Could PayPal Be an In-Store Option?

daria42 writes "PayPal has long been one of the most-used payment options on the Internet; its history serving eBay's millions of users has now expanded into a wider remit across many e-commerce sites. But will the company ever become a valid option for point of sale payments at actual physical retail stores? Yes, according to PayPal's global president Scott Thompson — and PayPal's working on that right now, with one option based on mobile phones on the way and two others in development. It'll be interesting to see how far the company gets with its plans; personally I'm not sure how comfortable I'd be using such a system."

Comments

I have a debit card with chip-and-pin.

[Soluzar]

Why would I need this? I can pay for things using my debit card with great ease. I don't see how any other system could beat that, unless it requires no physical token.

Re:I have a debit card with chip-and-pin.

[thsths]

Paypal could be a safer option - with online verification, a secret code in your mobile, and a password to enter. I think they may be on to something - something that certainly involves a good cut for them :-)

Re:I have a debit card with chip-and-pin.

[antifoidulus]

Depends on how paranoid you are I guess :P One nice thing about the Suica(and Passmo, hayakaken etc) contact-less cards is that they can be anonymous*. You can get them with your name on them, which has the added benefit of getting a replacement with the value still on it, but you can also get them with no name. Which means that wherever the cards are accepted(trains, most convince stores, some restaurants), you can pay for things as anonymously as you can with cash without having to fumble around for a billion coins. Pretty nice system if you ask me.

*(You can only buy the actual card from certain vending machines in the train station, theoretically they could snap a picture of you when you buy the card and use that to track you, but I sincerely doubt they do anything like that).

Re:I have a debit card with chip-and-pin.

[grqb]

I think this is more about the merchant than the buyer. I assume that paypal could make this cheaper for the merchant than the current norm (ie. merchant having to pay for a credit card processing system where a simple tablet and wifi/3G connection could work).

Re:I have a debit card with chip-and-pin.

[smallfries]

Seriously? You think that that a transaction that authenticates the identity of the payee through physical contact and sends the transaction over a private network is less safe that one that operates with dubious authentication over an untrusted network? Why don't you think that over while I count my blessings that you don't do this for a living.

Re:I have a debit card with chip-and-pin.

[bmo]

>Paypal could be a safer option

For who?

Vendors?
Customers?

From what I've heard is that everyone hates them, that they're forever screwing over both sellers and shoppers, day-in, day-out, 24/7 on Ebay, but since Ebay is a captive market, there aren't any real alternatives.

Why, on Gawd's Green Earth, would you want to take their abuses and expand them out into meatspace?

Credit card companies, as much maligned as they are, treat their customers (both vendors and shoppers) far better than Paypal has ever done for their own customers.

As a purchaser, you are better off with a regular or secured credit card and pay it off at the end of the month (this is key) than ever dealing with Paypal. You get extra warranties, cash-back, fraud protection, frequent flier miles, etc. Indeed, just comparing credit card fraud protection to Paypal's version of "fraud protection" and the differences are staggering. Only a fool would pick Paypal.

--
BMO

Re:I have a debit card with chip-and-pin.

[hitmark]

Do the vending machine take cards as payment or just cash?

Re:I have a debit card with chip-and-pin.

[Nick Ives]

In the UK, debit cards aren't covered by the consumer credit act. Under the CCA your card provider is liable for transactions over a certain amount (I think £50) which basically means if you don't like a product, you can give it back and tell your card provider you're not paying them.

If I use PayPal charged to my debit card (as I don't use a CC. I really should get one just to build my credit rating, but I never get around to it) it would mean I can use PayPal to get money back!

Re:I have a debit card with chip-and-pin.

[npsimons]

Credit card companies, as much maligned as they are, treat their customers (both vendors and shoppers) far better than Paypal has ever done for their own customers.

Credit card companies are maligned for a reason: they acted just like Paypal before the eeebil gubbermint stepped in and and regulated them. If it weren't for government regulations, people would be still getting fucked over by CC companies and banks (and despite the regulations, people *still* get screwed). This is why Paypal keeps wanting to play it both ways and insist "we're not a bank!" because it means they'd be subject to a whole pile of rules to prevent exactly what they do.

Re:I have a debit card with chip-and-pin.

[MobileTatsu-NJG]

You'd rather have fewer payment options? I've helped friends out a couple of times via Paypal and their debit card.

Re:I have a debit card with chip-and-pin.

[MobileTatsu-NJG]

A purchase of condoms I buy 5 years ago may haunt me when a patent troll decides that he can sue all of Trojan's customers, so goes through logs of people's purchases bought and starts a wide legal fishing expedition

What?

Re:I have a debit card with chip-and-pin.

[Fjandr]

I'd say that too, but have you seen some of the legal crap these companies try to pull? In 5 years, this may not be something that's shocking. Just sayin'.

Re:I have a debit card with chip-and-pin.

[hairyfeet]

Uhhh...isn't this the bunch that acts like a bank yet doesn't have to follow the regulations of a bank and can, and often has, taken people's accounts (and the money therein) and just held it hostage, sometimes for months at a time? Uh no thanks, I much prefer my little home town bank which doesn't screw me over and actually has really nice folks that go out of their way to HELP me, not to just see how much profit they can wring from me.

I trust Paypal even less than the scammers on ebay, that is not at all. I've known too many folks burnt by Paypal to ever trust them with anything I considered important which is why when eBay basically switched to Paypal only I walked away and haven't been back. There are just too many horror stories from that bunch to ever trust them with anything worth having.

Re:I have a debit card with chip-and-pin.

[osu-neko]

Seriously? You think that that a transaction that authenticates the identity of the payee through physical contact and sends the transaction over a private network is less safe that one that operates with dubious authentication over an untrusted network? Why don't you think that over while I count my blessings that you don't do this for a living.

Ha. I'll count my blessing that you don't do this for a living, either. You've just completely misdescribed the security involved in the debit card in question. Sadly, that second option that you rightfully regard as dubious is, despite being not terribly secure, much more secure than the first. The second system tries to authenticate that the person who owns the account wants this transaction by using an unsecure network get confirmation. The first system makes no attempt to authenticate this at all. Not sure what you're on about with the emphasized "physical", since deducting funds from a debit card does not, in fact, require that the owner of the account, nor the card they were issued, be present. Certainly precisely zero is done to authenticate the identity of the payee beyond "does the payee have a working account number I can charge". Nothing is done to attempt to authenticate that the owner of that account is the payee or wants the charge to be made.

Re:I have a debit card with chip-and-pin.

[nospam007]

How about a debit card from Paypal, one that you can fill at will and for each payment that is made with that card you get an email/SMS/Tweet a second later?
Something no 'real' bank seems to be able to do.
I'd use one for such a feature alone.

Re:I have a debit card with chip-and-pin.

[antifoidulus]

Both, I think, I've only used cash.

Re:I have a debit card with chip-and-pin.

[tehcyder]

From what I've heard is that everyone hates them

Everyone on slashdot seems to hate paypal, but I've never known anyone personally have any problems with them. I get the impression that they are fine for low value personal type transactions, it's when people start using paypal as an alternative to a business bank/credit account that problems occur.

Re:I have a debit card with chip-and-pin.

[tehcyder]

A purchase of condoms I buy 5 years ago may haunt me when a patent troll decides that he can sue all of Trojan's customers, so goes through logs of people's purchases bought and starts a wide legal fishing expedition.

You can't sue someone who has bought something legally, it would only be Trojan who were liable for patent infringement.

Re:I have a debit card with chip-and-pin.

[m50d]

From what I've heard is that everyone hates them, that they're forever screwing over both sellers and shoppers,

I've only ever heard sellers complaining (allegedly PayPal will never dispute a chargeback, so you can just claim the seller never delivered and get your money back)[1], so maybe they'd be fine for shoppers.

