassle. Deal with it. The more you do so now, the less you (and others) will have to do so in the future.
Re:PayPal. Nice idea, but it has it's problems. (Score:2)
Re:PayPal. Nice idea, but it has it's problems. (Score:2)
Re:PayPal. Nice idea, but it has it's problems. (Score:4)
I would say the person you sent the money to should be sending you the remainder of the cash, or delivering the items.
The fact that he couldn't get his money out of paypal is between himself and paypal.
Paypal is *very* clear that bank transfer fees will not be refunded if you do them wrong (because it costs paypal money if you do it wrong). This includes transfering to a bank that doesn't exist, or won't accept transfers, etc (I believe). It costs paypal money to attempt a wire transfer, and to sort it out later. There's a reason they charge money for this.
Also.. why did this guy try again adn again? after it failed the first, time, he should have been on the phone to paypal to sort it out properly.
This is not a failure on paypal's part. Paypal is not a credit card. Paypal is not there to 100% protect you. They are there to factilitate transfering money.
Also... this guy needs to contact paypal to sort things you. It's HIS account that's having the troubles.
Re:PayPal. Nice idea, but it has it's problems. (Score:4, Informative)
you cant call them or email a live person. you only get their automated responses..
Sorry, but any bank that ignores all it's customers is a scam, and Paypal is a scam, plain and simple... If they want to prove to me they aren't then have a live human respond to my email instead of the canned computer responses.
I reccomend to everyone I know to avoid paypal like the pleague and expect to get money stolen from them by paypal with no way of ever getting it back.
Paypal can fix that, Hire people to answer email and publish a phone number.hn
Re:PayPal. Nice idea, but it has it's problems. (Score:2, Informative)
Paypal Inc
1840 Embarcadero Road
Palo Alto CA 94303 USA
Phone: 650-251-1100 Fax: 650-251-1101
Paypal doesn't like phone calls (Score:2)
I tried to call Paypal several times. It seems they have let go most of the staff. You get an automated machine that suggested using their web site. In my case, the issue was a problem with their web site server giving a stupid error message, so I could not use the web site. And these guys dared to spam me because there's an account I could not close?
They may appear to be a dot.com success, but in my mind they are a failure. And I do expect to see them go bust at some point, given the degrading quality going on there. As you may see below, my /. signature tells more.
Re:LOL (Score:2)
The receiver owes this guy some money still (the money paypal lost).
No. (Score:1)
+3 informative? We need a -2 Disinformation moderation.
Addison
The nature of the beast. (Score:2)
Service doesn't factor into the equation the way it used to -- People buy pretty much exclusively on price or market presence.
To satisfy either, you've got to spend every available dollar on advertising until your competitors are gone, or you need to operate with little profit (or at a loss) to start with.
Getting a foothold in big business today is pretty much a starving contest. <overgeneralization type=slight>Quality products and customer service only work when you're pitching to old folks and the rich.</overgeneralization>
expertise (Score:2, Troll)
I don't know about this.
Maybe that is where they started, but they obvious developed a sophisticated understanding of how finance works, just for things like their internal fraud detection software, for example.
God in Heaven... (Score:5, Insightful)
Michael. Do you look for reasons to bitch? I swear to God, wannabe privacy advocates piss me off. How do you expect PayPal to do business such as it does (WITH ACCESS TO YOUR CREDIT CARD) without a modicum of personal information, hm? Do you think it would make good business sense for PayPal to say "You know, we don't need any of your personal information. Just give us your credit card number, and we'll base our business on the honor system."
Yeah. Right.
I strongly recommend you have a look at Paypal's Privacy Policy [paypal.com]. Since you're obviously doing some blind, ignorant whining about subject matter with which you have absolutely no clue, I guarantee you've never even clicked on the privacy policy. PayPal does their best to explain what information is gathered, why it's gathered, and how it's used. If you don't like it, don't use the service. But don't complain.
Michael's comment absolutely reeks of "I'm with Stupid", "follow everyone else's opinion" mentality. "Wow. The community is really for individual privacy! It's time for me to attempt to gain acceptance with my (cough) peers by complaining about privacy-invading goons!"
Yes. Privacy is important. However, when you choose to conduct business over the internet with a credit card, bitching about a company doing its best to protect yours and their asses only serves to make you look like (more of) an idiot.
