PayPal Goes Public 166
fluffhead234 writes: "Looks like IPO's for internet companies can still bring in something. PayPal, the online payment people, raised just over 70 million in their IPO: PPay Pal IPO"
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PayPal Goes Public
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Crazee Edeee, his prices are INSANE!!!
Pay Pal and Ebay (Score:3, Informative)
Re:Pay Pal and Ebay (Score:2)
OK,
- B
Re:Pay Pal and Ebay & Citibank and and and (Score:2, Informative)
There is a plethora of P2P payment services from the big financial services firms(c2it [c2it.com] by Citi) to regular banks and such.
Of course, VISA, MasterCard, American Express and the other associations all have "initiatives" to understand and exploit P2P payments. I think it's great that PayPal has gone public. Wether they make it, are acquired, or burn through the 70 mil raised, at least it will put some more publicity on the P2P payments market.
Anything that shakes up the current merchant-issuer-acquirer-association arrangement might bring reduced rates and a more competitive environment.
Re:Pay Pal and Ebay & Citibank and and and (Score:3, Interesting)
Also, VISA, MasterCard, American Exprese, and the other associations you so breathlessly refer to aren't peer to peer either.
I think you are confusing the term "peer to peer" with the idea of allowing account holders who normally only deposit paychecks and then buy things to also receive other payments into the account. But letting each account be a "merchant account" is not peer to peer, it's just a shift in the way people are using money.
A peer to peer payment system would not require that you have an account with some corporation. It would associate a person with a GPG or PGP key, and whether or not to trust the IOU or payment would be up to the receiving party, using something like PGP's web of trust. In that case the account creation, decisions about trustworthyness, and all the other details of a payment system are pushed down to the user level -- each person can be his own bank, so to speak, and they are all equal in the eyes of the protocol and system (but not in the eyes of other users, perhaps). That's peer to peer.
Re:Pay Pal and Ebay (Score:2, Redundant)
Ebay owns Billpoint, a payment system. It's absolutely terrible.
Re:Pay Pal and Ebay (Score:2, Interesting)
As a buyer, Paypal is nice, because they accept Amex, where other services don't, and I prefer to use the green card. As an occasional seller, I don't use them anymore due to restrictions they claim have been imposed upon them, limiting the amount that maybe transferred from one person's account to anothers. Last I used it it was only good for $100/mo, now I can't receive cc payments unless I sign up for more service, which I haven't done, but expect the fee schedule to be less than welcome, from dealers I have talked to.
On another tack, I'm not too surprised the IPO was only for 70 million, investors aren't as likely to run willy-nilly (a highly technical term) to throw money at. I think Paypal does have a bright future, particularly since they've made it easy for me to buy and sell things to people overseas, and I have a contact here, if it goes wrong. I'd just like more insurance, when the seller withdraws all their funds and runs away without sending anything, rather than a confirmation.
"Yep, they ripped you off, bud. How else may we be of service?"
Re:Pay Pal and Ebay (Score:2, Funny)
American Express, though, is making inroads--heck, even Wal-Mart takes them now. And there's nothing much more ironic than watching someone pull out his tres pretentious Platinum Card (no longer all that--the real elite have the Centurion black one) and hand it to the Wal-Mart cashier for diapers and soda pop.
Re:Pay Pal and Ebay (Score:1)
Re:Pay Pal and Ebay (Score:1)
When crossing the border, it's about as important to have as the passport, IMHO.
Re:Pay Pal and Ebay (Score:1)
Your mileage may vary. I've found Visa and Mastercard much more accepted in the U.S., to say nothing of foreign countries. Sure, you'll find establishments that accept it overseas--but I think you'd be hard pressed to find any establishment that accepts AMEX and doesn't accept Visa/Mastercard.
Sure, AMEX has branches around the world that can help you in certain cases. But still, I won't leave home without my Visa/Mastercard. I've never missed not having AMEX.
As a vendor, I don't accept AMEX either. Their discount rate is about twice that of Visa/Mastercard.
The only thing AMEX has going for it is its name and "tradition" as "the" business card. That's only going to last so long. Either AMEX has to become more affordable for both merchants and customers or they will become irrelevant.
Re:Pay Pal and Ebay (Score:2)
Not really. [costco.com] (They're the only one I've run across, though...)
