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The PayPal Phenomenon
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.
It seems to me that the problem with previous micropayment schemes was not the scheme itself, but that there was never a situation in which the convenience of using the system outweighed the risks associated with trusting an outside party with your money and transactions.
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.
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!
Not surprisingly, a lot of Slashdoters doubt PayPal...which is understandable, since it's so difficult to believe that any pure-play dot com can survive these days.
However, I've had the pleasure of working closely with many of PayPal's senior management over the past two years, back since they merged with X.com. I can tell you three very important things:
1. The P2P space is actually a loss leader. Most of their profit is made in the B2B and B2C space - not pure P2P as most people believe. They do very well in these spaces and recent analysts predict that their revenue was between $80 and $100mil last year. That's a heck of a lot better than most of the not-coms we've seen over the past several years.
2. They have an incredibly intelligent, dedicated and savvy staff that understands their market and industry.
3. They have a business model that works.
In my opinion, these three items equal success.
I love their service and I enjoy working with the company. If I didn't enjoy my current job so much, I'd probably apply for a job with them.
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?
Here's a nice outline of why PayPal's implementation is NOT very conducive to regular transactions.
http://www.gamers-union.com/paypal.html
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.
Chas - The one, the only.
THANK GOD!!!
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>
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.
"It is a greater offense to steal men's labor, than their clothes"
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.
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. 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.)
-- Give him Head? Be a Beacon? :P)
(If you can't figure out how to E-Mail me, Don't.
I've read several interviews with Peter Theil, one of PayPal's founders, including this one where he points out that fraud was the primary reason behind the failure of many online payment services. A quote from the interview:
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.
Fried ice cream is a reality. - George Clinton
Up until recently I've never had a problem with PayPal. However, that's because I never came near the $1000 limit for "unverified" users.
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...
--
#nohup cat
So are you going to file a small-claims suit against them, or just whine? I have no patience with people who say "ABC corp ripped me off to the tune of $X" but who then sit there and take it. People like that are the reason the behavior continues. Get a judgement against them. Get evidence of wrongdoing into the public record. Create a FACTUAL web page detailing your experience and see to it that a search for "PayPal" turns up your page.
If you're unwilling to do this, I can only assume you're in the wrong.
you to give them money and let them pay online distributors. They want to be your bank. Paypal is setup to issue money you have in your account to in via check or direct deposit. They do, however, hope you'd let them hold on to it (like a bank) so they can make money on it from the interest. It would be interesting to see how many people leave money in their paypal account. Just a thought.
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!
Well.. does paypal have it? That's between you and paypal.
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.
Did it not occurr to you to call your credit card company and simply say 'Observe this transaction. Two of the same value. The second one is fraudulent (which it is)'. They would have reversed it immediately and left the onus on Paypal to prove they needed to charge you.
I think they suck. I opened an account and it was instantly locked "due to unauthorized activity". The thing was, I hadn't done any transactions yet.. (?!) I still don't know why they did it. Email after email after email for a week. No replies. Finally I set up a cron job to email them every hour. 130 emails later they opened the account up with no explanation. Have not used them since. I'd already sent a check.
http://www.oracletool.com
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.
Top Most Bizarre/Disturbing Error Messages
Actually, there are a few APIs that PayPal will give ya if you just ask. Things such as a way for PP to send an SSL Enabled Verification back to a CGI on your website so that you can be sure the user did do exactly what they said they did.
I had actually started building a commerce site around PayPal before I discovered RedHat's (Akopia's) Interchange and decided to do things right (ie., real CC processor). The problem with a 'real' CC processor is that the user now has to trust you and your employees with the security of their cards. This means, did ya close all the holes, have ya shut down SQL Access to the outside world (you'd be supprised how many MySQL machines I have been able to access since switching to this software and playing around with it), if ya DO use things like card storage, ya then need to (if you are a responsible sort) encrypt the data, and not just with a ROT13.
Its a LOT of work for someone designing a site on their own. You'd be supprised how many people have their sites email them the #s in plain text. Too many 'geeks' think that just because they can write a PHP site, they understand programming and security (geeks in quotes as I wouldn't consider most PHP 'programmers' real geeks...even though I'm starting to use it myself).
PayPal does most of this for you, and if you aren't willing to put the time to learn everything ya need and verify that it does what it is supposed to do, then PayPal is PERFECT for these folks even if it didn't have the 'secret' APIs to do the verification -- which the users will not see because they are sent by the PP server to your computer, NOT from their server to the users computer to your own computer...which I think it does that as well...but only for simplicity...think about it as secure as a Javascript CC Mod13 Verification system (was it Mod13? I haven't written one of these in years).
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.
PJRC: Electronic Projects, 8051 Microcontroller Tools
It's posts like Paul's that make reading Slashdot worthwhile.
Codifex Maximus ~ In search of... a shorter sig.
Right. And once again.. the problem is between the RECEIVER and PAYPAL, not the sender.
The receiver owes this guy some money still (the money paypal lost).
- 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.
I personally have had nothing but good experiences with Paypal, but I was shocked to learn that there was a dark side to it that many, many people have been burned by. It seems the fact that I've had no problems with Paypal is the exception rather than the rule -- many people haven't been so fortunate.
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
Testimonials from above site.
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 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.
They didn't mention that paypal bought their competition, x.com, which included banking, mutual funds and stocks, then discontinued all of its operations.