Personally, I've had nothing but excellent service with PayPal. It's nice to be able to accept credit cards, or use credit cards to pay for something without a whole shitload of messy paperwork. I've got to give PayPal a lot of credit. They've become a very successful online transaction service, and pretty much the standard auction payment system on eBay. (Ah, no need to worry about sending checks or money orders through the mail. Instant payment rocks.)
Re:God in Heaven... (Score:3)
I normally try not to be overly critical of most people I run into online (at least not in a bitchy way, moderators included), but I've got to agree with you on your stance concerning Michael's apparent delusional expectations of total privacy in the area of online transactions.
As a case in point, I'd like to mention that I know several folks personally who run small to mid-size online businesses. The majority of these people have access to (and use) "true" merchant account processing systems, some online and some offline (via batch at the end of the day). Even so, again and again I hear the same general sentiment when it comes to PayPal:
"When I have doubts about the nature of a large transaction or have concerns over fraud, I use PayPal in lieu of ordinary merchant channels."
To all who might support Michael's (seemingly ill-informed) stance on the issue, note that that's not me speaking, it's a LOT of people I talk to routinely. PayPal has built a reputation on taking exceptional care to prevent online fraud, through a variety of verification mechanisms. Not only that, those mechanisms are easily configured through the browser by accountholders. You can make fraud passing through you account as easy or difficult as you want, depending on your needs and the relationship with your customers.
Thank you, Accipiter. Micheal, please research this stuff more before you go off on one-line rants. Of course, you could always talk to the folks over at ThinkGeek; I'm certain they would be happy to impart their experience in transactions processing to you (I mean this in all seriousness, education really is a Good Thing).
Re:God in Heaven... (Score:2, Insightful)
Would you hire a babbysitter who would not tell you their name? The more truth you know about someone, the more trust you can have to participate in a transaction with them.
Privacy is great for some things, but building a community of trust is not one of them. We need to move beyond the knee-jerk privacy=good mindset to a more balanced view seeing the costs and benefits of privacy and transparency for particular situations.
Re:God in Heaven... (Score:4, Interesting)
Unfortunately, as of 11/13, you won't be able to receive credit card payments any more with a personal account. Copied from their Policy Updates page:
Notice Date: October 11, 2001
Effective Date: November 13, 2001
To reduce the costs associated with credit card processing, the ability to receive credit card funded payments will become a feature reserved for Premier and Business accounts. Personal Accounts that receive credit card funded payments after 11/13/2001 may accept the payment by upgrading to a Premier or Business account, or they will have to deny the payment. Personal accounts will continue to be able to receive non-credit card funded payments for free. Once upgraded, Premier and Business Accounts may receive unlimited credit card funded payments.
Re:God in Heaven... (Score:1, Informative)
Re:God in Heaven... (Score:3, Informative)
I can no longer use PayPal, without anyone I'm sending money to, upgrading to a Business account.
Nice way to force everyone to upgrade
and that's the end of eBay as peer to peer (Score:3, Interesting)
Note the transition from peer to peer systems to one/many systems. There's something important to be noted from this.
Not really... (Score:2, Interesting)
Am I annoyed at the change? Yes. But at least they haven't blocked me out completely. All they're doing is taking a cut - same as eBay does.
Anti-Fraud Measures (Score:3, Interesting)
What are your barriers to entry? Technology? Network economics?
The nutshell answer: Security & Fraud.
The network effect will get bigger and bigger over time. Until recently, we did have all these copycat competitors and they did have difficulty gaining network traction, but their ultimate downfall was fraud. There were a number of these companies - from Payme, Payplace, Paypro, ExchangePath - that went out of business because of the fraud issue. They didn't run out of money, or not get investors to invest. They got killed on fraud.
"Fraud Prevention" (Score:3, Interesting)
I recently bought a high-priced item over eBay and wanted to pay for it through PayPal. Unfortunaly, the item's cost was $20 over my "unverified" user limit. In order to continue getting use of my account, I must give them a bank account number? Are they insane?
I ended up just sending the guy a postal money order. I was willing to verify a home address, but a checking/bank account is going too far. I guess I'll just sign up for another account...
Re:"Fraud Prevention" (Score:4, Insightful)
Other than that, you're not allowed to have two personal Paypal accounts. Once they find you doing that (and they seem to have some krad-sophisticated-systems for that) you'll end having both accounts suspended and banned from using their service.
Tom
Re:"Fraud Prevention" (Score:2, Flamebait)
Are you?