Re:Pay Pal and Ebay (Score:2)
Costco (and Sam's, too) will do ATM-card transactions...since that's how I pay for nearly everything, it works out OK. The weird bit, though, is that the gas pumps in the Costco parking lot will take Visa and MasterCard...go figure.
Never heard of BJ's...what kind of store is that?
Re:Pay Pal and Ebay (Score:1)
Who needs an IPO? (Score:5, Funny)
Re:Who needs an IPO? (Score:5, Informative)
I think anyone who's using PayPal as a bank account is either a) lazy or b) just plain stupid. Like the people who invest in "great opportunities" only to be burned -- you've got to do your research.
Re:Who needs an IPO? (Score:3, Insightful)
Well if you are a power seller, or just have a large money transfer it could be a real hassle. Many of these stories involve people who have gotten a large payment, and then before PayPal will give them the money they freeze theyaccount.
The people frozen accounts don't earn an intrest on this money, but PayPal does.
paypal (Score:5, Informative)
IPOs always bring in something; an IPO just means that the institutions that are underwriting it buy a set amount of stock, then offer it for sale on the market. The company itself risks nothing, as the stock was bought for an agreed-upon price beforehand.
If the stock tanks, they still get 70 million.
Re:paypal (Score:3, Insightful)
For example in a strong market an underwriter might set a target IPO price at $20 per share initially but based on the level of institutional demand raise the initial IPO price to $30 per share. This will yield an additional 50% working capital for the company going public.
The converse is also true leading to IPO's being delayed or cancelled altogether. Without sufficient institutional and investor interest, either the price of the initial offering must decline (decreasing the capital provided to the company) or the underwriter will cancel the IPO. All this happens prior to the actual IPO date
Actually... (Score:2)
Far less common would be a scenario where the underwriter promises to do their best efforts to sell the IPO stock, and they can return any unsold shares. Obviously, there's far less risk involved for the underwriter, and thus far less reward.
In the former scenario, the underwriter has strong motivation to sell the stock and to get the best price possible. In the latter, the underwriter may not be willing to expend as much energy because their profit is relatively slim.
internet revenue revival (Score:3, Interesting)
Market Value (Score:3, Insightful)
I thought dot coms were dead, useless, gone. That's pretty good money for a dot com, in a recession, thats being sued.
Re:Market Value (Score:2)
Re:Market Value (Score:2)
Re:Market Value (Score:2)
One wonders how good a business model can possibly be, if they have to keep changing it constantly. "Oh, we don't have to charge you a fee, we just invest your money..." "...okay, that wasn't working, now we have to charge you fees..." "...oh, and you can't accept credit cards unless you get our Pay Extra to Accept Credit Cards package..."
Remarkably Ironic... (Score:4, Interesting)
Re:Remarkably Ironic... (Score:2, Informative)
Not to mention the fact that they no longer allow you to accept credit card payments without a fee... you now have to pay 2-3% (and have a "preferred" membership) in order to accept a payment which comes from a credit card.
Big Risk (Score:3, Informative)
read about it (Score:4, Informative)
this actually held up the first attempt at an IPO several weeks ago.
another thing to remember is, unlike most business that IPO today (and not in the
Re:read about it (Score:2, Informative)
Monday's filing conceded that the company's regulatory problems in Louisiana might not be isolated. New York has also indicated the company is operating an unlicensed banking operation. Other states that have indicated a need for licensing include Arizona, California, Colorado, Idaho, Massachusetts, Maryland, Texas, Virginia and Vermont.
Paypal is lame (Score:1)
this is despite the fact that up until a year ago they were accepting accounts from the bank.
Even though the bank has been secure for them this whole time, they REFUSED to sign my account up.
Re:Paypal is lame (Score:1)
Re:Paypal is lame (Score:1)
Hell, they even use fingerprinting for accounts.
Re:Paypal is lame (Score:1)
Re:Paypal is lame (Score:2, Redundant)
woof.
Are you sure it isn't the other way 'round? (Score:1)
Cool. (Score:3, Insightful)
Fortunately, for online auctions, there's viable competition, particularly eBay's own Billpoint.
Re:Cool. (Score:1)
The only thing to note is that Billpoint is orders of magnitude smaller than PayPal in terms of the amount of payments they accept. They have never posed any real threat to PayPal in the past.