You can bitch about the privacy invasive features and the anti-fraud procedures, but if you get swindled out of $2000, then you will be bitching about them not being effective enough. I know several people who have been frauded out of that much money, on a seemingly good trade, and PayPal has done NOTHING to help the matter. It is incredibly easy to defraud people over PayPal, so you can bitch about the procedures, but when you get jacked, you won't.
Blake
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.
If you noticed, they have a link to a wav file of the letters and digits, for the blind. Nothing requires them to really care about the other groups; if you want an account, turn on your images or get on a computer with a graphical browser.
Female Prison Rape in NY
Seems to me a lot of people are dissatisfied with PayPal, but I haven't seen anyone yet say how to cancel an account. So how would one go about doing that?
i am a soviet space shuttle
Note the transition from peer to peer systems to one/many systems. There's something important to be noted from this.
are federally run and regulated so you have a legal recourse. The only recourse you have with PayPal is take them to civil court.
errr....umm...*whooosh* *whoosh* Is this thing on ?
file a small claims court case about an inter state commerce situation ? Good luck....
errr....umm...*whooosh* *whoosh* Is this thing on ?
Actually, this change just puts them on more-or-less equal footing with eBay's own payment system. You can still accept credit cards as an individual with a PayPal account, you just can't do it for free.
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.
on the phone to paypal? that phone number is a closely guarded secret and noone at paypay will give it out.
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
Do not look at laser with remaining good eye.
Well, there we were. All set and ready to buy a whole bunch of Webplayers from the defunct Virgin Connect operation. The deal with the supplier was struck by a volunteer, and funds were transferred into his PayPal account. More than $10.000,- in total, as there were several hundred machines ordered by more than 300 people.
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...
--frank[at]unternet.org
I have been pretty dissapointed with their dealing with various credit card issues and bank account issues for Canadian customers though.
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.
now we need to go OSS in diesel cars
Who at Paypal do you have to ask about those APIs?
Micropayments are much smaller than that. The oldest micropayment project I know of, Millicent 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.
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.
now we need to go OSS in diesel cars
The site www.paypal.com is running Stronghold/2.4.2 Apache/1.3.6/L C2NetEU/2412 (Unix) on Linux
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
-'fester
Wired magazine had a (imho good) article about PayPal, how and why it worked while other initiatives of big banks failed on internet money transactions:
The Money Shot
bash$
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.
now we need to go OSS in diesel cars
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. 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.
Examples of *real* online escrow services include Escrow.com and Tradenable. Note that I have not used either of these, so buyer/seller beware.
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.
You can call them. I checked out their IPO data and just dialed their phonenumber to verify it worked. I am sure you could get an operator or just pick someone at random from the directory until someone listened to you.
Paypal Inc
1840 Embarcadero Road
Palo Alto CA 94303 USA
Phone: 650-251-1100 Fax: 650-251-1101
As I take a careful look at this new community being formed, what I see forming is a globalized, fluid, largely anonymous culture. Then I look at my local neighborhood and my city. I see people who know each other by their faces and their first names. There is a feeling of trust among everyone here. Joe, who runs an electronics shop down the street, knows that Renee is not going to try to take advantage of him or steal from him. First of all, she has a sense of responsibility toward Joe as one of her neighbors. Second, there are several rings of authority around her that keep her from wanting to do something wrong. If she gets caught shoplifting, what the government will do to her is the last thing on her mind. She will first feel responsible toward her parents and her close friends and relatives. She will then worry about what the people she goes to church with every Sunday will think of her. She would be concerned about her employer finding out "through the grapevine" that she shoplifted.
... and many feel such a responsibility towards God. In economic terms, this keep the "transaction cost" down.
... and I think that the government should be the *last* entity we should be worried about when we do something wrong!)
... so don't be surprised when you find PayPal's service substandard (and more costly) to that of your local community bank.
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
An unjust law is no law at all. - St. Augustine
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. :)
Heh! I'll have to check as I can't access my mail right now. I was on a ecommerce mailing list and had mentioned the fact that I would like to use PayPal in my personal app, but didn't think that it could work well and one of their programmers emailed me and asked if I wanted the info.
Sent me a 40 page PDF with all the details and some examples. Actually got most of it to work under ASP which was a pain in the butt as there are like no comm objects that deal with sending secured HTTP stuff that doesn't cost a grand or more. Dealing with this in Perl was MUCH easier, but then I'm stuck with an app written in at least 2 languages (and sometimes more...usually do ASP as my clients are all M$, and then PHP and / or Perl to take care of the crap that I can't take care of on ASP...yeah don't ask why I don't just program EVERYTHING in one of those...client specs and stuff...)
If I remember to look, I'll see if I can find a URL on this as I believe it had one embeded in the doc...and I did find it on their networks once searching on specific terms...
Visa, Mastercard, etc, are very specific and protective about what merchants can and cannot do, because they want to keep the card attractive.
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?
Exactly.
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.\
Before you accept PayPal as a success story, please take a look at this warning.
Some people have had nightmarish times getting money, and some peopl ehave had their businesses and good names destroyed by PayPal.
Whatever happened to JonKatz?
Black Tuesday. They are regularly audited by the OCC, and must meet FDIC reg's to retain their charter. While I can't dispute your take on the rules slant at least there is a body over seeing them. If PayPal leaves you hanging where do you go ?
errr....umm...*whooosh* *whoosh* Is this thing on ?