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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.
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.
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 do not. If paypal becomes the universal standard for person to person financial transactions online, they stand to make much more money than if they only sold "ebay bucks."
OddManIn: A Game of guns and game theory.
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.
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.
...
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)
...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
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?
Because it would take them far more than 1.5 billion to gain the market dominance that Paypal has, and because Paypal only has a bad rep among a small percentage of internet users who reside on boards like this. Any huge company is going to have unhappy users, any huge financial one even moreso, just because you find a dozen unhappy stories (or one sides thereof) at paypalsucks doesn't mean the company is the sham it's portrayed as there.
sig:
See the "..for smart people" banners Wired runs here? Look elsewhere guys.
This has already happened. Richard Stallman, shortly after the story broke, announced the creation of GnuPal, citing the need for an free (free to use, anyway) payment system. It will be deployed using the DotGNU web services platform.
Software Wars
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
Damn! I bid $1.45 billion and ebay sniped me in the last 20 seconds.
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
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.