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PayPal Goes Public
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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All very well and good. But the vast majority of their business relies on E-Bay which may or may not, be developing its own payment system.. I'm sorry but the whole thing still seems on very shaky ground. Oh and it still aint great if your outside of North America.
"Enlightenment is your ego's biggest disappointment." --Yoginanda
Why on earth do they need to raise funding through an IPO when they have all those frozen accounts to dip into?? :)
Looks like IPO's for internet companies can still bring in something.
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.
Maybe this is the start of another internet boom, it seems after the marketing lows of the internet where companies were failing constantly after 6 months in action the tides are turning. The companies that have entered into business on the internet, such as paypal with a sound business idea are now starting to get the rewards they deserve.
http://www.webhostingtalk.com
Make it idiot proof and someone will make a better idiot.
I thought dot coms were dead, useless, gone. That's pretty good money for a dot com, in a recession, thats being sued.
I think it's interersting that paypal both created (and jumped on) a new marketplace: easy, convenient, secure online funds transfers _for_the_little_guy_. Thanks to Paypal, instead of paying 2-3% to Visa/MC (Amex is the worst: it used to be 7% surcharge) and getting a credit card scanner, anyone could accept credit cards. But then they blew it. Poor security, aweful customer service... I was an early adopter, and really liked the service when it came out. They saw a market, assessed the needs, and then... ignored them. Oh Paypal, what happened? You could have been so great... but now they're just one of a thousand.
-- Is "Sig" copyrighted by www.sig.com?
Since payPal is being sued over its primary technology, this stock would be very risky.
So long and thanks for all the fish . . . !!!
I tried to sign up on pay-pal for one of my web sites, but they wouldn't accept one of illinois largest bank chains because of "Security Procedures".
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.
_ _ _ Go for the eyes Boo! GO FOR THE EYES!
Fortunately, for online auctions, there's viable competition, particularly eBay's own Billpoint.
CEE5210S The signal SIGHUP was received.
A company that is supposed to to protect our private financle interests answering to the common stock holder ... So when it tanks does this mean they will dip into our credit cards/bank accounts to stay afloat and please the share holders?
All your accounts are ours!
TastesLikeHerringFlavoredChicken
TastesLikeHerringFlavoredChicken
Just like Ebay, Paypal is successful (and I mean by # of users and money exchanged, not profit-wise, which only ebay has attained) because they were first. Both charge higher rates than their competitors without any better service or features.
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
There's a an article over at http://www.ipofinancial.com/pow/archive.php?oid=10 4 which has a bit more info, from a financial analyst's viewpoint, but in plain english.
creation science book
here!
.BOOM), paypal doesn't and hasn't made a profit. keep that in mind.
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
/* Half alive and half dead too, work is for suckers and the sucker is you. - "Half-life" by Local H*/
Remember this, from a /. story a while back?
No PayPal
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Random, useless fact: I type in startx entirely with my left hand.
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).
Sig (appended to the end of comments you post, 120 chars)
From what I understand, PayPal is facing hard times, and the negative publicity they've been getting lately is not helping matters. I'm not sure I would want to put my money into a company in this situation. Raising money to expand your company is one thing, but a company raising money to stay afloat is never a good financial investment. With the whole Enron fiasco happening, I think people will be a little gun shy in investing in this company.
Now that they have all that money, they can lower the fees they keep raising every few months.
My Webcomic: Asylum on 5th Street
~~~
When Paypal started offering $10 just to start an account I thought they must have huge cash backing. But think about it for a second, they were giving away 10 paypal dollars not US dollars. They are "printing" their own currency and pegging it to the US dollar. Just look what recently happened to Argentina to see what can happen when you try to print money and keep it pegged to the dollar, their currency just dropped in value by half! So what is a paypal dollar backed by? I want to short the paypal, is there a secondary market where I can do this?
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I first got excited about PayPal because you could zap money between palm pilots. Then pzzt. They dropped that in favor of wireless phones stuff. sigh...