However, it should be noted that Billpoint is backed by Wells Fargo, who is a major component to the banking lobby. The lobby may play a big part in slowing down PayPal's business in the near future, which may fuel Billpoint's growth.
Re:Cool. (Score:2)
Once I found myself in the whole debit-card doublecharge problem that most PayPal people end up in once. The person I got on the phone for that problem was helpful in WHAT they were saying, yet very terse and defensive. After a few horrible phone calls in the past to them, I wanted to take down his name and extension so that I could use him in the future and avoid the other drones. After I asked for his name and extension he snapped, "What, to threaten me? Is this some sort of a threat?" and hung up on me. And that was my most POSITIVE customer service experience from them.
Just what we need ... (Score:2, Interesting)
All your accounts are ours!
TastesLikeHerringFlavoredChicken
PayPal & Ebay (Score:5, Insightful)
Ebay has a bunch of users because their business model requires that many people come together in one place; Yahoo Auctions, for example, are horrible in comparison if only 1/2 the people use them (and the #'s aren't even that high).
PayPal just basically rode off Ebay's success and Ebay's lack of making any decent alternatives (BillPoint started off way too expensive and full of hassles).
Does anyone remember the LONG period where PayPal gave $5 to each user and $5 for each referral, even if you never used their service? I had a slightly popular website and made nearly $200 off of referrals. I've used PayPal, but only as a sender, so I've never given PayPal a dime back.
I think PayPal is near the peak of its popularity; once ebay's BillPoint starts getting more users (as Ebay is pushing it more on users and the fees are more reasonable for the market) and better alternatives arise (like citibank's c2it for a bad example), PayPal will decline in popularity. They haven't reached anything near a profit yet and I doubt they ever will.
Jeremyf's rating: Sell
Re:PayPal & Ebay (Score:2)
Actually, you did. First off, it's important to understand that PayPal makes its money off of the float; i.e., off of the interest earned on the money in its coffers between the time it's deposited and the time it's withdrawn. And because PayPal only receives cash electronically, there's no lag time waiting for deposited checks to clear; the money can be put to work immediately. If someone requests that PayPal cut them a check for their account balance, then PayPal continues to accrue interest on that money during the time it takes to travel through the mail and then clear through the bank. The short of it is, if you've moved any money through their system, then PayPal has been making money off of you.
Secondly, you've made $200 off of referrals; you've thus referred 40 people. You may not have maintained a balance for very long, but some of those 40 people probably did, and if those 40 people referred an additional 40 people, who referred an additional 40 people, and so on, then you can see that your recruitment efforts have had a significant impact.
Third, PayPal had set its cost of acquiring new customers at $10, and they did it through a very efficient referral program. Millions of people do their marketing for them, and they only pay out when a new customer is actually acquired. Compare that to the gamble of doing a multi-million dollar advertising blitz that may (or may not) result in a significant increase in new customers. You've helped PayPal save a ton of marketing moolah by promoting their referral program, and doing a pretty good job at that.
Lastly, when PayPal pays out for its referral program, it pays directly into your account. A lot of people won't take out that money right away. So, even though they've paid out their marketing expenses, that money is still working for them! Very slick. In fact, it reduces their customer acquisition costs. On paper, they pay out $10 for new customers, but the net cost is probably something much lower. Again, back to the 40 people... you may have withdrawn that money immediately, but odds are that many of them didn't, nor did many of the people they referred.
Financial analyst view (Score:5, Informative)
Some will be very upset about this (Score:2, Informative)
No PayPal [nopaypal.com]
Re:Some will be very upset about this (UPDATE) (Score:2, Informative)
http://slashdot.org/askslashdot/01/12/10/1713224.
Warning signs... (Score:5, Informative)
In fact, there is a growing literature which suggests companies purposely limit the number of shares issued in the IPO. This low supply of shares causes the stock to rise in the ensuing days and months as additional investors purchase the stock and analysts begin issuing recommendations. After the lockup, insiders then begin to sell shares in earnest at these high prices which are at least in part due to the manipulative effects of a small number of shares offerred at the IPO. In short, while there may be short-term gains to be made in the stock, be cautious after the lock-up expires.
Also note that in the past two years the company has managed to lose 1/4 of a billion bucks and is not sure when it will be profitable. That's not exactly the kind of words that bring confidence in this market environment.
