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Ebay buys PayPal
mdahlman was among several readers who submitted the story that
eBay has
bought Paypal in a deal worth $1.5B in stock. The article is mostly
numbers and money related stuff, but it also briefly mentions some of
the controversy surrounding eBay.
I have noticed the one sketchy part about the whole Ebay experience has be the payment path. Perhaps now it
will be better integrated.
Don't read this!
Who else can see paypal becoming a "have money sent to you, but only be allowed to be spent on ebay" type of service?
I get my pay from germany with paypal, if they change it to you can only use your paypal money to pay for ebay stuff, ebay will gain, but we will all be stuffed.
Is it really that unrealistic?
Microsoft IIS is to webserving as KFC is to healthy eating
Maybe they're just tring to set a record for the largest sale on their own auction site. You too could own paypal. Bids start at 1 billion, 2 billion dollar reserve.
from the article:
PayPal is a tad controversial - it's got jaw-dropping Ts&Cs and it's not very friendly to people outside the US. Also, there are occasional foul-ups, and several states want much closer scrutiny - if PayPal.looks like a bank and it acts like a bank, then it should regulated like a bank.
In fact, the article doesn't mention any ebay controversy. Expect this comment to be modded down and the story silently edited...
Do you even lift?
These aren't the 'roids you're looking for.
Ebay took the "Buy now" option. I'd have always figured they would have opted for a fierce bidding war with billg@microsoft.com. Assuming Paypal is guaranteed against DOA, the sellers of Paypal should get positive feedback.
Ergonomica Auctorita Illico!
It turns out they just fell for some Finnish guy's scam (never send $1.5B of stock to a P.O. box!). He claimed he was selling PayPal "for a friend", but oddly became angry upon suggestion of sending it C.O.D. Unfortunately, due to their toothless fraud protection policies, it looks like they're just gonna have to suck it up and take the loss.
Better luck next time, eBay! They probably should have bought PayPal through an escrow service...
Ebay's business model is almost perfect: no warehouse, few employees with average qualifications, buildings can be in the middle of nowhere, no suppliers, no stocks, customers take care of themselves. Paypal, on the other hand, requires more customer care - I could be wrong on that but I suppose it does.
I'm going to play silly here. What do they really gain? Is Paypal that profitable or are they just going to push Paypal users towards spending their dollars on ebay?
Trollem mirabilem hanc subnotationis exigiutas non caperet
EBay agreed to buy PayPal, a popular payment service, in a stock-swap transaction valued at $1.5 billion. EBay, which separately reported stronger-than-expected earnings, will phase out its in-house Billpoint unit.
I'm sure billpoint wont be missed until paypal fees are raised due to lack of competition.
Comment removed based on user account deletion
they would have bought them 6 months ago, but PayPal had frozen eBay's account.
PayPal, while secure, isn't exactly cheap. While it's quick and secure, if you use credit cards and direct deposit. The fees for transfering funds are outrageous. I think PayPal starts to make up for it through the services they provide that are similar to any other bank. Still not to happy with the chunk of MY check that they take.
Why would ebay do this? Simple, that way they control every part of the bidding experience, from the post, to the bid, to the buy ... I see them maybe trying to buy fedex next. I mean why not, let's plaster EBay on everything!!
Ignore the "p2p is theft" trolls, they're just uninformed
This is an interesting development. I really don't think we should be worried about some kind of monopoly appearing here, since the success of eBay depends on hundreds of thousands of sellers.
We've seen a few moves like this on eBay's part. This is another way that eBay is trying to shield itself from being slaughtered in the current economy.
First, you have eBay beginning to offer benefits for sellers over a certain income margin, which should encourage sellers to stay with eBay, which increases eBay's financial security. Then, you have eBay buying PayPal. PayPal is one of the most influential external factors to the success of eBay; if PayPal went under, many sellers and buyers would have more difficulty making transactions.
This also allows eBay to begin attacking the single factor that keeps many people from buying at online auctions: fraud. Before now, eBay did not have any ability to track fraudulent users, or take any action against them if they used PayPal. Now, they have the ability to go after and probably halt fraud for the most part.
Overall, this looks like a very intelligent business move, and one that should help continue eBay's pattern of success.
...
... here and here.
---- scrm
If they did, who keeps the transaction fee? :D
Thanks,
--
Matt
Asked about the deal, an Ebay spokesperson described PayPal's management as "A++++++++++", calling them "VERY RESPONSIVE" and noting that they "WOULD DEFINITLY BUY FROM AGAIN." PayPal's feedback rating is 1283.