Paypal is certainly not all light and puppies as others here are saying (ignoring Michael's knee-jerk rambling for a moment), but what do you expect them to do?
You did read their terms of service before you got started, right? You did know that that was their policy for transactions over $1,000? If the answer is no, then it is your fault for not knowing.
And two, how do you expect them to secure large transactions? Fraud is probably their primary source of loss. How is an easily-faked address confirmation going to do anything if you walk off after a $2,000 buy? Seems a reasonable policy to me. If you don't like it, don't do business with them.
If you're that concerned about giving that information out, I'm sure you never write a check or use your debit card for purchases.
Paypal (Score:1)
The biggest problem limiting paypal in my opinion is the lack of integration tools with websites. You either have a manual process or trust a URL send back that the user can readily see. They need to have some kind of b2b hook up that you can read transactions off of or something. (just stuff like bob2@domain.com went through for X dollars...no cc#s necessary on that side).
-Andy
Re: (Score:3, Informative)
Re:Paypal (Score:2)
Re: (Score:2)
paypal only wants... (Score:2)
Speaking of complaints... (Score:1)
Oh, and I'm pretty sure I could keep a real bank from spamming me mercilessly.
Re:Speaking of complaints... (Score:3, Informative)
How bad are the fees? Credit Cards are scary expensive to accept. First you pay the discount fee, anywhere from 2.5% to like 3.75% or worse if the address verification fails. Plus you have to pay the processor (the place that processes the transaction. Either via a monthy fee ($25 to $100/month), transaction charge (like 25 cents or so) or both. Then you have to pay the bank that maintains your merchant account - they charge you $10 just to send you a statement each month. Then they charge you the minimum discount fee - usually $20 or so which means if you only have a couple transactions that month and the discount charges are So is paypal this bad? Credit cards are nice - no doubt. Easy to challeneg, etc. But you also have to realize they are clamping down on online merchants HARD. They now have VERY detailed security policies in terms of where CC info can be stored, how its encrypted, etc. This is a good thing, but it adds to the cost.
So don't assume it'll be a cake walk with credit cards.
Paypal sucks (Score:1, Informative)
Kenny
Their definition of "fraud" is a little thin... (Score:2, Interesting)
I was putting together an old laptop for a friend of mine and tried to buy an old retail copy of Windows 95 to put on it. Color me strange, but I was actually trying to do things the legal way. To make a long story short, I paid for retail and got OEM.
After trying to talk the seller into a refund for a week or so, I gave up and took the matter to PayPal. Blah blah blah retail was pictured but got OEM instead blah blah blah violates Microsoft's license blah blah blah claimed to be "fully legal" but wasn't... (I didn't point out that if I wanted to use Windows 95 illegally I wouldn't have paid $35 for it)
After a few days of their "investigation process" I got a form letter from them telling me that, because I actually got something, they won't get involved. To quote it:
So even though the attribute in question was "legal/illegal," it's Somebody Else's Problem (TM).
I could understand their position on this if it weren't for the fact that, if I had mailed a money order instead (ie. used a competitor), this would have fallen under the category of mail fraud. But instead I'm now stuck with waiting for eBay's manditory 30-day waiting period to end so I can complain to them and see if anything happens.
Right now it seems that PayPal is working hard to make sure I get my shiney, over-priced, drink coaster with the Windows logo on it, while my best bet to get most of my money back would be to take the guy to small claims court in New Jersey. Thanks PayPal!
Re:Their definition of "fraud" is a little thin... (Score:2)
Re:Their definition of "fraud" is a little thin... (Score:1)
PayPal sucks (Score:2, Interesting)
Paypal experience as a internation user (Score:1)
I've had to deal with Paypal twice in regards to this... and thus I will never do so again... though I did *prove* to them I wasn't committing fraud.
It's a great service, if you want them to hold onto your money and never let it go.
Great service until you think about what they do...
they take your money, and charge you service fees, banks take your money and no fees.
banks give you interest on your accounts.
paypal, no.
banks don't charge you a service fee while closing your account.
paypal does!
summary, paypal is a ripoff.
Just think about it, before using their service...
Fraud Sucks (Score:5, Interesting)
It's easy for guys like our infamous slashdot editor to comment:
Well, that's an armchair critic opinion if I've ever heard one. PayPal is now less enticing to "michael of slashdot".