Although the market for IPO's was much smaller in 2001 than in years past, those companies that did come public tended to be more profitable and had better business models and a proven record of success; and they performed relatively well. I don't think PYPL fits this mold, however, so LOOK OUT BELOW! (after a short run upwards).
Re:Warning signs... (Score:2)
When a company goes public, it's not really becomming a fully public entity, rather it's just using public markets to set a price and value the company.
And this "growing literature" you speak of is called basic economic theory...it's not some grand evil corporate scheme to defraud the everyday investor. Companies ALWAYS have sold a very modest (10 - 20%) stake to the public, and when their stock appreciates they'll issue more to raise more capital. It's a balance between supply and demand -- if they issue too many shares, there will be excess supply and the price will stay flat. If they issue too few (1 - 2%), it will artificially inflate the price and the stock will suffer (making the CEO and other managers look bad) when it drops later on.
Re:Warning signs... (Score:2, Informative)
I was referring to the large number of articles appearing in the Journal of Finance, Journal of Financial Economics, and other leading finance journals as well as the plethora of papers being presented at conferences throughout the country. Although superficially it seems like "basic economic theory," the precise modelling of these strategies is rather daunting, as is the estimation of these models. Trust me, two more months and I'll have my PhD in Economics (with a chapter of my thesis on IPO pricing!).
Re:Warning signs... (Score:1)
For more examples, see numerous
Re:Warning signs... (Score:2)
If I were a short I'd be all over this. Only trouble with shorting is that it's too easy to get burned by people who know how to manipulate the market to the up side.
I mean, come on. How do you run what is essentially a banking, credit and escrow service and LOSE MONEY. These guys must be some kind of financial geniuses to pull that off.
Oh well, it's nice to know that the market can still be fleeced old-school. The only thing that's missing is a picture of some 20 year old millionaire.
Not necessarily a good thing. (Score:2, Interesting)
Oh good. (Score:1)
Now that they have all that money, they can lower the fees they keep raising every few months.
Pegging currency to the dollar can cause problems (Score:2, Insightful)
Re:Pegging currency to the dollar can cause proble (Score:1)
Re:Pegging currency to the dollar can cause proble (Score:1)
Re:Pegging currency to the dollar can cause proble (Score:2)
Short it right here! - just PayPal me $100 and I'll send you $75 cash. Sound good??
:)
Re:Pegging currency to the dollar can cause proble (Score:3, Insightful)
How is this different than my real-world bank giving me $25 for opening an account with direct deposit? I can go straight to the ATM or branch and withdraw it. US$ is US$, whether in paper form or an account balance.
Re:Pegging currency to the dollar can cause proble (Score:2, Interesting)
Re:Pegging currency to the dollar can cause proble (Score:2, Insightful)
huh?? (Score:2)
Ummm...you have a $20k credit and a $20k debt, which nets to $0. The dealer has $20k, so the total system value is the same as it always was (your $20k under the bed). Banking is about moving money around, storing it, and investing it, not creating it.
Money cannot be created by any body other than the central national bank. Interest rates are important for lots of reasons, i.e. because they affect peoples tendancy to spend vs. save, and make the currency more or less attractive to overseas investors. That attractiveness affects the exchange rate, and therefore the fortunes of import/export businesses.
W.r.t. to your Macys account - if you could walk into Macys and convert that credit to $ (as you can with PayPal) then I would say they value of a Macy credit is exactly $1, minus the cost of going there and physically getting it as cash. If that cost is $0 (as clicking a button on a webpage effectively is) then you end up with a 1:1 rate.
Re:Pegging currency to the dollar can cause proble (Score:2)
When you deposit money in your account at a banks it is still your money. Customers accounts are show as a liability on the bank's books. What the bank is allowed to do with that moeny is limited by regulation, and how accessable that moeny is to you is also regulated. If the bank goes under you get 100% of your money back. If the bank catches on fire, is robbed, is sold, etc., you get 100% back.
When you have money in your PayPal account it is not your money. PayPal is not a bank. They are not regulated. When you put money in your account you are paying PayPal for the "service" of holding and/or transferring that money.
PayPal can do anything they want with that money, because it is theirs. They can put it in bonds or they can bet on the ponies. If they lose it all that sucks for you. If PayPal goes bankrupt, get in line with the rest of the creditors. If they are bought, sold, or dissolved -- good luck. PayPal has recently gotten in the habit of "freezing" accounts for arbitrary reasons and violating their own TOS when they are threatened with chargebacks.