Instead of a Donation button (link to pdf!) on my website, I prefer the Brunching Shuttlecocks' system: The Oral Sex Donation System.
It was actually an "Ask Slashdot" from this past December:s html
http://slashdot.org/askslashdot/01/12/10/1713224.
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Random, useless fact: I type in startx entirely with my left hand.
[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.
"It is a greater offense to steal men's labor, than their clothes"
It's hard to short companies right after they IPO because they're "hard to borrow". Basically, it's not possible to short until brokerage firms are convinced they've got some people planning on holding the stock or can borrow the stock from somewhere else.
Sig (appended to the end of comments you post, 120 chars)
There is a plethora of P2P payment services from the big financial services firms(c2it 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.
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.
I am not talking about shorting the stock, I am talking about shorting the PalPal dollar. Right now they have pegged the PayPal dollar to the US dollar at 1 for 1. I think the Paypal dollar is worth less than than the US dollar. Which would you rather have, $10US in your pocket or 10 PayPal dollars in an account? I think the PayPal is worth about $0.75US so where do I place my bet? Do you remember Flooz and their online currency? which you rather have now, beenz or US$
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Nokia Ventures is in on paypal, as the article states. Nokia Ventures focuses portfolio priority on mobility and IP related businesses. BMC Software is a partner, along with Nokia and others, in Nokia Ventures. BMC deals with business solutions, that wonderful catch-all, but a look on their site will tell you these people are very supply-chain oriented.
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.
Blearf. Blearf, I say.
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.
After I spend $940 more on paypal (even though it's coming of a credit-card) I will no longer be able to use paypal, according to them, until I provide them a bank routing number.
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!
Its amazing that PayPal can go public after their worthless security was the reason that my credit card was ripped off for over $5000. Had to go into emergency mode and have my bank generate charge backs to save my ass.
Sounds like a seriously risky investment and a dangerous security (sorry about the pun.)
There is no such thing as PayPal currency. When I signed up for an account, I received my sign-up bonus of $5 or $10 at the time. I made a purchase on Ebay and used PayPal. My sign-up bonus money was used to make some of the payment...this means PayPal credited me with real money, which they debited from their cash account.
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.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
Yes. To the tune of over $5000 just for me alone. Be afraid. Be very afraid.
http://www.paypalwarning.com
....maybe they can upgrade the phone system and hire more people that will actually answer and help you. Then they won't have to 'hide' the phone number on the website like one of their people quoted they did on purpose.
- 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.
There is no 'paypal currency'. I sign up, jump through hoops, and I get $10 'paypal money', which oddly enough, I can transfer to my bank account for $10 'US dollars".
They are not like flooz, they are not printing their own money-- they are a bank. Nothing more, nothing less.
Everybody seems to be reaming PayPal. I love it. I'm not a huge Ebay'er but I've bought some stuff recently and let me tell you if an guy on an auction says he won't take Paypal (or escrow for high value items) I won't buy from him. It is that simple. All my friends use it as well. We settle up dinner tabs, fantasy football fees, etc. I've never had a problem. Of course, I'm only beaming payment off my credit card, not trying to use Paypal as a bank. If you want to hold big bank balances at PayPal, that's not something I would recommend.
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.
You must not have taken Macroeconomics. Yes you are right a dollar is a dollar when it is in a bank, but when someone credits your "account" is it still worth a dollar. Remember Paypal is not a bank. An example, Right now I have $100 credit at Macy's, I would rather have the cash. I would be willing to sell someone that credit for a discount of say 20% So to me a Macy's dollar is worth 0.80 US$ Another illustration, I take $20,000 cash that was under my matress and deposit it in a bank, they credit my account. You want to buy a car but have no cash so you borrow $20,000 from the same bank and buy the car. The car dealer deposits the money in the same bank and they credit the car dealer's account. Now I still have a $20,000 dollar credit and the car dealer has a $20,000 credit. The bank just created $20,000! This example is why interest rates are so important and why banks are so heavily regulated and audited. Remember the savings and loan crisis, banks created 300 billion that just wasn't there.