The cold reality of the world is that there's a small number of crooks out there who will commit fraud, given the opportunity. Any party in the transaction who may be exposed to the potential for a loss would be acting irresponsibly by not taking reasonable measures to detect fraud before making the transaction.
In the conventional visa merchant world, the consumer is protectedby the fact that their bank will handle their dispute with the merchant and issue a chargeback to the merchant to recover the funds.
The bank is protected by their ability to issue a chargeback to the merchant. If the bank believes the merchant may not have the funds to cover chargebacks, they will hold a "reserve", which basically means they won't give the merchant some portion of their money for many months, sometimes even a year or two! (we had this shitty situation when we got started and consquently had to carry quite a bit more debt than we expected as we weren't getting the money for most of the products we sold!)
The merchant isn't really protected by much of anything in the conventional visa transaction, other than their own efforts to verify that the buyer really is the legitimate cardholder and that the goods are shipped to the correct destination. Actually, a card swipe and signature are more-or-less proof that the buyer received the goods, but with internet and mail order sales, it's a risky business for the merchant.
PayPal is in a tough situation, being in the middle of a transaction. It's really amazing that they can make this work at all, built on top of the conventional infrastructure which puts most of the risk onto the seller's side. They really need to do everything they can to detect and prevent fraud... even if it doesn't appeal to michael's tastes.
PS: I will agree that it's very un-cool to take personal customer information and use it for any purpose other than the reason it was provided. We don't do this, partly based on ethical grounds, partly because we're so small that there's no incentive, but mostly because nothing is more important than satisfied customers.
Mod this one up guys. (Score:2)
Re:Fraud Sucks (Score:2)
What is needed is a better way to transact safely over the net.
A mechanism where a buyer can confirm his identity to his payment source (credit card company or bank) would help eliminate fraud on the part of buyers (e.g. stolen cards and such). When the buyer goes to some shopping site, and checks out with their full shopping cart, they get a transaction code with a link to a central clearing house. That clearing house then lets them select their financial institution and passes the (possible remapped) transaction code to their site via another link. Now at the site of their financial institution, the buyer provides his identity and confirms request to pay the transaction. Actual payment goes behind the scenes, but can be tracked using those URLs and transaction code. When the seller gets the code on his server, the transaction (shopping cart) is updated to reflect payment and the order can be shipped.
Now this does protect the merchant against fraud on the part of buyers ... to a certain extent. If the buyer has a legitimate account, and made an actual payment, and then uses the complaint process to claim they never received the goods, or received the wrong goods, or broken goods, the merchant can still be screwed. That is, unless it was the merchant doing the nasty and actually not sending the goods.
A truly secure, both-ways verified, transaction system perhaps could be done, but it would cost a lot of money. Still, a stronly verified payment system could be useful when the parties do trust one another already. But then, if a merchant trusts a buyer, they can ship now and get a check later. The problem is, establishing such trust is uncommon.
Papal may be financially successful but..... (Score:1)
Papal will seize your funds and never look back. The only way you can protect yourself is to make sure you use a shipping service that will let them check delivery of the item ONLINE. They are too lazy to pickup a PHONE or read a FAX.
Competition for Papal wouldn't be too difficult. Simply provide the same service but have some competent customer care people there to resolve issues. If you think my diatribe is unique, check out http://www.paypalsucks.com.
Some useful sites, and tips to stay safe. (Score:4, Informative)
Some of the problems can just be attributed to "shit happens," but in many cases, Paypal is guilty of out-and-out theft: when they receive a complaint about a single transaction, they often freeze the accounts of everyone involved, and then do everything possible to make themselves inaccessible by phone or e-mail so that the accounts can never be unfrozen. They've just walked away with someone's money. Good job.
Anyway, here are some useful links that have many, many testimonials of bad experiences:
Paypal Warning [paypalwarning.com]
Testimonials [paypalwarning.com] from above site.
PaypalSucks.com [paypalsucks.com]
Based on the testimonials I've read, here are a few ways I can think of to make the Paypal experience as safe as possible.
1. NEVER leave money sitting in your Paypal account. Withdraw it IMMEDIATELY. They will freeze it, or steal it, if they get an excuse to do so -- any excuse will do. Don't be tempted by their "Paypal Money Market Fund". That 1.2% APR isn't going to make you rich. You'd be better transfering your money to your bank where it can't be stolen. They can't steal what isn't there.