Last but not least, I know that I can walk into my bank on any day they are open and walk out with every penny of the money in my account in cash. When and how you can get money out of your PayPal account is entirely at the discretion of PayPal.
These are all things that cause certain people to believe that at some point in the future PayPal "dollars" will be as useful as Flooz driving down the value relative to US$. Hence the question about shorting the PP$.
Re:Pegging currency to the dollar can cause proble (Score:2)
Nope, real money (Score:2)
What most people really did of course, was to buy something on eBay to try out the service. I think it was a very successful way to gain market share, and I've used them ever since with no complaints.
In any case, they were not "printing" anything.
Re:Pegging currency to the dollar can cause proble (Score:2)
No no, PayPal money is real US dollars, just like "Bank money" (you know, that number in your checking account that you don't actually ever seen in cash unless you withdraw it) is real US dollars.
That's part of the success of PayPal, REAL dollars, not Floooz or Beans or Bullshitz.
The $10 they gave out at the beginning generally NEVER LEFT PayPal's bank accounts, which was a bit of a clever thing for them to do, really.
The problem with PayPal, they can do anything they want with your money, all they have to do is change the terms of service. Without banking regulations, there's no guarantee that your money will be there until you take it out.
And I think you can short PayPal on the NASDAQ just like anything else..after a waiting period perhaps...
the value of a dollar? (Score:2)
And by extension, what is a Federal Reserve Note (FRN) backed by? I don't have any on me right now, but I've looked before and it says... nothing. They used to say "payable in gold upon demand", or something similar, I believe, but not anymore. I also think they used to say, "backed by the full faith and credit of the United States" (or something similar), whatever that means. But now it doesn't even say that. So I'm stumped - as far as I'm concerned, FRNs are worthless, and it's only through the miracle of mass dellusion that you can get people to trade you physical items for pieces of green paper.
Support real money - accountable in actual physical ounces of gold, silver, platinum or palladium. Use e-gold [e-gold.com].
Re:the value of a dollar? (Score:2)
And what makes these things "real" money anymore than green paper?
Sure, they have a higher physical scarcity level, but all you're really doing is trading one monetary token for another. In neither case would your currency have any inherent value for most people. You can't eat it, live in it, drive it, compute with it, or be entertained by it -- it has no utility whatsoever except its capacity to be freely exchanged for some other good or service. And that takes just as much mass delusion for gold or silver as it does for FRNs.
Money is a useful work of fiction. Yep.
Re:the value of a dollar? (Score:2)
Reserve notes help to create a much more efficient trading economy than mere bartering could hope to accomplish. If you don't agree with this, then try to trade a computer program, or whatever else it is you make, for everything that you need to buy. It might work one time, but I doubt you could survive for more than a couple weeks like this.
Re:the value of a dollar? (Score:3, Funny)
The 82nd Airborne Division :-).
Re:Pegging currency to the dollar can cause proble (Score:2)
The PayPal dollar is backed by the full faith and credit of PayPal, of course.
It's the same with the Visa and MasterCard dollar. They've been printing their own currency for YEARS, and selling its convenience and availability. PayPal is doing the same. The difference is that most Credit Card companies I've ever dealt with guarantee the integrity of the currency much better. Reversing charges? Not too hard. Even waiving a late fee can be done if you've got a good reason. Part of this is probably due to the fact that if a customer gets too fed up with them, they have options other than settling their debt (like Bankruptcy or just accepting the black credit mark) and they realize that reputation is important to a currency. PayPal is great in its niche for convenience and availability; confidence is obviously sortof shaky.
Lawsuits, etc. (Score:2)
[sigh]
another dam buncha lawyers who think the world owes them a living.living. and then there the the state regulators getting into the act with their brilliance in trying to regulate the internet.
pardon me, while I bang my head against this convenient stone wall to get rid of this head ache.
Caution! (Score:3, Informative)
Slashdotters need to think twice, thrice,
PayPal have been repeatedly subject to systematic frauds. These frauds which look set to completely destroy any customer/consumer confidence and shareholder value.
I'm a pretty active investor in high-risk high-tech stocks and I will not touch the PayPal IPO.