[1]And people running charitable donation accounts, but that's also on the "seller" side.

Re:I have a debit card with chip-and-pin.

[Soluzar]

It's the same payment option. When I pay using PayPal, the money is coming from my bank account. The same bank account with which is associated my debit card. The way I see it, that is not two options.

Re:I have a debit card with chip-and-pin.

[jonescb]

It doesn't necessarily have to be PayPal, but I'd like to see paper currency replaced by something digital. Nothing is worse than buying something and then dealing with change. I really don't have any reason to carry pennies and nickels so all that change I get is lost money. There could be some government sanctioned digital currency and I would be cool with that. It should work like a check so that you can use it to pay people who aren't equipped to handle credit cards, but without the paper. Maybe you could bump smartphones together and verify the transaction or something cool with NFC devices.

Re:I have a debit card with chip-and-pin.

[wallsg]

As a purchaser, you are better off with a regular or secured credit card and pay it off at the end of the month (this is key) than ever dealing with Paypal. You get extra warranties, cash-back, fraud protection, frequent flier miles, etc. Indeed, just comparing credit card fraud protection to Paypal's version of "fraud protection" and the differences are staggering. Only a fool would pick Paypal.

I use Paypal for:

• Small purchases where it's a nuisance to dig out the credit card.
• Cheapo Hong Kong purchases from places like Meritline (my wife doesn't trust them with CC info).
• Paypal promo discounts.
• Forced.

I've never understood why anyone would use a Debit Card over a Credit Card. You have money withdrawn directly from your account with much less fraud protection (while a bank may limit your losses it's not legally mandated like it is with credit cards and protections usually only cover signature transactions), and you can't manage your cash flow by paying the credit card bills at a time of your choosing. Of course, I've never been buried under a pile of debt and have always paid off my cards monthly since 1987 so maybe I lack the debt-o-phobia perspective.

What Debit Card Companies Don't Tell You

A Debit Card is basically a paperless check except that if there's fraud it hurts the issuer instead of the receiver. If you receive a counterfeit check then the banks come back to you for the funds and the account holder is not liable. If someone counterfeits a debit card transaction then the money's gone.

If you carry balances on all of your cards then you're screwed anyway. You should have one card that you ALWAYS pay off regardless of how painful it is.

Re:I have a debit card with chip-and-pin.

[smallfries]

You'd be surprised what I actually do for a living...

You've confused the payee and the payer. The payee is the shop owner that is getting paid. The physical guarantee is important, although it is actually flawed in the current debit card infrastructure. There have been papers in the past couple of years that show that you can tamper with the signing device so that the funds are actually stolen and passed to a third party. So what we have at the moment is a system that tries to authenticate the destination of the funds, but fails in the implementation.

The proposed system doesn't even do that. If I use a mobile device to transmit funds to a third party over the internet, how do I (or the payee) know where they've gone. The devil is in the details, and sadly the proposal doesn't seem to even consider them.

Re:I have a debit card with chip-and-pin.

[JohnnyLingo]

Places that are cash only usually do so because they can't afford the startup costs and 2-4% overhead that accepting credit / debt cards does. Not to mention training their staff. There's a huge opportunity to just provide something that's easy to use, cheap, and only charges around a 1% usage fee per transaction. Whoever gets that concept and executes on it will get their foot in the door on this market very easily, and will start to chip in to Visa / MC / Amex's territory from there.

Already done (ish)

[Dr_Barnowl]

My local computer parts warehouse allows you to order from web kiosks in-house, and pay with PayPal.

Re:Already done (ish)

[SkyDude]

Already done (no ish)

USBSwiper has created a POS (point-of-sale) application using Filemaker. A merchant must have a PayPal account and be approved for Website Payments Pro and Virtual Terminal services offered by PayPal. Once that's done, USBSwiper will sell or rent the application to a merchant. Rental is designed for small merchants who need a trade show payment system or who might be a seasonal business, purchasing the application allows a web merchant to process mail and phone orders much easier than on most e-commerce shopping cart systems.

This is not second hand knowledge. I now use USBSwiper and have used it at a trade show on my laptop with a Verizon wireless connection. It worked perfectly. From an administrative perspective, I've never had a merchant credit card account that was so easy to use. From an economic perspective, PayPal charges a flat rate for all transactions - 2.9% of the sale plus .30 per transaction. There is a $30 monthly fee which can be turned off anytime if the merchant is closed for the season, on vacation, or any reason.

Most consumers understand that the merchant pays for the acceptance of credit cards; what they don't understand is that their affinity card or rewards card costs the merchant more per transaction than a standard credit card, or what is called a "qualified" card. All non-qualified cards are charged more. Want to take a guess how many cards are now deemed "qualified"? Out of every 100 cards swiped, maybe 10 to 15 are qualified, which means they are charged at the lowest discount rate. All others are non-qualified and cost the merchant more. Add on fees such as statement fee, "abuse of system" fees (it's real) and anything else the card processors can cook up and the real cost of card acceptance can be as high as 6% - 8% or more.

PayPal's venture into POS applications started with the development of their virtual terminal application, but only the smallest of retail merchants could use it. It just doesn't work in a high traffic retial environment. The USBSwiper application makes things easier, but the flat rate card acceptance fees is what makes it work for me. All other processors can go to hell as far as I'm concerned. Paypal is our choice for card acceptance and will be as long as they don't screw up or get greedy.

Re:Already done (ish)

[fluffy99]

My local computer parts warehouse allows you to order from web kiosks in-house, and pay with PayPal.

You have to trust that they aren't capturing yuor keystrokes and stealing your account logon. Really no different than trusting the vendor isn't cloning your credit card. Of course PayPal has a horrible reputation for handling disputes as compared to Credit Cards where consumers have laws to shield them.

Re:Already done (ish)

[Dr_Barnowl]

They easily run about £50,000 worth of sales before lunch without breaking a sweat, I really don't think they need to indulge in fraud.

I suppose a rogue sysadmin might install something. The kiosks themselves are pretty locked down but they are Windows, so I don't really trust the integrity of that. Any time

So no, I wouldn't use it myself - I order at home using my debit card and pick up in the store.

Re:Already done (ish)

[Kalriath]

This is not second hand knowledge. I now use USBSwiper and have used it at a trade show on my laptop with a Verizon wireless connection. It worked perfectly. From an administrative perspective, I've never had a merchant credit card account that was so easy to use. From an economic perspective, PayPal charges a flat rate for all transactions - 2.9% of the sale plus .30 per transaction. There is a $30 monthly fee which can be turned off anytime if the merchant is closed for the season, on vacation, or any reason.

That's an entire 1% higher than my card processing, and my card processing doesn't have a monthly fee (it does have a minimum commission - which means if I don't run up $30 - $40 locally, but probably about $30 USD - worth of transaction fees, they charge the minimum anyway). PayPal definitely loses on the economy point there. I'm also protected from stolen cards because the processor uses 3DS authentication, meaning that the card issuer eats it if a transaction is charged back due to someone claiming it's a stolen card, not me. PayPal would just rip that transaction right back, leaving me out of pocket.

Most consumers understand that the merchant pays for the acceptance of credit cards; what they don't understand is that their affinity card or rewards card costs the merchant more per transaction than a standard credit card, or what is called a "qualified" card. All non-qualified cards are charged more. Want to take a guess how many cards are now deemed "qualified"? Out of every 100 cards swiped, maybe 10 to 15 are qualified, which means they are charged at the lowest discount rate. All others are non-qualified and cost the merchant more. Add on fees such as statement fee, "abuse of system" fees (it's real) and anything else the card processors can cook up and the real cost of card acceptance can be as high as 6% - 8% or more.