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Can I use PayPal to buy PayPal stock? Or is that just asking for trouble?
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Cheese it! It's the FEDS!
One thing that is not going to help Paypal is Billpoint's full purchase protection promotion which is prominently displayed on every auction with billpoint. This will convince Joe Sixpack that paypal is some type of unprotected rogue service.
Louisiana has declared PayPal to be a money transfer system (duh!) and that they require licensing from the state to do business in the state.
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
www.slightlycrewed.com - Because aren't we all?
I've heard of banks that won't deal with PayPal. That sounds more likely than PayPal not dealing with your bank.
Well, there's EBAY, perhaps it's only legit use. And then there is online sex and gambling. And online laundering.
At least that's where the actions at. Risky you say? Come on, now, anythingforabuck is the American way....
Hey democracy lovers, add Quorum as a c
this is good? perhaps this will somehow allow the public to put paypal under closer scrutiny?
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.
Now they can pay me back the $40 or so they owe me from double-dipping my checking account!
*grumble*
This is only true if PayPal doesn't have cash reserves to cover their accounts. If every paypal user tried to withdraw all of the money from their Paypal account (i.e., a run on the Paypal "bank"), does PayPal have enough cash to honor this? I don't know for sure, but I think that they do. Do you have evidence that the Paypal joining bonus wasn't covered by a cash reserve?
Paypal differs from banks because banks borrow money from consumers (a savings account is basically a loan to a bank) and lend that money to others. Hence, they don't have the cash reserves to cover all of their accounts. Regulations today (especially after the S&L corruption) make banks a pretty safe bet for consumers, but in the past there were 'runs on the bank', where the enough of the bank's customers demand their money that it exceeded what the bank has on reserve, and would cause the bank to fail.
To my knowledge, Paypal doesn't lend money, so it's not inconceivable that their reserve is 100% of their accounts. I would need to see evidence one way or the other before I started speculating with the "paypal dollar exchange rate".
Yes, but PayPal gives you 10 US Dollars, which you can transfer from your PayPal account to your checking account. Store credit is how you described it, but it's a different situation.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
As an internet company, what's to stop them changing where they're registered to another country?
You could open an account and withdraw the $5 (I can't remember it ever being $10) right then if you wanted to.
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.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Until they issued the prospectus we had no info at all but now we can see they have $132MM to cover $140MM in deposited money. They have other money of course, but it is interesting they do not list this customer deposited money as "restricted funds" They can at any time spend this money on bonuses and trips to Fiji. Their big problem is they are either a bank and must be regulated like one or they are creating a Paypal currency pegged to the dollar.
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I've used Paypal once so far, perhaps I'll use it on an ebay bid. Then again, I'm poor and they can't take money away that I don't have ;).
"What use is power to the Keeps of Balance?" -Disnt of Nightmare LpMud
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.
All banks create money. It is the nature of a fractional reserve banking system. Consider. If I deposit $500 in a bank, and the bank has to keep 20% of its deposits on hand as reserves in order to cover withdrawls, then the bank can loan $400 out. A person comes in and borrows $400. Voila! The bank just printed $400 new dollars. I have $500 in my account and now someone else has $400 in his hand. If he deposits the $400 in a bank, the process is repeated.
As for PayPal dollars, when PayPal puts $10 in your account, the probably just record a liability for it on their balance sheet. If you have money sitting in your PayPal account, then you are an unsecured creditor, whether it be the free $10 you got or $1000 you deposited with them. This is exactly how it works with a regular bank. One big exception is that if a regular bank fails, your deposit is likely insured by the US government up to a sum of $100,000, while PayPal does not (I think) have FDIC insurance because to date is has not operated as a bank.
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...
So what is a paypal dollar backed by?