Check-out this site in particular.
http://www.paypalwarning.com/
And this Google search on PayPal fraud reveals >20K hits.
http://www.google.co.uk/search?hl=en&safe=activ
IMHO, Think once, think twice, think never.
Re:Caution! (Score:1, Interesting)
http://www.google.co.uk/searchhl=en&safe=active
Now don't get me wrong, Pay Pal may have some security issues, but that line above isn't really convincing... Try searching for "britney spears naked" and tell me how many hits you get. I'm pretty sure she's never been nekkid for the camera...
Re:Caution! (Score:2, Funny)
Caution is well founded in the long term with respect to this particular company. Although, the fact that this company is utilized by a number of shady characters, which does give it the advantage of stability, they will be the target of litigation and regulation unlike most businesses. Being in such a position may well add to the cost of doing business beyond what they are able to recover from users.
In the short term, however, I'm sure they will enjoy good profits. They are one of the very few business models out there capable of taking a little piece of illegal industries, and dipping into the huge underground economy supported by black markets around the world. Not a bad bet in my opinion.
The Interesting Results of a Quick Dig (Score:3, Interesting)
This is of course jumping to many conclusions reeking more of wishful thinking than any sense of reality, but the potential for synergy here just tickles me silly...
I'm picturing an entire order-shipping-billing cycle, along with the obligatory online supply chain management system, all operated from PDA's and/or cell phones...
Any suit with a geek-streak such as me is no doubt drooling by now.
PayPal is Doomed (Score:4, Insightful)
Any institution that accepts money for "deposit" is by law, subject to the regulations of a bank. Federal regulators haven't fully caught-on to what PayPal does.
The IPO will make for their easy slaying in federal court.
Re:PayPal is Doomed (Score:1, Interesting)
When the banking system was first concieved banks issued their own bank notes until governments stepped in and created their own central bank with that sole responsibility.
So surely what paypal does is illegal?
Re:PayPal is Doomed (Score:2)
I can only use paypal for $940 more (Score:3, Interesting)
So, I buy something on Ebay, wanna pay with my CC, why the hell does this company need access to my bank account?
Things like that, even though I've never had any trouble with paypal, set off all sorts of little red flags in my head!
Re:I can only use paypal for $940 more (Score:4, Informative)
Credit card fraud is pretty damned rampant on the internet anyway, and there's tons of fraud (CC and otherwise) on Ebay. Combine all that into one big lump that PayPal has to deal with, and they have to take measures like that to protect themselves. Most major credit card issuing banks have really stepped up the penalties for sites that do not have sufficient anti-fraud measures in place.
Re:I can only use paypal for $940 more (Score:2)
I can understand the shipping/billing address thing. I do have to provide my billing address when I add a card, but there is nothing that forces the seller to ship it to that address.
I'd rather they provide an alternate method for verifying identity.
Re:I can only use paypal for $940 more (Score:2)
I'd rather them continue to not charge lots of fees than to offer other verification methods.
Re:I can only use paypal for $940 more (Score:3, Interesting)
So they don't need access to your bank account, but they know your bank have validated your identity, so it's like a web of trust thing.
Re:I can only use paypal for $940 more (Score:3, Informative)
Errr...your bank a/c number is not secret information. Mine is printed on all my cards and along the bottom of cheques (checks). It's also on statements, letters to/from the bank etc etc. Under no circumstances should you consider something so widely distributed "secret". Knowing my account number will (should!) not help an attacker gain access to my money. The bank are required to establish my identity, for instance with a signature. Failure to do so puts the liability on them to refund me for any fraud.
If someone walks into a bank and empties my account as cash, all the police have to do is look at the CCTV and show that it wasn't me. If they want to do it by phone/internet then my account number is actually not involved, it's traditional username/password. If they want to do it with forged cheques (checks) then the bank are liable as they accepted forgeries as valid. If they want to use an ATM, again the a/c number is of little importance, the PIN is much more important. Don't forget - a/c numbers are for the most part sequential.
Re: Escrow services (Score:2)
In the past, I've heard of at least one instance where the escrow service suddenly closed up shop, keeping all of the customer goods and money that was held in escrow at that time, and disappeared.
Even more likely, what about the escrow service making a clerical error, causing you to lose your money and not receive your item?
I've always said it's best to keep the "middle-men" out of transactions, whenever possible - because it just adds more places for mistakes to be made.