In this country, we also don't have any such thing as "Qualified Cards" - it's all the same discount rate (you can opt for unblended rate, which means you pay different amounts for Visa than for MasterCard, but the banks generally discourage that for smaller vendors). We also don't get any fees other than the declared fees (the monthly minimum charge, and the gateway transaction charges). So to me, a transaction is 2ish percent, and that's it.

But remember

[stinerman]

They're not a bank!

If this went through, I'd be hard pressed to see how they could keep up that facade.

Re:But remember

[gl4ss]

well, they couldn't. but I guess they'd go on to say that amex isn't a bank and neither is UPS. anyhow, since you can already buy physical items with it.. it's only up to the store owners to start accepting it or not - and for them it probably means if it integrates with their cashier machine and automatic financial systems, they'll use it.

there's also probably a number of establishments and stores in beginning phase that would like to use them as the primary system, since through paypal they could accept the major credit cards as well(which can be expensive to setup, depending on locale..).

Re:But remember

[Colin Smith]

You have no idea what a bank is or does.

Re:But remember

[thsths]

Actually they are a bank - registered in Luxembourg - since 2007.

Re:But remember

[ColdWetDog]

You have no idea what a bank is or does.

That's OK. I'm convinced that my bank doesn't either.

Re:But remember

[Jibekn]

And this is why Amex is considered to be in the same league as a Discover card. At least outside America, hell, up here in Canada we take discover more than Amex.

Re:But remember

[Jibekn]

Except I can be talking to a human, at my bank in 30 seconds via telephone, and if it is a misunderstanding, such as with minecraft. It would be cleared up in minutes. This is possible because of the regulations banks have to deal with, you're not allowed (at least in my country, not USA) as a bank, to deprive someone of their money without just cause.

Do some searching, theres people who have trusted paypal with the payment methods of their legal, business licensed small businesses, and then have been literally bankrupted after paypal froze 10's of thousands of dollars for months while these peoples homes went into foreclosure. this type of thing doesn't happen with banks (they get you to go bankrupt in other ways, another topic, and you generally have to be stupid with credit)

Re:But remember

[Kalriath]

That division of PayPal only serves Europe. USA is served by PayPal, Inc (not a bank), the Pacific region is served by PayPal Pte Ltd in Singapore, which also has a giant disclaimer on the website "does not require the approval of the Monetary Authority of Singapore" (not a bank). Basically, everyone but Europe is screwed.

Re:But remember

[d'fim]

No, it's very different. Banks don't get to put "suspicious" money into their own pockets. You don't have to "keep after" banks "long enough" -- you only have to say "lawyer" because banks don't get away with ignoring legal challenges. Banks can only tell you "because we said so" until law enforcement, jurists, or banking regulators get involved.

Re:But remember

[ToasterMonkey]

They're not a bank!

If this went through, I'd be hard pressed to see how they could keep up that facade.

1. There are lots of non-bank players in the payment card industry.

2. Lots of closed loop systems exist that don't involve Visa, MasterCard, Discover, American Express, etc, and a sponsor bank.

3. There are a thousand different ways this could go, and 'become a bank' is not in all of them.

Looking for trouble

[schwit1]

Paypal demands access to your checking account after $10k of purchases. It is reckless to permit any third party access to a checking account.

What happens when Paypal gets hacked and people's checking accounts start getting drained?

Re:Looking for trouble

[antifoidulus]

Especially Paypal, I stopped giving them any information after they royally screwed up, fucked me over, then had the audacity to tell me it was my fault. When I first signed up with them I was suckered into giving them my checking account information so I could get like a $5 deposit. Well a few years had passed and I had totally forgotten about that account, I think I had the minimum required to keep the account open. So I go to pay for something that was like $10, and I selected my credit card, I know I selected my credit card because I would have never used that bank account to pay for anything, I knew there was nothing in there.

So despite the fact that I selected the credit card, Paypal decides to use my bank, and when that fails they used the credit card, but here's the thing, they kept on trying to withdraw the money from my account EVERY DAY, and this was AFTER they had already taken it from the credit card. And when I called them up to tell them to stop doing that, they refused, the manager basically called me a liar on the phone.

So I had about $100 in over withdrawal fees for a $10 purchase...fortunately my bank was cool and dropped the fees and blocked paypal from withdrawing any more money. At that point I deleted all my info with paypal, only keeping the account active for when I needed it. And even then I deleted all my credit card info. There are a few places I shop online that only take paypal, and in those events I enter my card info, buy what I need to buy, the immediately delete it again. Before Paypal screwed me over I was a loyal customer, but when management refuses to honor my request with my money when they already had there money and had no reason to try to take anymore, I refuse to give them any more business than I absolutely have to. Paypal sucks.

Re:Looking for trouble

[mr_lizard13]

I'm not familiar with US-based bank accounts and how they operate, but in the UK we have Direct Debit which is pretty much what you describe, and almost all banks offer it.

Banks who participate in the system are required to refund customers whose accounts are subject to an unauthorised debit. It's after the event of course, but the upsides and convenience factor of DD have made it wildly popular and for many outweigh the very real risk of fraud.

Does this system exist in the US? I hear a lot of transactions are carried out by Credit Card over there. In the UK most bills and regular payments are settled using Direct Debit, whilst Credit or Debit Cards are used for ad-hoc purchases.

Re:Looking for trouble

[MyFirstNameIsPaul]

I had a similar experience and resolved it by closing the checking account. PayPal then removed the account and reverted my PayPal account to 'unverified'. I didn't care until some years later when I hit the $10,000 limit that I was previously unaware of. Now I just enter my credit card number. It works to do this even on eBay purchases.

Re:Looking for trouble

[nospam007]

"What happens when Paypal gets hacked and people's checking accounts start getting drained?"

Same thing as when the guy at the gas station/pizza parlor copies your CC number on a piece of paper and orders woldwide crap for his granny. No hacking needed, just reading.

Re:Looking for trouble

[nospam007]

You're too dumb to enter the real account and 'forget' about it and if the shit hits the fan it's somehow PayPal's fault?

"At that point I deleted all my info with paypal, only keeping the account active for when I needed it. And even then I deleted all my credit card info. There are a few places I shop online that only take paypal, and in those events I enter my card info, buy what I need to buy, the immediately delete it again. Before Paypal screwed me over I was a loyal customer,"

I hate to tell you, but you're still a loyal customer, you just augmented your workload.

Re:Looking for trouble

[simmonsjeffreya]

$100, you got off lucky. I had $80 in my checking account, and bought something that was $70.68. Yes, I remember this amount exactly, I'll never forget it. PayPal double charged me, charging the debit card associated with that account, and the actual bank account. So, I overdrafted. The bank charged a $35 fee, but didn't pay the charge, which is standard practice there. So, PayPal, without ever notifying me, and the bank never notified me for over a month, tried to process this charge EVERY DAY for 38 days, at which point I only found out because my monthly statement was in the mail. Yup, a $70.68 purchase that I had the money to cover in the first place, ended up costing me $1,471.36. Yes, that is $1,471.36. Now, my local bank had zero sympathy, and despite the fact they should have notified me about this, wouldn't reduce the fees one cent, and required me to pay it off within 45 days. Being a broke college student who doesn't have a job while in school, I was screwed. Of course, they were happy to give me a loan for $1,515.50 (3% processing fee.) So now, for a damn text book for school, I paid $1,515.50, which will be even more after you account for interest. Lessons learned? NEVER use a local credit union, they're useless idiots. I closed my PayPal account and will never use them again. I also had every bank do a complete block on PayPal, who knows if there will be some mysterious "ghost" charge from my closed PayPal account, I wouldn't be surprised. So while I have sympathy for your $100-$10 purchase, it could be much, much worse.

Re:Looking for trouble

[theNAM666]

You are aware that ANYONE with your checking account number has the same access though the US's ACH system? Hmm?