Karma: Good (despite my invention of the Karma: sig)
You guys missed it..sure eBay got PayPal all of it..
But look at who partnered with PayPal and invested in Paypal before the eBay transaction..
Wells Fargo..
PayPal is going to be pushed as the online pay site for all online transactions by Wells fargo..
eBay just wants to make sure they have a full handled on that leader..
Don't Tread on OpenSource
It is me, but of all the companies who could have bought PayPal, this is the one I'm the most confortable with. I mean, even tought Ebay is in it for money (after all, you don't buy something at 1.5 billion for fun... or maybe you do, I don't know, I'm not that rich... yet :-p), this is one of the less contreversial takeover/merger that happened in the last few months. They complement each other perfectly, one providing a service, the other the most popular the way to pay on that service.
I don't think tought that Paypal will only work with eBay now. As someone else pointed out, eBay will make a lot more money keeping Paypal as it is right now then making it eBay-centric, tought I'm sure that we'll soon see an option in your eBay account to get a PayPal account, no harm in that.
I disagree. For Ebay payments buyers you don't have to go through the Paypal "registration" process (where they try to persuade you to upgrade to Premier where they get your bank account information), and for Ebay payment sellers you get deposit straight to your bank account without sitting around in a namby-pamby "paypal" account first.
Both systems did have strong discouraging factors for non-US buyers, but things have gotten better for both sides in the past couple of years.
Ebay payments did always have a larger seller fee than Paypal, though.
I thought the Amazon "Zshops" system was pretty cool for both buyers and sellers. The nice thing about it is that it worked for non-auction sales *and* it didn't require an extensive registration process like Paypal. But it appears to have never really become popular with users.
I'd be curious to get a sense about how you feel about PayPal and *your* country.
(fwiw, I care because I use it to sell my software, and I've got lots of international users)
Here's what I do: Bitty Browser & Andromeda
Now that eBay will control PayPal, this could be a better incentive to keep deadbeat buyers/sellers out of the pool. At least now there may be some real reasons to NOT play dirty and expect to pull it off. I know it's still pretty simple to clean out a bank account and move on, but for those who don't, bank account numbers (and the info associated with them) afford a simple way to track bad eggs as they switch emails and attempt to become 'repeat offenders.'
This is, of course, assuming eBay intends to wield this newly-acquired power for good and not evil...and based on both companies' past behavior, I wouldn't bet on it.
eBayPal? PayBay? Payola?
Terms and Conditions,
Paypal's are pretty draconian.
"All your money is belong to US!"
It is the domination of an industry. Period. There are no viable alternatives to either.
eBay has 85% of the market.
PayPal has almost the same numbers.
What you get is one company that can control everything in the process of selling goods auction style online. Fees are raised, people who don't play the game get squeezed out.
Yahoo has seen the light and has stopped their auction services in every country except America. Where do the send the traffic? eBay of course.
I like eBay and I like PayPal. I don't like the combination. eBay has shown a historical record of squeezing out the little guy. They will continue this with PayPal who already has draconian methods of handling customer service.
This is a monopoly of an industry pure and simple. The only thing left for ebay to buy is a delivery company and it will be complete.
One of the chief metrics used to determine a monopoly is viable competition. On this web we use it all the time to look at Microsoft. Here it applies as well. Is there a viable alternative to eBay. No. Is there a viable alternative to PayPal. No.
Yeah, I know, it's for the UK only. But I only live in the UK...
...or does corporate America somewhat resemble a game of Pac-Man?
"To confine our attention to terrestrial matters would be to limit the human spirit." -Stephen Hawking
Click here or here.
1.5B in paypall stock -- Original box, reciept. (Sold by they same folks selling empty PS2 boxes last year)
+++ UGUCAUCGUAUUUCU
Only yesterday, I was doing an EBay purchase, and noticing that PayPal had gotten slightly more clever at circumventing EBay's attempts to steer buyers to Billpoint. I guess they won that battle!
I'm sure that for far less than $1.5 billion, they could have set up a company that does everything that PayPal does, but without PayPal's reputation for treading mightly close to the borderline between incomptence and plain old criminality?
Does anyone have any theories as to why Ebay want to be tarnished with PayPal's reputation rather that setting up the alternative to paypal that people want?