I've used PayPal extensively, and I did have a problem once with them freezing my account, but it was rectified within a matter of 2 days after I emailed their customer service dept. Other than that, it's worked flawlessly for me - and so many people use it, it's currently the best way for me to receive quick payments for online sales.
Granted, I won't keep large amounts of money in PayPal, since they aren't FDIC insured. If you use them as a payment transfer service though, they're as good as anything else.
Now that they have money.... (Score:1)
Good service, Great people - but trouble is coming (Score:5, Insightful)
- 1. They have an excellent group of talented people and an excellent corporate culture. Talented, bright people who are dedicated to their jobs...what else can you ask for. They have excellent management and have the ability to move fast and adapt to change quickly.
I am a fan of their service and a fan of the people who work there, but it saddens me that they may be in a good amount of trouble in the times to come. As a number of people have pointed out, several states are threatening to shut them off for doing business as an unlicensed bank. This causes a number of problems for PayPal and they need to address them soon:2. They've found a business model that works. It seems that anyone making or taking a payment over the Internet these days has a PayPal account. Most importantly, however, if you take a look at their growth rate and their balance sheet, you will see that they are on track to start making some real money very quickly.
- 1. The states are right: PayPal is doing business as an unlicensed bank. You may have noticed that PayPal is not protesting any of the allegations made by the states - that's because they know if it came down to a fight in court, they would lose. They are a bank...no question about it. In fact, they've already had to give in to a few states, as they actually ARE regulated in few (3, I think)
Continue to use PayPal...it's a great service (Yes, there are the stories at www.paypalwarning.com and such, but any service with 1mil+ customers will have some unhappy people). Be cautious, however, if you are thinking of investing in them.2. "So why don't they just get licensed as a bank?", a number of people ask. There are a number of things that make this difficult. First, the license process must occur in each state - this takes a lot of time and money. Second, this may greatly change their internal cost structure, as there are a number of regulated practices that they would have to adhere to if they were considered a bank in all the states they did business in. PayPal's margins are low and their real money is made on volumes - a major change in their cost structure and, particularly, how they hold floating funds may be lethal to their business.
3. The Internet has no boundaries: If PayPal is shutdown by even one state they are in major trouble. If Louisiana, for example, shuts them down, PayPal must ensure that they do not mediate payments between any parties that live or do business in Louisiana. PayPal currently identifies individual's location by verifying (via US Mail) the address associated with a credit card or bank account. This presents a number of problems: What if the billing address of my credit card is a Mississippi address, but I actually reside in Louisiana - how will PayPal know they are performing transactions on behalf of a Louisiana resident? What if the routing number relates to a bank branch in Mississippi, but I reside in Louisiana, where that bank also has a branch (making it possible for a Louisiana resident to do business in Louisiana with a Louisiana bank through PayPal)? This is just a Pandora's box waiting to be opened.
4. The banking lobby is strong: And they don't like non-banks getting into their space. Worst of all, PayPal has proven that this business model will work. A number of "real banks" are salivating to take this space over.
Re:Good service, Great people - but trouble is com (Score:4, Insightful)
90% of a bank's customers are unwanted by the bank. They wish they could get laws passed that would allow them to refuse service to all but the very wealthy, and charge you a service fee for the privilidge of being paid by a wealthy person.
The differnce between a bank and an illegal loan shark is that the bank has a building and a sign (maybe the leg breaking part, but then the banks just come and take everything you own and tattoo a giant L on your forhead). Other than that they are 100% identical... and unfortunately in the world there is no alternative to turn to.
Re:Good service, Great people - but trouble is com (Score:2)
1) No amount of money in my account will ever be frozen for any reason other than suspicion of fraud
2) No amount greater than an amount suspected of involvement in fraud will ever be frozen.
3) Full details of fraud claims must be given within 48 hours of freezing
4) Fraud cases must be thoroughly investigated and resolved inside 30 days, or all account assetts are returned and the case is turned over to the legal system.
It'd also be nice if they were backed by the FDIC, but that's sortof impossible until they become an official bank.
Other than that, tho', I can take the risk of knowing they might go away. I just want to know they can't arbitrarily freezy my money.
Solution: merge with a big bank (Score:2)
Paypal gets: not having to worry about the big messy process of becoming regulated as a bank.