Re:Looking for trouble

[osu-neko]

I'm not sure if it's required, but that's how it operates in my experience, including with Paypal. I had a bunch of unauthorized charges appear on my Paypal debit card, so I notified them and they refunded me. Granted, I had to file some paperwork, but it wasn't much. Just a signed statement identifying which charges I didn't make and stating that I did not make them. Paperwork received, refunds issued. It was almost scarily easy (scary from the point of view of a merchant accepting one for payment, knowing it's so easy to have the money sucked right back if the buyer isn't on the up and up).

Re:Looking for trouble

[ledow]

So you didn't check your account for 38 days. That's actually quite silly, in this modern age when you can logon any time you choose.

But more importantly you *paid* it? There's more than one way to be an idiot, apparently. And I hope you told your "local bank" where to stick it, even if you didn't end up taking them to court for failing to protect your account.

Re:Looking for trouble

[tehcyder]

Paypal demands access to your checking account after $10k of purchases. It is reckless to permit any third party access to a checking account.

What happens when Paypal gets hacked and people's checking accounts start getting drained?

Are you really basing your argument on the assumption that, unlike paypal, banks are infallible? You must have not been watching the news for the last few years.

Re:Looking for trouble

[JohnnyLingo]

Nice one. People forget the fundamental security benefit of PayPal - you're SENDING the payee money. With credit / debt cards, anyone with the card information can charge you any amount. Huuuuge fundamental difference. Hopefully they will keep that paradigm going on in a POS setup.

Re:Looking for trouble

[JohnnyLingo]

The flaw is anyone can setup a PayPal account. When money is sent, PayPal has no way of knowing if it's going to sick kids or to buy weapons for diamond smugglers. Much like they police, they can't see everything, so they just have to rely on behavior patterns.

Pointless addendum

[tripleevenfall]

"personally I'm not sure how comfortable I'd be using such a system."

So how is this any different than using a debit card?

Re:Pointless addendum

[spooje]

Usually you have some legal protections when using a debit card. Paypal has a habit of ignoring disputed transactions until it's legally too late to get your money back. I had a problem with them a few years back where they kept telling me to talk to the merchant to resolve the issue, but if the merchant never shipped my stuff and won't give my money back what else can I do? If I used a debit or credit card it would have been much easier to dispute the charges and get my money back.

Re:Pointless addendum

[spire3661]

Debit cards are issued by banks, subject to strict regulation. Paypal is not a bank.

Re:Pointless addendum

[__aaqvdr516]

That pretty much sums up everything I was going to say. My wife has an account that's tied up in the Paypal dispute system with just under $1000 in it. We're going on around 6 months now with no resolution in sight. If we were dealing with a bank we'd have been done long before now.

Re:Pointless addendum

[pongo000]

On the other side of that coin: I've got a con artist who is trying to scam me out of about $400 in a legitimate transaction, first time in over 8 years that I've run into this. What does PayPal do? Immediately debit my account for $400, then tells me I'm supposed to reason with this fuckhead. So now I've got a $400 debit (meaning any transactions after this I will never see until I'm over the $400 threshold), and a scammer who knows I'm down $400.

This road runs both ways, friend.

Re:Pointless addendum

[hitmark]

"(meaning any transactions after this I will never see until I'm over the $400 threshold)"

huh?

Re:Pointless addendum

[0100010001010011]

PayPal is hands down one of the worst companies out there.

Back in the day when I was young and naive I bought a computer on eBay. The guy gave me the run around. I got nothing. Since I was young and dumb (and trusting) I let them debit my checking account. So I had 0 recourse with my bank (It's also the day I signed up with a credit card because every other person that bought from the guy. PayPal was 'only able to recover' $100 of the $1600 I paid.

Fast forward 5 months. I sell some Amazon gift cards. PayPal green lights the transaction as an 'authorized buyer', everything is good to go... then they come back that the card is stolen. Debit my account $900 and say that I owe them that much. Thankfully I didn't link it to my checking account. So they locked it.

It's been a cat and mouse game since then since some places on eBay ONLY accept PayPal. I'll open an account. Register a disposable card with them. Then they'll figure out that it's me. Remind me about what I 'owe' them and close the account.

Re:Pointless addendum

[MyFirstNameIsPaul]

PayPal allows you to pay with a credit card even if you have no account. I stopped using mine and started entering the number some time ago.

Re:Pointless addendum

[MyFirstNameIsPaul]

Just like Madoff and Enron, so you're safe and protected by the Government.

Re:Pointless addendum

[MyFirstNameIsPaul]

Well, something must be horribly wrong with their coding because my card is on my PayPal account and they allow me to make purchases using the card. In fact, I use the same email address, which they require even non-account purchasers to enter, and they ask me if I would like to use my PayPal account for the purchase. I select no, and complete the purchase without using my account.

Re:Pointless addendum

[JohnnyLingo]

Hmmm I got double-billed by Hilton on my Visa a few months ago. Basically the clerk had mis-entered my arrival and departure dates. I sent them copies of my plane tickets showing me arrival and departing the same day, and yet they still wouldn't reverse the charge. Guess what happened when I called up Visa to dispute it? "Sorry, you'll have to work this out with them". Stolen credit card, totally different story. Charges were taken off no problem.

Comfort level

[Waffle Iron]

personally I'm not sure how comfortable I'd be using such a system.

Are you comfortable with the current practice of letting a waiter you've never met whisk away a card with your account number prominently stamped on the front (and "security code" stamped on the back)?

At least PayPal uses a unique number for each transaction. In theory, that's an improvement.

The only thing that credit cards have going for them is the limits on customer liability for fraud. However, in the end that really just spreads the huge costs to everyone.

Re:Comfort level

[CohibaVancouver]

Are you comfortable with the current practice of letting a waiter you've never met whisk away a card with your account number prominently stamped on the front

Where I live (Vancouver, Canada) this practice has largely gone away. The server brings a wireless payment device to the table and processes the transaction there. This has largely been driven by the "new" (new to North America) credit cards that are PIN-enabled chip cards.

Re:Comfort level

[MoonBuggy]

Those liability limitations are hardly a trivial benefit, though, not to mention that my contact with AMEX customer service has always been pleasant. The one time I ended up getting screwed on a Paypal transaction it was an absurd effort even to get a non-canned response from them, the bank refused to step in to assist (apparently you don't purchase the product via Paypal, you purchase 'e-funds' which are non refundable, and then use them to purchase the item), and I ended up getting maybe half my money back. The amount was not especially significant, but the way it was handled was beyond infuriating.

They also have a terrible record in terms of freezing funds, even if you do your best to withdraw everything immediately, and worse rates than Google or Amazon (last I checked, at least) - the only reason I used them as a seller was that eBay forces you to, and on balance the extra exposure my sales got with eBay listings was worth the unpleasantness of dealing with Paypal. I wouldn't touch them with a ten foot pole if there's another alternative, however.

Re:Comfort level

[swordgeek]

"Are you comfortable with the current practice of letting a waiter you've never met whisk away a card with your account number prominently stamped on the front (and "security code" stamped on the back)?"

Absolutely! At the _very_ worst, I am liable for $50 of fraud that occurs if I report it. Practically, it's almost certainly going to be waived.
I have been the victim of credit card fraud four times in my life, and am out-of-pocket exactly $0.00. The credit card companies work with the customers against fraud for the sake of keeping their business afloat and profitable. Paypal, on the other hand, has no regulatory or business reasons to do this at present - they have a captive audience.

Put them into a competitive market, and they'll die.

Re:Comfort level

[mr_lizard13]

Do waiters still take cards from customers and walk off with them? In every restaurant I've been to since Chip & Pin was launched (5 years ago, or perhaps more?) they bring the card terminal over to you and you put the card in, enter the pin, and hand the terminal back to the waiter.

I wouldn't be at all comfortable if a waiter asked me to hand him/her my card, and if they stepped away from the table with it I'd want to know what they were up to.