A pizza of radius z and thickness a has a volume of pi z z a
I trust PayPal about as far as I can throw them, but I like BillPoints just about the same. I always found it rather interesting that they can take money out of my checking account "instantly," but it takes 3-4 days to put money into it (allowing them to earn interest off of mymoney). Of course, there's also PayPal's social engineering attcks ("We can e-mail your buyers when your auctions end automatically, update your PayPal logo to a "Pay Now" button, all you have to do is give us your eBay password...")
To be honest I'm not really sure what to make of this development. In my auctions I've been flip-flopping between accepting one or the other depending on what price I think it will go for (PayPal is a little cheaper for auctions over $15.00), but either way I still feel like I'm getting ripped off from their per-dollar fees. Heck, at this point I'd rather my buyers mail me a personal check instead, and I'm getting to the point where I'm considering to offer my buyers a refund of the $1.27 if they just mail me a money order instead...
Will this make things on eBay more smooth? Will PayPal's fees for e-checks more resemble BillPoint's? Will they now start charging a "deposit fee" just as BillPoint does? Will eBay start throwing around their monopoly power at my expense? Will there ever be a new competitor to them? Will this prevent PayPal and eBay from passing the blame back and forth if there is a problem with a transaction? Will BillPoint's fees drop?
And, most importantly, does anybody else know of a current competitor to both of these people I could switch to?
Having something like bidpay or paypal better integrated into E-bay would be nice, but Paypal needs to REALLY clean up their act. I use them when I can, but they won't let you have full access unless you "validate" yourself by giving them your checking account information. Which is SO NOT going to happen.
They already have my credit card info and that should be enough. My losses are limited if some bozo breaks into my Paypal account and pays for something with my credit card.
If they have my checking account info, they could potentially wipe me out and I have little to no recourse at that point.
Don't anthropomorphize computers, they don't like it.
It was only a matter of time before Ebay's BillPoint would have pulled the rug from under PayPal's feet. EBay should have stuck with BillPoint, offering their customers incentives to switch to BillPoint. Eventually, they would have made inroads into PayPal's marketshare. It would have taken a year or two, but in the end it would have been much cheaper than $1.5b that they spent.
I thought the people upset with Paypal were a small minority until I tried to use the service. I sold a friend something. PayPal screwed it up. The amount of the transaction was $5. But they managed to take the money from my friends credit card, claim they never took it, charge my friends account for it, giving it a negative balance, and reverse the charge on my account.
So over this $5 transaction PayPal grabbed $15 for itself-- $5 from me, $5 from the friends bank and $5 in a charge to the friends paypal account that they have to pay to fix it.
Then they decided this friend was committing fraud and suspended their account.
This is totally unacceptable. This was the FIRST TRANSACTION for all of us, after we both became verified members, etc. The bank is clear that the money went to paypal, and paypal wouldn't say a peep about what went wrong.
I wouldn't say PayPal was a fraudulent company, but in my experience, they have a %300 failure rate-- 1 transaction and they took money from three entities.
In the end my friend and I both closed our paypal accounts and settled up face to face.
Sheesh.
Yeah, and you guys panned the ipod too: http://apple.slashdot.org/article.pl?sid=01/10/23
While I don't have numbers, I think you'll find zShops is more popular than you think. I buy used stuff off of Amazon constantly, not only because I've found some great prices, but because I don't have to use PayPal.
And my wife, who runs a bookstore, tells me that her store lists their collectable stuff on Amazon and does well with it.
From a user perspective, it's much easier to wander around on Amazon, find the book you want, compare (if applicable) the new/used price, and then order it from some random book dealer without having to deal with back-and-forth emails or new payment options. If you head to eBay and search right off the front page for a book title, you're likely to turn up 20-some irrelevant responses (Brand New Copy L@@K!!! keyword keyword).
-- q
Damn! I bid $1.45 billion and ebay sniped me in the last 20 seconds.
If you want to see it in action, go to Centiare. If you have any tech questions, send me a private reply at karln@centiare.com
Oh, before I forget:
So, my wife wants to know why I think advertising on the Internet would be a good idea. But first, I should probably explain the family dynamic: she's an Ivy League grad and attorney while I have a UC degree and CPA certificate. Usually, she's the one who is right, so I figure I should probably listen (as if I have a choice).
I figure it makes pretty good economic sense, since many different sites with low CPM rates still get over a million page views per day. Problem is, she replies, there's probably only around 150-200k unique visitors at any of these respective locations, each of whom is triggering around 5-7 page views per person per day.
