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Paypal Reverses Payments Made To Indians
bhagwad writes "Beginning January 28, Paypal has been reversing the payments made to any Indian provider of services. In addition, Indian users have been unable to withdraw their money to their bank accounts. As a result, a large number of Indian Paypal accounts have negative balances running into the thousands of dollars. The worst part is that users weren't informed beforehand — the funds were just whisked away. Indian providers have gone ballistic, with over 2,000 posts on a thread on the reversal of payments and over 700 posts on this thread about the delay in transfers. Paypal hasn't given any explanation to this behavior other than they're looking into it. Although Paypal claims in the above blog post that payments made for 'Services' are not being reversed, this is not true. All payments not made for 'Goods' with a shipping address have been reversed — in fact, the Paypal e-mail tells the Indian sellers to encourage their clients to lie and claim that they're paying for goods with a shipping address instead."
No viable alternative? What about a normal bank transfer? I used to pay an Indian guy via Paypal but their charges are pretty steep. So I informed with my local European bank for the costs and it turns out this is much cheaper. Problem fixed.
What Paypal does is actually very similar to what many banks do at least from the user's perspective. Both hold money in accounts, and provide ways to transfer money. Banks provide checks and debit cards for this purpose.
I will admit that Paypal does not offer loans, nor does it over things like savings accounts, but from a user experience they are very similar to a bank where they have only a checking account.
If Paypal does not bother to invest the money sitting dormant in accounts, then many regulations would have only minimal impact on them, since they would be keeping full reserves rather than fractional reserves. The regulations we really want are those that prevent banks from freezing accounts for no valid reason, and from interfering with valid transactions. The procedures already in place for banks on both of these points would really help protect users.
I will admit though that overall Paypal's primary purpose is more like that of American Express than a bank, but the way they do it is debit based rather than credit based, meaning a whole bunch of regulations that would not apply to AmEx could be applicable.
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Why should they be a bank? Their primary purpose is enabling transactions not the usual roles of banks.
They hold user accounts - you can keep money there.
PayPal credit
PayPal Money Market funds.
Sure smells like a bank to me.
No viable alternative? What about a normal bank transfer?
The US does not allow for that. The banks don't link into other banking systems seamlessly. They treat the account number as a password (despite it being on the face of every check). The US just doesn't do it. Most of the other countries on the planet have banks that let you transfer money to other banks in that country with a phone call, over the web, in a branch, or maybe even other ways without any problems at all. A large portion of money moves directly between banks electronically (rather than checks, as used in the US).
Hell, I have a fellow customer at the same branch of a US bank that wanted to send me money. It's impossible, according to Wells Fargo, to transfer more than $1000 from one account holder to another. The person may have been misinformed, but the person trying to get me money tried more than once with different people and couldn't do it. The only option is to not transfer it within the bank (meaning, withdrawal the money completely, the deposit it again, which can be done at the same time at the teller, but can't be done by phone, fax, ATM, online, or such, when such options are available outside the US almost everywhere).
With that system, I declare that to be "no viable alternative."
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Never, never, EVER use an ATM to make a deposit. I learned that the hard way. That receipt it spits out is worthless if the contents of that envelope are misplaced, lost, or stolen. Until a human being actually verifies those contents, there is no deposit. And if the envelope, or its contents, pull a disappearing act twixt machine and homo sapiens, you're screwed. You can wave the little receipt in their face and yell and scream and make dire threats, and you will simply be told that the machine receipt isn't worth a pitcher of warm piss. After all, think about it from their point of view -- one could put an empty envelope in the thing while punching in a $500 deposit, and then claim that it was stolen or otherwise misplaced. So, there is no deposit until a bank employee says there is a deposit.
"Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket." -- Eric Hoffer