Re:Comfort level

[TheGratefulNet]

silicon valley resident here: yes, they still take your card and walk away. I've gotton the wrong card back, at times; and even had the wrong meal charged to me. I now try to pay in cash whenever possible at restaurants.

silicon valley and yet still pretty far behind in many tech ways (sigh).

Re:Comfort level

[osu-neko]

I have been the victim of credit card fraud four times in my life, and am out-of-pocket exactly $0.00. The credit card companies work with the customers against fraud for the sake of keeping their business afloat and profitable. Paypal, on the other hand, has no regulatory or business reasons to do this at present - they have a captive audience.

Um, that's exactly what Paypal did when my Paypal debit card was charged fraudulently. Well, technically, I'm out-of-pocket for the cost of the stamp I used to mail the paperwork, but that's a lot less than the nearly $2000.00 in fraudulent charges they refunded as soon as I sent them the statement identifying which charges weren't mine and stating I didn't make them.

Re:Comfort level

[glodime]

that's exactly what Paypal did when my Paypal debit card was charged fraudulently.

The difference is that paypal isn't legally required to do that for you. There is no limit for fraud liability for a paypal transaction, unless you are using your credit card to fund the transaction, in which case paypal is just another processor of credit card transactions for the merchant.

Re:Comfort level

[JohnnyLingo]

I was in Whistler a few months ago and was surprised by this. It makes sense but doesn't seem to be coming to the USA anytime soon.

They don't create money

[Colin Smith]

What makes a bank a bank is that they are allowed to create and destroy money.

The analogy would be to think of a bank as being just like PayPal, but with nuclear weapons.
 

Re:They don't create money

[Ecuador]

Ehm... You definitely don't know what "bank" means. There are special "banks" that create and destroy money, usually called central banks or something similar, and they are often not private (this depends on the country of course - for example for the US the Federal Reserve Bank is I think partly private).
But most banks cannot create or destroy money (unless by destroy you mean remove money from people's hands).
PayPal is free from regulation that banks have (which for example would not allow them to freeze your money whenever they please or arbitrarily decide whether to cover you from fraud or not etc), because they claim the are not a bank and apparently no-one who matters is interested in showing that is not show.
First of all, what is a bank? Let's see what PayPal themselves say a bank is. I am referencing the response someone from Paypal gave to a consumerist post that described them as an "unregulated bank" (http://consumerist.com/2010/05/keep-paypal-from-using-the-default-atm-debit-setting-to-save-on-bank-fees.html)

we're not regulated as a bank in the U.S. (we don't hold deposits or issue credit)

Huh??? They don't hold deposits? What do they call the money deposited on people's paypal accounts which from time to time they freeze at will?
They don't issue credit??? What is Bill Me Later then? (https://personal.paypal.com/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/BillMeLater_ProductOverview) What about the PayPal Mastercard? (https://personal.paypal.com/cgi-bin/marketingweb?cmd=_render-content&content_ID=marketing_us/paypal_credit_card&nav=0.1.2). Yeah, *credit* cards are not "credit", easy to argue that...

Re:They don't create money

[poity]

bank...create and destroy money

That's a central bank, or more accurately the authority overseeing the banking system, e.g. Federal Reserve or ECB. not the same animal as, say, Bank of America.

Re:They don't create money

[xelah]

No, it's a bank. Bank deposits are normally included in the definition of 'money'. They do it like this (if the reserve ratio is 10%):

• Person A deposits $100 with his bank. Total money in existence: $100 (not counting bank reserves).
• The bank lends $90 to someone who uses it to buy something from person B. Person B puts it in his bank. Total money in existence: $100 (in person A's account) + $90 (in person B's account) = $190.
• The bank lends $81 of this new deposit and it's used to buy something from person C. Person C puts it in his account. Total money: $100+$90+$81
• ...
• Total money at the end of the process: $100/10% = $1000.

If the central bank creates $100 of cash then $1000 pops in to existence (with some adjustment for cash people keep in their pocket). It's called the money multiplier.

Re:They don't create money

[hitmark]

"In the real world, banks extend credit, creating deposits in the process, and look for the reserves later."
- Alan R. Holmes

And that guy was a ice President at the New York Federal Reserve.

Re:They don't create money

[Colin Smith]

"Ehm... You definitely don't know what "bank" means."

I know exactly what a bank is and does, and the bog standard high street banks create and destroy money every day.

I suggest you go find out what money is before you lose everything.
 

Re:They don't create money

[Colin Smith]

"not the same animal as, say, Bank of America."

Bank of America creates and destroys money every day.

Do you work? Do you work for money? Do you even know what money is? I suggest you learn.
 

Re:They don't create money

[Colin Smith]

You have no idea what you are talking about. The GP is correct.

Re:They don't create money

[Nick Ives]

Banks don't create money.

Central banks print money and lend it to certain banks with interest. In this manner the central banking system functions like a cartel. That money is is then spent as a capital investment in order to generate a return. The actual new value comes about from labour, as all value is generated by people doing things in order to make goods and services for people.

Re:They don't create money

[Mr. Slippery]

But most banks cannot create or destroy money (unless by destroy you mean remove money from people's hands).

Banks create money by loaning out more than they have.

I put $100 into a checking account at Alice's Bank. You come and borrow $50 for that same bank. I write a check for $90 to the grocery store. The grocery store has $90, you've got $50, and there's still $10 in my account -- total $150 in circulation, all from $100.

We can argue whether this is a good or bad thing, as to whether that $50 is created out of thin air or out of some value that you gave to the bank (collateral, or just your promise to repay), but there's no doubt that fractional reserve banking basically creates money.

Re:They don't create money

[xelah]

You're confusing cash with money. Money is whatever people are using as a medium of exchange, unit of account and store of value. The definition and its limits are argued over but there are quite clearly things beside central bank issued notes which are used this way. People use bank deposits this way - eg, GM pays Jim by bank transfer to build a car, Jim pays Bob by bank transfer to replace his roof, Bob pays GM by bank transfer for a car; no cash but still money. Several definitions get used when people wish to be precise about what they're talking about - M0 (circulating notes and coins only), M1 (demand deposits and circulating cash), etc. up to M5 - but in terms of the effect of the economy's money supply on the economy M0 is not what directly matters.

No.

A bank can only lend out the money they have.. they are still not creating money.

A bank can lend out part of its deposits to borrows even whilst the depositor still considers his deposit to be money.

Bank of America, for the purposes of this problem, has 1,000$ total in cash. So does USBank. The total amount of money in circulation between them is $2,000

I presume you mean that BoA and USB both have $1000 of cash from investors (ie, capital). It isn't circulating at this point, but that's not really important.

Bank of America opens an account with Person A and they deposit 500$. BoA now has 1,500$

BoA has $1000 capital in cash and $500 of reserves in cash. Person A has $500 in bank deposits. From what I remember bank reserves don't count because they're not circulating, so there's $1000 (USB capital) + $500 (person A's deposit) + $1000 (BoA capital) in M2 money in existence.

Person B comes along and gets a loan for 400$ afterwards. BoA now has $1,100 and an outstanding loan liability of 400$. They still have not created any money.

Person B deposits it in their bank account at USBank. USB now has $1,400. BoA has 1,100$. Note the fact that they still have not created any money, as we're still at 2000$ total money.

Person B has $400 in his account, which he considers money, can spend like money and acts like money in the economy. Person A has $500 in deposits to which the same applies. Both banks still have $1000 capital each in cash, BoA has $100 in reserves and USB $400. M0 is the same ($2500: $1000 in each bank plus $500 which was deposited), but M2 is now $2900. $400 of money in the form of bank deposits has been created by the banks.

Now Person B pays interest on their loan, let's say 5%, for the next 12 months. The person finally pays off the loan in one go at the end of that 12 month period. That money is coming from their employer. BoA gains 300$ in interest from an outside source plus the 500$ they originally loaned out.