2. Try to avoid setting up a bank account on Paypal or giving them your checking account number for any reason. They do everything in their power to convince/force you to set up a bank account, which should give you cause for suspicion. If you give them your checking account number, they can (and will) withdraw the money from your bank account at any time without permissions.
3. If you must set up a bank account with Paypal, contact your bank and tell them NOT to allow Electronic Funds Transfers from Paypal without your approval. Unlike with a credit card, there's no way to dispute EFT charges. Get this in writing from your bank.
4. Check your credit card statement carefully each month, and chargeback any mysterious charges immediately -- but not if you have money sitting in your Paypal account or they have your bank account number, because they will take your money away from you if you do a chargeback. Get your money safe first, then call the credit card company to do a chargeback.
5. Try to avoid using a debit card -- you have no fraud protection, and if the debit card draws from the same account as the bank account you have set up in Paypal, you might run into some problems because of the way Paypal does things. If you have $600 in your bank account, and you try to make a $500 Paypal payment from your bank account, it'll bounce! Why? Since bank transfers take 3 days, Paypal wants to avoid finding out 3 days later that there's no money in the account, so they use your credit/debit card to "secure" the transaction by "locking" $500 on the card and then releasing it after the bank transfer clears. So now, when you've tried to pay $500 from your bank account, Paypal has locked $500 of the $600 in the account, leaving only $100 in the account which will make the $500 bank transfer bounce. The bank will charge you a bounced transfer fee, Paypal will charge you a fee, and you'll be unhappy with the whole situation. Sometimes even when the transaction DOES complete, they still don't release the "hold" on the card for days, weeks, months, or ever.
6. Do not use Paypal for large transactions. Use some sort of escrow service. With the incredible fees Paypal is charging now, it wouldn't be much more expensive.
7. As an alternative to Paypal, consider using E-Gold [e-gold.com] instead. Instead of dealing in a national currency like Dollars or Pounds, it uses actual physical gold as currency: you actually own a stake in the vault of gold that the company owns, and you can send/receive electronic gold from others as payment. It's very expensive to get involved, though: getting money into an E-Gold account requires you to go through a currency exchange service (E-Gold does not offer this service directly) which generally charge a 15% conversion fee, and 1% of your balance is deducted per year.
The cool thing about E-Gold, though, is that if you buy 5 ounces of gold, you'll always have that 5 ounces of gold in your account no matter what happens to the value of gold or to your national currency. If you spend (for example) $200 on 2 ounces of gold, but six months later the price of gold has risen from $100/ounce to $300/ounce, you'll still have that 2 ounces of gold -- but it'll now be worth $600. Pretty nice, eh? A lot nicer than Paypal's 1.2% APR mutal fund.
Anyway, use Paypal if you have to, but be safe. Minimize the opportunities for them to steal your money. Don't use them as a bank. They're not a bank; they're not regulated as a bank, but they want you to use them as a bank so that they'll have more chances to take your money.
Play it safe, and you should be okay.
Re:Some useful sites, and tips to stay safe. (Score:1)
Re:Some useful sites, and tips to stay safe. (Score:4, Informative)
You can also setup a new checking account just for use with PayPal. If you do it at the same bank as your main checking account, it should be a piece of cake to transfer money between the two as needed.
Re:Some useful sites, and tips to stay safe. (Score:2)
Re:Some useful sites, and tips to stay safe. (Score:2)
If you spend (for example) $200 on 2 ounces of gold, but six months later the price of gold has fallen from $100/ounce to $50/ounce, you'll still have that 2 ounces of gold -- but it'll now be worth $100. Pretty nice, eh?
Re:Some useful sites, and tips to stay safe. (Score:2)
I've ended up having a large sum of money locked in my checking account over a weekend while PayPal processes it for a few days. I was paying my rent through PayPal, and had twice it taken out (half of that temporarily as a 'lock' as mentioned before). Needing some cash that weekend, I was suprised to see my account so low. After dealing with my bank, I attempted to get a hold of someone at PayPal for hours. Finally getting someone to help me, the person on the line explained the situation, explained his inability to do a thing about it, and accused me of threatening him when I asked for his name. I was upset but understanding until that accusation came out. Didn't know asking for a name, so I could deal with him again in the future, would be mistaken as a threat.
X.com (Score:4, Interesting)
Re:X.com (Score:1)
I've been using paypal for several years now, though, and haven't had a single bad experience. It makes my life a lot more convenient.