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.
Learn the rules so you know how to break them properly.
www.teslabox.com
Short it right here! - just PayPal me $100 and I'll send you $75 cash. Sound good??
:)
---- Den ene knappen er powerknapp, den andre er Bender voice knapp "Bite My Shiny Metal Ass"
banking is like lawyers. It's full of the most corrupt and evil people on the planet. Banks happily turn huge profits while at the same time happily throwing it's customers under the bus by raising fees, adding fees, dropping service and quality. Why? because they know thay can abuse you as a customer and you won't do squat. What are you gonna do? take your measley $10,000 elsewhere? they dont care.. They care about the guy with $500,000 or more in the bank... they dont get fees, are treated nicely and even recieve thank you notes in the mail.
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.
Do not look at laser with remaining good eye.
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.
---- Den ene knappen er powerknapp, den andre er Bender voice knapp "Bite My Shiny Metal Ass"
So what is a paypal dollar backed by? I want to short the paypal, is there a secondary market where I can do this?
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.
Libertarianism is rich wolves and poor sheep playing gambler's ruin for dinner.
What an actual business model will get you these days.
Your analogy is incorrect.
... then you'd be a fool to value your $100 credit at $80. Heck, I'll buy your Macy's credit right now!
I more correct analogy would be:
"I have 100 dollars at Macy's" == paypal
"I have 100 'Macy's dollars'" == macy's
These two are *very* different...
If you have $100 credit at Macy's, and can cash in on that credit and get that money back as cash at anytime
However, if you *can't* get that money back as cash and HAVE to use that $100 at Macy's, then it would be reasonable to value *those* $100 at $80. $100 Macy dollars can only be used at macy's, then the money has lost value because it's not useful to you (ie. not as useful as $100 real dollars). That loss of usefulness translates (to you) a 20% decrease in its value.
This situation is *not* paypal... as you can redeem your "paypal dollars" at anytime for $1USD.
I wonder how many truckloads of Aeron chairs are on their way out to Paypal?
;-)
I wondre if Herman Miller TAKES PayPal? That's an interesting paradox. It's an instant 3% off their purchase
-S
We Apprentice Developers and Designers
As far as regulation goes, I'd be happy if I could be guaranteed the following:
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.
Libertarianism is rich wolves and poor sheep playing gambler's ruin for dinner.
Big bank gets: an established customer base and a headsart over big banks.
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.
Do not spread "09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0" over the internet, thank you.
Ultimately, you *have* to trust someone in order to complete an online transaction. I'm not really sure that it's so clear-cut that one person (say, a given escrow service) is more trustworthy than another (such as PayPal)?
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.
What is "peer to peer" about c2it ? As far as I can tell, it is a system where a transaction moves money in accounts on a central computer. Isn't that what paypal is ?
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.
Everything Solaris recently posted a slew of articles, showing that the Solaris community is alive and well. Featuring Open Source software, articles like "Providing Core Customer Services" discuss how to set up that new infrastructure with both Open Source and high-availability in mind. Other interesting articles include, "Replacing Sendmail with Postfix" and "Upgrading to ProFTPD."
I've never used PayPal and I don't intend to. If I have any trouble with my own bank, not only is there a number to call, with people who are actually helpful, but there's a brick-and-mortar building I can walk into, with real people. If I have trouble with my Credit Card, I have confidence that I can phone them and get the trouble cleared up. I have no such assurances with PayPal, and I've heard more than enough bad things that I will steer clear of them.
Slow down, cowboy! It has been 4 hours since you last posted. You must wait another few hours.
this link
I got screwed out of money by pay pal too. About $10, but still that is $10 that they STOLE from me. Again, they took my money "pending investigation" and after days of trying to get in touch with a real human I gave up. Don't buy thier stock because they are pending several investigations by the US, and a couple class-action suits.