To have any hope of keeping track of whether money has been created or not you'll need to use an example in which you keep a note of how much exists in the entire hypothetical economy at every point. We could say that person B's employer is the central bank who printed him a fresh $300, but that complicates the example because M0 is changing part way through. Instead, let's say that person B's employer is USB, who pay him out of their capital. We now have $2500 of cash in total still. USB has $700 in cash as capital, BoA has $1300 in capital (taking all of the interest as profit, person A has $500 in bank deposits and person B has 0. That's $2500, too - the additional $400 created by the banking system was destroyed when the loan was repaid.

Incidentally, this would still be true if person B never received any income, stole the loan and the loan was written off rather than repaid. USB would have $1000 in capital, BoA would have $600 in capital ($1000 - $400 in losses; the physical $400 stops being capital and starts being reserves, which can't circulate as money), person B (or whoever he gave it to) $400 and perso

Re:They don't create money

[Kalriath]

There are actually valid answers to all your questions. For a start, PayPal actually doesn't hold deposits - they deposit into their own numerous bank accounts held with real banks - if you read their annual statements (assuming they produce any) then you'd see which banks those are even. This also means PayPal collects money on those deposits, and you don't. It's also how PayPal claims to be FDIC covered - because the accounts with the other banks where the money really is are covered. Also, the credit card is issued by GE Money, with PayPal's branding on it, so they don't actually issue credit. Saying that they do in fact issue credit based on that means that Blizzard Entertainment also issues credit, since they issue co-branded MasterCards (or was it Visa? Anyhow...) too.

Re:They don't create money

[Kalriath]

You forgot the step where the central bank issues a loan of $4000 to BoA based on BoA having reserves of $2000. Remember, the central bank can create and destroy money (they're also technically the only ones legally permitted to destroy cash - fun fact).

Re:They don't create money

[osu-neko]

But most banks cannot create or destroy money (unless by destroy you mean remove money from people's hands).

Banks create money by loaning out more than they have.

I put $100 into a checking account at Alice's Bank. You come and borrow $50 for that same bank. I write a check for $90 to the grocery store. The grocery store has $90, you've got $50, and there's still $10 in my account -- total $150 in circulation, all from $100.

We can argue whether this is a good or bad thing, as to whether that $50 is created out of thin air or out of some value that you gave to the bank (collateral, or just your promise to repay), but there's no doubt that fractional reserve banking basically creates money.

And the balance fails to come to $0 in your example, unlike it always does in a real bank, because you failed to sum up all the accounts here properly. Nothing is created or destroyed in any case. Money is an abstraction. The $10 credit in your account is no more or less read than the $50 debit in his from the loan (although from the point of view of the bank, your $10 is a debit and his $50 is a credit).

Re:They don't create money

[osu-neko]

Argh, obviously that should say "no more or less real".

Re:They don't create money

[glodime]

You're not doing the Accounting Correctly.
Person A has Assets of $100 in Cash in a checking account.
Person B has Assets of $90 in Cash in a checking account.
Bank has Assets of $190: $100 in Cash on hand, $90 in Loan to Person B
Bank has Liabilities of $190: $100 in checking account A, $90 in checking account B.

Reserve requirements are for liquidity, capital requirements are for solvency. Capital for the bank here is unknown because we don't know how much equity was in the bank before Person A opened a checking account. The there was no change in capital here until interest on the loan and deposits are paid.

Re:They don't create money

[glodime]

Banks create money because lending creates money. Banks get special permission to lend out money given to them from individuals for safe keeping and transactional purposes with on demand. There are many credit intermediaries that are not banks, they all create money as does the bond market and other leveraged securities.

Re:They don't create money

[tehcyder]

But most banks cannot create or destroy money (unless by destroy you mean remove money from people's hands).

Banks create money by loaning out more than they have.

I put $100 into a checking account at Alice's Bank. You come and borrow $50 for that same bank. I write a check for $90 to the grocery store. The grocery store has $90, you've got $50, and there's still $10 in my account -- total $150 in circulation, all from $100.

We can argue whether this is a good or bad thing, as to whether that $50 is created out of thin air or out of some value that you gave to the bank (collateral, or just your promise to repay), but there's no doubt that fractional reserve banking basically creates money.

Well, a few points::
1. You might have $50 in your pocket but you still owe the bank $50
2. I have $90 worth of groceries to eat
3. The grocer has $90 less stock to sell. 4. The bank owe me $10
Obviously the grocer has made a mark up, the bank will charge interest, and so on, the fact is that there's nothing been created by the bank out of thin air, overall assets equal liabilities.

Re:They don't create money

[xelah]

The bank's liabilities aren't negative money - they don't reduce the amount of 'stuff fitting the definition of money' which is circulating in the economy because they don't reduce person A's or pe rson B's ability to use their bank account balances as money.

Glodime is also right, you've missed some liabilities - but he's missed some, too. The central bank has a liability of $100 which appeared when it issued the cash The total will add to zero if you get it right. In the old days if you took your notes to the central bank and demanded payment they'd give you gold. Nowadays they'll pay you in legal tender :) The assets and liabilities created look like this:

• Person A has Assets of $100 in a checking account.
• Person B has Assets of $90 in a checking account.
• Loan recipient has Liability of $90 to the bank.
• Bank has Assets of $190: $100 in Cash on hand, $90 in Loan to Person B
• Bank has Liabilities of $190: $100 in checking account A, $90 in checking account B.
• Central bank has liability of $100 in issued notes.

100+90-90+190-190-100 = 0

Re:They don't create money

[thsths]

> Banks create money because lending creates money.

No they don't. Banks get money from someone, and lend it to someone else. They do not create money.

In most societies only central banks can create money, and only in defined circumstances (usually interest on deposits). Of course in recent years "creating money" has become fashionable again, and they call it "quantitative easing" and stuff.

Heck if I could print money, I would apply a "quantitative ease" to my "deficit", too.

Re:They don't create money

[glodime]

When a bank lends money it is creating money instantaneously. If you have a $100 checking account in the bank and the bank lends me $50, it does so by simply creating a new account with $50 in it from which I can withdraw. At that point both you and I can with draw $150 from the bank, but I will have to pay mine back.

A central bank creates money by lending money through the purchase of government debts (and in some cases to banks directly) and destroys money by selling those debts.

As you can see in both cases the money is created through lending. However, while there is no technical limit on how much a central bank can lend a normal bank is limited by liquidity and solvency regulations. Other lenders are acting in a similar manner though they don't necessarily borrow against their portfolio of loans which is part of the money creation phenomenon.

I'm pretty sure how comfortable you are about this

[Qwrk]

Likewise!

Re:Down with the credit card companies.

[Cwix]

I'm sorry sir, but your account has been frozen.
We dont agree with you politically so any money you had in your account now belongs to us.

Have a wonderful day,
Friendly PayPal rep.

Paypal "could" have been many things.

[ron_ivi]

IMHO the most promising would have been if it had become the leading micro-payment system for telephone calls -- which I thought was the plan when the same company bought both them and skype. Yet strangely it seems you could only buy skype credits with credit cards, and had a separate skype balance instead of being able to pay-per-call using paypal.

TL/TR. Sure, it could; but for that to happen the paypal guys would actually have to make it happen.

It'll never be an option

[Pop69]

Because they're a bunch of scummy thieves.

http://www.paypalsucks.com/

Re:It'll never be an option

[TavisJohn]

It just might. As banks try to charge customers for using their debit cards. And as banks charge as much as they can to BOTH retailers & consumers... If PayPal can undercut them, then I can see stores accepting PayPal,

And the general public will just see that they will be charged less for smaller transactions.

Re:It'll never be an option

[Graff]

Because they're a bunch of scummy thieves.