And besides, she continued, using the Jungean Archetype model to illustrate her point, the target audience is devoted to reason, not emotion. This, I concede, defeats one of my central tenants: applying a test to determine whether a person is Apollonian or Dionysian, left-brain or right-brain, etc. in order to assess the likelihood of purchasing my $20 cash management program.
To be continued ...Centiare
What will happen to eBay Payments (Billpoint) users?
"eBay Payments (Billpoint) will continue to function as a provider of online payment services until the acquisition is finalized around year-end 2002. At that time we plan to phase out eBay Payments (Billpoint) as we integrate PayPal into our platform. Since a majority of eBay Payments (Billpoint) users already use PayPal too, the transition will be quite simple for them. For eBay Payments (Billpoint) users who have never used PayPal, we will work closely with them to make sure that the transition happens in the most user-friendly way possible."
FAQ
Original announcement
Discussion #1
Discussion #2
Nobody knew what a "Zshop" was.
Amazon hasn't promoted Zshops or Auctions in years -- they earn far more profit on Marketplace sales.
Microsoft
AOL
eBay
Is eBay the lesser of three evils?
Stop worrying about the risks of nuclear power and start worrying about the risks of not using nuclear power.
Selected commentary:
"Hopefully they will replace the paypal [employees] with the nice eBay people." -pictureman1
"Not sure how I feel about this one. I think I'm leaning towards not happy here. Billpoint has been so easy to use/accept." -luvs-to-read-2
"Will PayPal change and put in place security for sellers against chargebacks as Billpoint has? Will PayPal demand now that everyone be verified and charge a fee to everyone thereby forcing it to be a business type venue as it should be? Will PayPal now quit freezing folks accounts and tying up there funds on a whim without just cause?" -ishipfree.biz
I use eBay a lot (500+ feedback) and have been mostly happy with them. They occasionally step on little guys, and their terms of service get a little creepier with every rewrite, but I still feel safe using them. They are open about technical problems, they keep the site design simple and clean, and they allow you to use your own HTML code and images in your auctions. And the fee structure has grown slowly and carefully, so it's still a good deal to sell on eBay.
But they are still a monopoly, and ONE OF THESE DAYS, the board of directors will be sitting around, thinking about ways to "monetize", "maximize", and "synergize", and they'll do something that SCREWS everybody. I can just smell it. Any day now, I'm expecting a massive fee increase, or a rewrite in the terms of service ("thanks to our partnership with the RIAA, CD sales are no longer allowed"), or some kind of limitation on the small guys, or something...it's coming... I can feel it.
And now by buying PayPal, they just got a little bigger, and they have just a little more control over your online auction life.....
As bad as PayPal can be, it is probably better than having an account directly with an online casino.
I, like many other eBay users, will only accept paypal with my auctions because like many others, I have been jilted by the poor quality of service of ebay's own service, Billpoint. While PayPal is certainly not known for being big on customer service, it has always had one thing going for it that kept it alive: It wasn't billpoint.
Paypal's service survived until simply because, shocking as it seems given the horror stories, it was better than the eBay offered alternative. Now with eBay having snagged it, it seems unlikely that they will abstain from changing and likely ruining the service.
Sad indeed.
Viewed through dot-com glasses, I have trouble seeing the sense in this purchase. Through more traditional financial analysis, I have even more trouble.
EBay is a profitable company (strange, I know!). PayPal is not. Hell, it ain't even close (-78.7M ttm income vs. 139.6M revenue). Buying PayPal puts a serious dent in EBay's own numbers. Before the purchase, its P/E ratio was about 146 ($17B market cap divided by $117M income---I'm looking at 3/31/02 numbers). After, it will be about 448 ($17B market cap divided by $38M income). If that doesn't look bad, consider profit margin. It's currently about 14% ($117M income divided by $840M revenue). After PayPal, it drops to 4% ($38M income divided by $979M revenue). Ouch!
EBay seemed to be one of the (very) few dot-com companies with a head on its shoulders. Now I even wonder about EBay.
Btw, did EBay really think that PayPal would be around for *that* long? At the rate it's bleeding cash and annoying customers, I'd think it would be dead in another 3-4 years. Or, did the EBay CEO forget that sometimes it's useful to think of the long-term future of a company?
Jason
Is there a viable alternative to PayPal? Yes. Its called the USPS, Canada Post, or whatever. Anyone who actually TRUSTS PayPal with their money is seriously derranged. I personally have been screwed to the tune of 60 dollars by them, and I wouldn't touch their service with a 10 foot pole. Thousands of others have simmiar stories. Just do a google search on PayPal fraud.