I'm sure people investing in paypal see this as a likely end to their investment.
PayPal is Great! (Score:1)
As for being first, some would say slashdot owes much of its success to the same thing. Ebay is great. Paypal is great. Slashdot is great. I love them all.
Buying Stock (Score:2, Funny)
billpoint new promotion (Score:3, Insightful)
Actually they're already having problems... (Score:4, Informative)
Since they don't have such a license, they have to quit doing business in Louisiana. Other states are following....
Full article here:
Yahoo News Article [yahoo.com]
who uses paypal? (Score:1)
At least that's where the actions at. Risky you say? Come on, now, anythingforabuck is the American way....
Perhaps (Score:3, Insightful)
I'm not one who's usually in favor of regulation.. and I'm not sure I think it's a good idea, even in paypal's case...
but when you have one institution JUST moving money around.. they end up with the power to SERIOUSLY disrupt people's lives.
A bank can't generally freeze your account without a court order. Why? it's YOUR MONEY, not theirs.
Same thing should apply to paypal. This freezing of funds is rediculous. Paypal is not a credit card; if you want purchase protection, use a credit card.
Paypal should do the right thing and simply allow funds to move.. after all, they take their cut.
oh boy, I have my doubts (Score:4, Insightful)
I love PayPal. I use it regularly for buying and selling on eBay (sometimes several thousand dollars a month), for giving online donations, and for occasional general money-sending.
I have never had any problems with them. Their customer service has replied with real answers most of the time, the web page has been inaccessible once or twice, but other than that has never had any big problems. I have a merchant-level account, with a low fee (lower than Billpoint's regular rate, for sure). I take my money out every time I receive it, or I use the very handy Debit card to buy something. And they even TELL you when they change their terms of service!!
eBay's billpoint? Junk! They really missed the boat when they bought them. The PayPal model, where they hold your money, has many more possibilities, including the debit card, bill payment, and investing (X.com style). Of course there are more possibilities for fraud too, but from a features point of view, PayPal wins. Plus my biggest problem with Billpoint, I can't sign up my multiple eBay accounts and addresses, but with PayPal, there's no problem.
But, being the jaded and cynical fellow I am, I know that happy feeling will disappear very soon.
Now PayPal, which is essentially an UNREGULATED bank that deals in short-term loans from customers (essentially, I am loaning them my money for short periods of time), now they don't have an obligation to their customers, they have an obligation to their SHAREHOLDERS. I'm very afraid, and everyone else should be the same.
I guarantee they will do one or more or all of the following: 1) abuse patents .. 2) hide and massage the fee structure (how about charging 1% to withdraw YOUR OWN money.. that would be a good start).. 3) change the terms of service WITHOUT notification (why slow things down like that?).. 4) piss of the credit card companies who will stop allowing them to use their credit cards and logos.. 5) piss off enough people so that the government steps in and over-regulates after several state lawsuits..
Who, knows, maybe I'm overreacting, maybe, like eBay, they will stay good after their IPO. But of course eBay was profitable very quickly, maybe that kept the shareholders happy. PayPal is in a unique and tempting position, and can easily screw over MANY people for their quest to profitability.
What do you folks think? Along with eBay, I consider PayPal one of the few actual "innovations" that the Commercial Internet(tm) has brought us.
I wish I worked at Herman Miller (Score:3, Funny)
I wondre if Herman Miller TAKES PayPal? That's an interesting paradox. It's an instant 3% off their purchase
-S
Perhaps they should ACTUALLY go global (Score:2)
Does anyone know of a real electronic payment solution that allows you to send money from any country with trustworthy banks to another?
$20 now (Score:2)
Guess my friend's friend is rich(er) now (Score:2)
Anyway, a few years later, he was approached by a company that wanted the name (this was during the height of the domain name foolishness/craziness a few years ago). I remember hearing that he sold for some money and a percentage of the company.
I remember thinking that he was dumb because he ought to have asked for more cash and less equity.
Guess I was wrong in the end because his couple hundred thousand shares of what is now PayPal (originally x.com) are probably worth several million.
In the same situation I probably would have asked for much more cash up front and much less equity, which would have been completely wrong. To the extent that anyone can riches buying and selling domain names, this guy "earned" it by making a smart choice when selling.
Re:My anus, plc (Score:1, Funny)
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