Exactly, this is not just a "no" from me - it's a "hell no!"

I've had way too many problems with PayPal in the past to even think of trusting anything to them anymore. I don't don't care if they are reformed, repented, and remade, I'll have nothing to do with them. Any business which requires PayPal simply does not get my business and it'll never be an option for payment for me.

Re:It'll never be an option

[TheCyberShadow]

Note that paypalsucks.com is affiliated with (has ads plastered over linking to) another payment processor.

Not defending PayPal, but I wouldn't consider that website as an unbiased source.

Re:It'll never be an option

[JohnnyLingo]

You've hit the nail on the head. Imagine an Commerce system where merchants get charged between 1-2% transaction and customers not only pay a dime, but don't have to worry about overdraft or ATM fees. I'm sure that's what PayPal will be selling.

Re:Down with the credit card companies.

[Repossessed]

Except of course paypal's fees are higher than credit card fees.

There can be only one

[nurb432]

on bank to rule them all.

Scary stuff.

Not for me with the insane fees...

[csumpi]

Paypal transaction fees are insane. Even a merchant account is charged 1.9% per payment.

It already is an option for me.

[IANAAC]

I have a Paypal debit card with a Mastercard logo on it.

Money can stay in my Paypal account and I can use it directly from there with the card.

Re:It already is an option for me.

[Anonymous Coward]

I'm so sorry. Your paypal debit card is in reality a GE mastercard, and the connections between the GE system and the PayPal system are maintained by the sorriest excuses for software engineers I have ever seen. Once, they rolled out the Ebay branded card, and in the process de-activated every single existing paypal branded card in the system. Payment volume on these cards went to zero overnight. It seems that one of the devs in india didn't know the difference between '0' and '\0'; and the guys in Phoneix didn't bother with stuff like code reviews or defaulting new DB columns to something other than null. Because hey, why write a class to manage your object state when client code can just check and interpret the DB columns directly? Anyway, the bug wasn't caught for over a year, because no one was monitoring the transaction volume on PayPal branded credit. To the best of my knowledge, they still aren't today, despite that fact that they made an 800 million dollar bet on this line of business when they bought bill me later. So every single paypal branded credit card and virtual credit line became inactive in the system; essentially hitting the reset button on something PayPal had been working for two years to build.

Today, the senior manager who oversaw it is in charge of merchant reporting (which probably explains a lot if you look at recent trouble reports for the live site). The front line manager responsible for the india team is now in charge of the project to build PayPal's next payment engine. Good luck with that guys.

Re:It already is an option for me.

[IANAAC]

I'm so sorry. Your paypal debit card is in reality a GE mastercard, and the connections between the GE system and the PayPal system are maintained by the sorriest excuses for software engineers I have ever seen. ...

So every single paypal branded credit card and virtual credit line became inactive in the system; essentially hitting the reset button on something PayPal had been working for two years to build.

Gosh, you sound bitter.

My card's not issued by GE (it's my second card with Paypal - don't know what the first one was).

In any case, I've had none of the problems you've described in the close to 4 years I've had a business debit card with them. And when I use it, the money may indeed pass through some account unbeknownst to me, but it sure doesn't pass through my linked Chase account. When I make a purchase or a withdrawal, it comes directly out of my Paypal balance.

Re:It already is an option for me.

[osu-neko]

You are misinformed. Says right on the back of my Paypal Mastercard (in really tiny print at the bottom), "This card is issued by JPMorgan Chase Bank..." I'm pretty sure JPMorgan Chase and GE have not secretly merged recently...

Like a Debit Card

[glorybe]

Many people now carry debit cards and use them almost exclusively instead of cash . My bank has strong guarantees against thefts from my card and they will pay any bill not payable with a debit card by bank check and they even pay for the stamp. It works great, saves time and money and is a superior way to get things done it is all a free service. The single fault found so far is that an accidental double click can pay a bill twice and it tends to not be reversible. It saves me at least an hour a month and a trip to the post office as well as a lot of postage fees. If PayPal can match that one would be a fool not to use it. For long distance buying go from your debit card though PayPal and you have the bank as well as PayPal backing you up if you are shafted by a seller.

disposable card numbers

[metalmaster]

that is all....

I have never been overly paranoid about purchasing things online, but I made my first online purchase with a bank-drawn giftcard. I've done the same thing since. I think some banks even offer disposable card numbers for primary accounts.

I visit my bank to purchase a gift card and they will register it to my name and address. I set a pin I have never used for another account, and im good to go.

Who Regulates Paypal?

[Liambp]

If you add up all the money that goes through Paypal on a daily basis they must rank as one of the world's biggest financial institutions? I wonder if they are subject to any financial regulation?

Could PayPal Be an In-Store Option?

[the eric conspiracy]

No. I don't trust these guys and I only use them when there is a good reason.

I made the mistake once of signing up for a web service with an annual use fee. Paypal cheerfully processed the renewal request from this site without my permission.

I do use them to make purchases from Ebay and some web sites that I visit infrequently as I like not giving out my credit card info to piss ant vendors. This helped me out once as one of these sites was compromised and there were a lot of complaints of fraudulent credit card charges from this incident.

But I always pay through a credit card when doing so with the theory that if anything goes wrong I can dispute the charges with the credit card company. I have done this a couple of times with non-Paypal stuff and my experience is that the credit card company is very willing to take my side in the dispute.

The slow, but thundering march of unification

[Twinbee]

As much as many people dislike Paypal (myself included to a degree), this brings us closer to a more unified monetary system, where anyone can pay anyone else, anywhere at any time.

It's one step closer to the (eventually inevitable) single world currency which will again bump up the efficiency of general cash exchange by another order of magnitude. I live in the UK, but can at least the first-world countries all just use dollars and be done with? (and let's metricize the US at the same time).

Re:The slow, but thundering march of unification

[glodime]

You might not realize that a major reason why Greece Ireland, Portugal, Spain and Italy are having trouble getting their economy on track is because they no longer have their own currency and have committed to the Euro which is mostly controlled by Germany.

Not Likely

[guttentag]

They're facing a catch-22 critical mass problem. There have to be enough places that accept this for consumers to get on board, but retailers aren't going to spend money on new hardware and software to accept a fringe payment system that hardly any consumers use. Remember all the excitement about RFID in credit cards a few years ago? I've got two cards with them, and the only places I get to use this feature are CVS, Chevron and McDonalds, and most of the time the cashier tells me the system isn't working so I have to slide my card anyway. The major credit card companies were pushing this, yet the few retailers that bought into it can't be bothered to maintain the hardware. They already spend a lot of time, effort and money just keeping up with the requirements of the payment card industry (PCI), which is essentially MasterCard, Visa, AMEX, Discover and JCB. PCI has extraordinary power to dictate what retailers must do and sets deadlines for them to do it, but even they couldn't effectively push the move to RFID. Unless PayPal is offering an attractive, secure system that costs far less than the PCI alternatives, retailers will tell them they should be content with having PayPal-branded credit cards from Visa or MasterCard.

Then there are the little problems of PayPal living in regulatory limbo because it's not a bank, and the fact that many people distrust PayPal because of its attitude that it can do practically whatever it wants without accountability because it's not a bank. But the catch-22 problem makes these seem like minor issues.

I'd say this article is just wishful thinking on PayPal's part. "PayPal CEO Says he Wants to Supplant Trillion Dollar Credit Card Industry, and He'd Like A Diamond-Encrusted Flying Pony. Film at 11!"

Re:Not Likely

[Kalriath]

PCI only covers security. It couldn't be used to mandate RFID unless there was a security reason for it. And for the most part, RFID is more of an insecurity-introducing feature.

Fuck Paypal.

[Ludedude]

I'd rather give my money to AIG, Wamu, hell even Bank of America before I give those crooks another dime of my money. Carry on.

Credit card companies are far more dangerous

[Colin Smith]

For who?