X.com == PayPal (Score:1)
Simple flaws (Score:1)
It really is a pain when you've got 1800$ in your Paypal acct, and it refuses to withdraw to your chequing acct even though you've input the info to the best of your knowledge. It would be great if Paypal's support staff were a little less anal and a little more patient in trying to help you spot the error. Even after faxing them a void cheque, they still couldn't tell me what was wrong in my case. In the end, my problem was a leading zero that was missing from my routing number.
I don't know about you, but where I'm from, 1800$ is more than enough to get someone whacked over such a stupid problem, using either a lawyer or a big-guy-with-a-gun. I would have expected their procedures and policies to improve over time (this was over a year ago), but they obviously have not, since I still hear similar stories every few weeks.
Re:Simple flaws (Score:2)
I have been pretty dissapointed with their dealing with various credit card issues and bank account issues for Canadian customers though.
Gold baby (Score:1)
Bugger it, anyway, gold baby gold. e-gold [e-gold.com]is the biggest electronic gold clearing house at the moment.
It's much more fun to pay in gold rather than dollars. And talking about ounces of product gets some great reactions
Anti-fraud features (Score:2, Interesting)
Blake
hmm.. (Score:1)
If someone does get a wild hair, contact the SEC as well as their lawyer and see if they can make heads or tails out of what PAYPAL is doing with their $$$ and is it considered to be a violation of US law.
As usual, IANAL, but knowledgable in in public law. It keeps me from being bothered by telemarketers.
Where have I heard this before... (Score:2, Interesting)
I remember way back when ebay started you could sell most anything and not give them a credit card number. When they started making profits, they started banning things because they were "immoral"(aka we dont want to take a risk when we are losing money but now that we are making it....). They also used to require almost no security check for anything. Now they require a credit card number, and 10+ feedback for using certain features(hey, I am totally glad they have it). It seems that it just might be a good strategy, start a service thats easy to get into, and once you get people hooked, clamp down.
Unisys 0wns PayPal (Score:1)
I tried to sign up for a PayPal account, but the form asked me to copy letters and digits from a noisy GIF image to a text input. I know they do this to keep bots from signing up [kuro5hin.org], but such a technique fails to distinguish these users from bots:
Re:Unisys 0wns PayPal (Score:3, Insightful)
E-commerce in general can learn something here... (Score:1)
* Focus on the customer. Understand the market; be responsive to real-world needs; act with an obsessive customer orientation.
* Keep it simple. Keep it understandable; make it easy to use; let simplicity itself be the key competitive edge.
* Exploit the Internet. Play by Internet rules; develop new features that leverage the Internet; use the Internet as the dominant go-to-market channel.
* Design for adoption. Eliminate as many adoption dependencies as possible; make it easy for target customers to become registered users; keep providing compelling reasons for registered users to increase their use of the service.
* Think incrementally. Start small, get market feedback, and then incrementally make it a little better. Remember that big things grow from lots of little things.
* Costs matter. Price the service to reach critical mass first; adjust the pricing for profitability later; obsessively drive down internal costs at every opportunity.
There is nothing magical about this approach; others in the financial services industry should be able to follow the philosophy behind these rules--and the many lessons learned along the way--as they develop and introduce new online payment services. "
Cancelling paypal accounts (Score:2)
Re:Cancelling paypal accounts (Score:1)
I've had nightmares with them as a Brit living in the US, I have both UK and US addresses and credit cards but they have no way to support that whatsoever. I just don't buy from people who want Paypal anymore, it's too much hassle...
The international account stuff drives me nuts 'cos there is lower credit card fraud in Europe anyhow yet they require all this confirmation shit - then when that card expires you have to do it all again...
Re:Cancelling paypal accounts (Score:2)
I don't see any such link (Score:2)
I don't see any link. But that's because of some strange server error (claims my cookies are not on, but they are, and I know they are because I use cookies at other sites just fine) where I can't even get logged in. And yes, I was trying to close my account after getting spammed by them. And I didn't want their spam anymore because I quit using Paypal due to not being able to login and not being able to get any response from support at all, and not getting any live people on the phone.
I understand the legal and financial conditions they have to operate under, and I'm not opposed to them (or anyone else providing this service) from taking a cut, and having to freeze accounts when something goes wrong ... PROVIDED ... you can actually communicate with someone there who can comprehend what is going on and help solve the problem. The reason I quit Paypal is the lack of support. And my servers are now rejecting all mail from Paypal, so if you decide to bribe me, I'll never even know about it.