-EvilMonkeyNinja
Mild Mannered Host by Day
Wild Hammered Programmer by Night
I don't think they're able to just blow the whole wad of cash just because it isn't labelled as restricted. btw, the "restricted cash" account refers to a certificate of deposit that is related to average daily transactions made with the PayPal ATM/Debit card. Here is what *I* saw on the S1 filing as of 9/30/2001 (all amounts $MM):
Under Current Assets:
Cash and Equivalents: $138,614
Short-term Invt. Securities: $ 4,998
Under Current Liabilities:
Due to Customers: $139,993
Funds Payable: $ 16,584
None of that includes the $37,191 in long-term investment securities. So, they look pretty solvent. Of course, I'd rather they be run more like a "real bank" with FDIC insurance on deposits, rather than deposit insurance with Traveller's.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
How is this different than my real-world bank giving me $25 for opening an account with direct deposit?
When you deposit money in your account at a banks it is still your money. Customers accounts are show as a liability on the bank's books. What the bank is allowed to do with that moeny is limited by regulation, and how accessable that moeny is to you is also regulated. If the bank goes under you get 100% of your money back. If the bank catches on fire, is robbed, is sold, etc., you get 100% back.
When you have money in your PayPal account it is not your money. PayPal is not a bank. They are not regulated. When you put money in your account you are paying PayPal for the "service" of holding and/or transferring that money.
PayPal can do anything they want with that money, because it is theirs. They can put it in bonds or they can bet on the ponies. If they lose it all that sucks for you. If PayPal goes bankrupt, get in line with the rest of the creditors. If they are bought, sold, or dissolved -- good luck. PayPal has recently gotten in the habit of "freezing" accounts for arbitrary reasons and violating their own TOS when they are threatened with chargebacks.
Last but not least, I know that I can walk into my bank on any day they are open and walk out with every penny of the money in my account in cash. When and how you can get money out of your PayPal account is entirely at the discretion of PayPal.
These are all things that cause certain people to believe that at some point in the future PayPal "dollars" will be as useful as Flooz driving down the value relative to US$. Hence the question about shorting the PP$.
Si vis pacem, para bellum
The only thing more annoying than a Libertarian is an (un|mis)informed Libertarian
"If PayPal goes bankrupt, get in line with the rest of the creditors."
PayPal provides up to $100,000 deposit insurance through Traveller's. It's not FDIC, but the effect is the same.
Bill Clinton: Pimp we can believe in. - The Shirt!!!
Can I buy paypal stock, then a few months later do a chargeback and get my money back?
It's amazing Paypal was able to get this far. Negotiating deals with MC & Visa, and the banks, was almost miraculous. Frankly, I think the only reason they all allowed Paypal to go ahead was to let them be the guinea pig! EVenutally, they'd like to take over this space themselves, but not until the market forces them to. Corporations like the status quo, even when new opportunities are slapping them in the face.
I think bricks-and-morter banking is absurd, anyway. How much of our money is going for high-street real estate, and for what? I'd like to see Paypal take 'em all down, but it'll never happen. They're holding their own now, but when the establishment gets into this space, they'll be lucky not to get steamrolled.
Of course, some sharp, forward thinking big bank executive could have the bright idea to buy Paypal, but sharp and forward thinking and the banking industry don't usually go together.
Actually they are not a bank, they aren't insured by the FDIC, and they don't portray that they are a bank. They are a company who deals in money, nothing more, nothing less...
... and it has been sometime already since I first thought they had one of the best ideas being rolled out on the internet, an idea of a magnitude, I believe, comparable to Hotmail, Yahoo and Ebay.
The reason is that their business is geared by the creation of network externality forces -- you know what that is: many people already in make it slightly more likely that you will to join them than competitors, which in turn brings more people in and so forth.