A christmas story, and how PayPal ruined it (Score:2, Interesting)
Then PayPal decided that there was something bad about this transaction, and froze the account. Mind you, they froze it for our volunteer, but they did not freeze the incoming stream of funds which now piled up on his account.
PayPal sat on this money for three months, all the while collecting interest on it. The volunteer had complied to all of PayPal's requests, but they just kept on repeating them.
Eventually, more or less at the end of the 'allowable' freeze period, they released the funds and our transaction with the supplier (Boundless Technologies) could go through.
It is quite clear that PayPal did not have fraud in mind when they froze the account. What they did have in mind was the illegal collection of three months worth of interest on OUR funds, not one cent of which has been given back to the group.
In essence, while PayPal might provide a useful service, the company behind it is not to be trusted with your funds. Once bitten, twice shy, PayPal is not on the shortlist anymore...
Wired Magazine, September 2001 (Score:2, Interesting)
The Money Shot [wired.com]
650 employees? no way! (Score:2)
There's no way they have 650 employees. Their service (in terms of trying to reach someone there) sucks. So they can't be operating any big in-bound call center. What they do have running can be done by a dozen programmers and a few admins. Add in a bunch of accountants, lawyers, and VPs, and perhaps at most 100 employees.
PayPal is *not* an Escrow service! (Score:2, Insightful)
A large number of people here have complained about how PayPal refuses to handle complaints about merchandise either not being sent or arriving in poor condition. While PayPal politely handles some of these cases, they are no means obligated by their terms to handle them all.
The fact of the matter is that PayPal is a money transfer agent. They are the electronic version of Western Union [westernunion.com]. Money transfer agents basically take money from one person, charge a fee, and then give the remainder to another. While they may have some fraud guarantees, they do not normally handle merchandise disputes. They just move money from one place to another, and then their job is done.
What people here seem to consider PayPal to be is an escrow service. An escrow service takes money from person A plus a fee, and then notifies person B that the escrow service has money from person A meant for them. Person B then sends the merchandise, which Person A inspects. If Person A is not satisfied, they send the merchandise back to Person B. Otherwise (ideally), Person B gets paid.
Escrow services endure a lot more risk than a money transfer agent does. They deal with a higher risk of fraud, and take more measures to compensate for this. PayPal does not consider themselves to be an escrow service. PayPal's own FAQ says so [paypal.com].
Examples of *real* online escrow services include Escrow.com [escrow.com] and Tradenable [tradenable.com]. Note that I have not used either of these, so buyer/seller beware.
PayPal history (Score:2)
To paraphrase the article...
PayPal was developed by Confinity with backing by Nokia. It was intended for use with making payments on mobile phones. That didn't pan out, so Confinity sold out to X.com in March 2000. X.com was doing other stuff besides PayPal, but that didn't pan out either. X.com changed their name to PayPal, shut down their other stuff, and here we are today.
It's All About... Trust! (Score:4, Insightful)
This sense of community helps foster individual restraint in the face of self-interest. While everyone would like to take everything they can get their hands on, they have a sharp sense of responsibility toward those around them
On the Internet, this community is virtually nonexistent. People can distance themselves from the world around them and become immersed in a sea of IP addresses. For some, a sense of responsibility leaves also, and they take the opportunity to take advantage of nameless, faceless people around the world. They don't know these people, and so their natural human inclination to deal virtuously with these people declines. And for many, the only potential repurcusion of their actions would be from the law (the government is a weak authority figure in the minds of the people
The result? Again, in economic terms, transaction costs go up. Without trust in the virtue of those around us, we need to hire middlemen to keep us all in line. PayPal finds itself in such a situation
Witholding Funds (Score:2, Interesting)
I contacted their support line (via voice) and turns out that I only need to send a 'login card' (similar to a phone card) to cover my ass on their Seller Protection Policy - I get to keep the funds even if they are fraud! Even though I told them I didn't want it, the only way I can do business using PayPal is to accept fraudulent payments! They don't have an option to refuse payments 'on a hunch'.
Anyhow, I've rambled. I've spoken my peace. Thanks for looking. :)
If this is success... (Score:2)
Some people have had nightmarish times getting money, and some peopl ehave had their businesses and good names destroyed by PayPal.
Re:If this is success... (Score:2)
PayPal Warning [paypalwarning.com]