Is the network externality force all there is to this game ? Of course not! But it is, in my view, *the* differentiator. They need to do well in customer service, in fee setting, service design, in marketing, in providing guarantees and all the rest. But they can do any of those things, in principle, just as well as any other competitor. However, no competitor can really replicate the network externality, for as long as PayPal leads. What I am trying to say is, all things being equal -- and I think they *could* make all things equal -- PayPal would be dominant (I mean MS vs Apple dominance) in this P2P payments field.
Now look closer at where they are, and where they could be evolving to. I see it in three dimensions. Dimension number one is type of payment. They started P2P, then they evolved P2B, perhaps they could go micropayments (something they haven't done yet) or B2B.
Dimension number two is financial services depth. Here we see them evolving (sooner or later) towards being a full service bank. It started with the investment accounts, then banking cards, credit cards -- what could come next ? Insurance ? Loans ? Pension plans ? Think retail financial products.
Dimension number three, and this is, in my opinion, both the most important for their future prospects and the most interesting of them all, is platform evolution. The vector is clear: from internet based to mobile devices. One fact to consider is that more people use mobile cell phones than the internet today. Another is that a cell phone is, together with your wallet and ID, one of the least likely objects you will leave home without. It is always there. Think paying your cab driver from your cell phone to his cell phone.
But WAIT! Not all things are rosy, and I do recognize (as other posters pointed) significant hurdles ahead -- Regulation is, I believe, the greatest one. Vertical challenges in their value chain is another. Others are related to management capability to set the company in the right course, negotiating the challenges as they lay ahead, and being faultless (or as close to that as possible) in execution.
So their probability of success is not 100%. But remember that their value is their probability of success times their value if they are successful. And, from my perspective, the position they are aiming -- becoming the financial "operating system" of internet and mobile transactions -- has immense value.
Well, what do I know...
-Ricardo
Quem a paca cara compra, paca cara pagará.
I disagree Paypal has failed in it's major objective and that is gaining financial confidence
If a financial institution cannot gain the confidence of it's users then it has failed
The main success of Paypal is in its marketing
not it's financial structure and management
Greetings,
P2P in the epayment world doesn't mean Peer-to-Peer. It means Person to Person. It means an individual paying another individual, instead of paying a company. (It also means Path-to-Profitability for startup companies, to give you an idea how overloaded P2P is.)
Yes, the payment still goes through a central organization, but the direct destination for that payment is another person.
-- Cyberfox!
Does anyone know of a real electronic payment solution that allows you to send money from any country with trustworthy banks to another?
You said
...."
1. "Banks happily turn huge profits while at the same time happily throwing it's customers under the bus by raising fees, adding fees,
Then:
2. "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....."
Why would they wanna get rid of everyday customers they can allegedly milk and bilk to no end?
Nor did you offer a solution.
(BTW, sounds almost like you are talking about Microsoft: They allegedly got rich off of squeazing out "forced-upgrade-to-be-compatible" fees from regular offices, yet wanna head to the "high end" market.)
Table-ized A.I.
according to this lovely chart. Thats respectable, I suppose. Although if this company had IPO's 3 years ago they'd have been at $400 by now, and $1000 by tuesday :P
autopr0n is like, down and stuff.
There's two ways to do an IPO. The most common one is that the underwriter(s) buy all of the stock at a certain price from the issuing company, and if the stock price rises during the IPO, then the underwriter pockets the difference. It's their compensation for taking on the risk of buying all the stock (gross margin). The difference between what the underwriter paid and what the underwriter sold the stock for during the IPO is part of the cost of the IPO (spread), and if the stock price explodes, then you have a lot of weepy executives back at the issuing company, because they sold their stock waaay too cheap and missed out on a boatload of cash.
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.
As long as they keep paying the premiums.
Si vis pacem, para bellum
The only thing more annoying than a Libertarian is an (un|mis)informed Libertarian
A friend of a friend registered the domain name "x.com" five or so years back, before domain names were thought to have much value, and during the week or so window when single-letter names became available and before they were all registered. I think he registered it because he was working on some project related to X11, or perhaps he just thought the domain name was cool.
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.