For the entire world.

Banks and credit card companies are orders of magnitude more dangerous than PayPal. Paypal are small potatoes on the Evil scale.

The 1929 Great Depression? Banks.
The 2008 Great Recession? Caused by banks. The fucking great boom we're in just now? (which is going to end at some point with a terrifying bust) => Banks.

No matter how bad PayPal's customer service, it doesn't compare to foreclosure fraud or the utter (20% unemployment) kind of mayhem which banks and credit card companies can wreak on an economy.

Re:Credit card companies are far more dangerous

[Jibekn]

Until PayPal is regulated under the same accountability as a bank, Ill never use them in cyber, or meat space.

A bank cant just freeze your account for no reason, paypal can.

Re:Credit card companies are far more dangerous

[Fjandr]

PayPal is almost entirely dependent on those same banks, so talking about how evil they are doesn't add anything to the conversation. Except, perhaps, to say that PayPal requires a greater evil to exist as a lesser evil.

Re:Credit card companies are far more dangerous

[tehcyder]

The 2008 recession was caused by investment bankers, not the banks. I am not saying that the banks had no hand in it but the vast majority of the blame belongs to the investment bankers. The banks would not of done the mortgages if they had no way of selling them on.

It is splitting hairs to differentiate between different types of banker. The whole lot of them are fucking twats.

PayPal is a bank in Luxembourg

[tepples]

Until PayPal is regulated under the same accountability as a bank

It already is. In Europe, PayPal Europe SARL has operated for nearly four years as a bank.

Re:PayPal is a bank in Luxembourg

[mestar]

Let me translate this FA for you:

"daria42 writes" - obviously a fake name since there are no women on slashdot.

uses ";" - he is a professional writer.

"PayPal has long been one of the most-used payments option" - Paypal is paying for this piece of PR.

" according to PayPal's global president Scott Thompson" - appeal to authority, another mark of PR writers.

"PayPal's working on that right now" - PayPal is scared of emerging free alternatives, so they are increasing their PR spending.

Re:PayPal is a bank in Luxembourg

[AmiMoJo]

Not quite. They are based in Switzerland, which is not part of the EU. Obviously their operations in each country are subject to local laws, but in the UK they are considered a financial institution and not a bank. The Financial Services Authority and Ombudsman have jurisdiction over them, but for example they are not required to follow rules on direct debit payments for PayPal transactions involving a bank account. You can of course simply ask your bank to reverse the direct debit to PayPal and legally they must comply, but you can't for example force PayPal to reverse a payment to a seller.

They also like to seize your funds at the slightest sign of a problem and withhold them after an eBay sale until the buyer leaves positive feedback. Banks simply can't do that, but your PayPal account is not a bank account.

Re:PayPal is a bank in Luxembourg

[tehcyder]

" according to PayPal's global president Scott Thompson" - appeal to authority, another mark of PR writers. I think asking a company's global president about that company's plans is probably what a journalist would do too.

Compare to PayPal Website Payments Pro

[tepples]

Not if they have to maintain their credit card processing system as well

PayPal Website Payments Pro already offers credit card processing. I had to code up support for its Direct Payment API in my last employer's shopping cart software. I can't see how it'd be that much of a stretch to extend that to card-present transactions.

What would be the point?

[John Pfeiffer]

The PayPal debit card already fills this role. I mostly use mine for sites that don't take PayPal, but my younger sister uses it as her primary means of paying for stuff in the real world. On countless occasions she's actually called on her cellphone and been like "Hey, I'm at X, do you need anything?" because it's easy for her to swing by on her way home, and I'll be like "Sure!" and put the money in her account.

I remember the first time I did that, she called while she was in line at McDonald's because she had forgotten something, and I asked her where she was, and was like "Man, I haven't had anything to eat yet today..." and it just popped into my head. *Ding!* Barely five minutes later I had food-like substance in the shape of a hamburger, and a serving of fries.

Of course, it also means she's always nagging me to lend her money by putting it in her PayPal...

Re:What would be the point?

[osu-neko]

For you, there's no point. For Paypal, the point is to not loose money to JPMorgan Chase (who issues their debit cards) and MasterCard. And, heck, if they can get most merchants to accept an alternative, and it's no less convenient that using my Paypal debit card, why not?

No...

[lscotte]

Please... just No... Bad idea all around.

Re:Paypal is already an in-store option for many

[SkyDude]

Would you name the online service you use? I'll be needing one soon. Tnx.

Take a look at USBSwiper. Low fees and inexpensive equipment for swiping and scanning.

obvious enough

[KingAlanI]

His account balance is -$400 because of PayPal's dickheaded way of handling disputes, so he'd need to receive more than $400 of normal payments top be back in the black; that $400 is tied down until the case is resolved, assuming that PayPal even lets him keep it in the end anyway.

Re:obvious enough

[hitmark]

we are talking here about a paypal account, not a bank account, right?

Re:obvious enough

[KingAlanI]

Yes, the PayPal account balance is what's in the red.

I smiled at the article heading...

[pandrijeczko]

PayPal chief hits Australia, wants POS payments

"Point Of Sale" was not the first thing that came into my head for the "POS" acronym when thinking of Paypal.

PayPal problems? Meh.

[KingAlanI]

Honestly, the horror stories about PayPal have not really affected me; although I don't doubt that the crazy stuff sometimes happens, I don't get too worked up about it. The fees can be annoying, but that's at least predictable.

One minor questionable claim went against me (maybe the item really didn't arrive); a few other disputes went amicably
I once used a debit card through PayPal to buy a ticket to an event that later got canceled; it was too far after the transaction date to use the PayPal dispute process (which naturally can happen when buying tickets months in advance). However, I was able to, without incident, dispute it through the bank that issued the debit card.

Not a bank means...

[jimbrooking]

...they are not regulated in any way. Anyone (other than stockholders) cheering this movement into an unregulated marketplace by this rapacious, anonymous, arbitrary, capricious and arrogant organization has probably never had dealings with it.

Trusting Paypal

[TheRecklessWanderer]

I'm not sure I trust paypal or ebay for that matter. They are like that shifty brother of your friend who always seems to do things that are just barely legal (but rarely ethical). In these days where you can barely trust major vendors (a la Sony) or banks that seem to get hacked and then admit it eventually, i see a definite advantage in going to the keep my money under my matress (long term savings) or in my pocket (for immediate use).

Re:Trusting Paypal

[glodime]

To live is to take risks, to posses money is to risk loosing it's value.

You should note that fire, flood, and hurricane insurance do not cover loss of currency from the insured event.

Pick your poison.

Have their cashback Debit, why use other?

[hortnut]

Until they become under the same rules of a US Bank I would not use for purchases.

I already have a PayPal Debit Card that earns cashback. It is issued by JP Morgan Chase Bank and is MasterCard branded.

Paypal competitor

[rmcmahon]

There's a company here in Iowa that basically does this. Called Dwolla, it's a person-to-person payment system designed with mobile phones in mind. You have a mobile money account with money drawn from your bank account and a ten-digit ID code. When you want to pay for something in a store, the vendor gives you their ID code and a transaction number. Punch that into your cell phone with a PIN and money moves from your account to theirs in the space of a few seconds. Transaction fees are cheap because Dwolla uses a local bank's clearinghouse system without the burden of Visa or Mastercard licenses and fees. And your bank information is accessed separately from a secure web site with a different password, so even if someone should intercept the transaction information, they don't get any useful information about you or your financial accounts. I'm not sure if Dwolla will ever gain much acceptance outside the region, the founders are working on a shoestring VC budget and just started marketing in their first city outside the state (Omaha). It's a pretty slick implementation, though.

Re:Paypal competitor

[witherstaff]

I would expect dwolla has had a surge in use recently now that most of the bitcoin exchanges allow dwolla transfers. I think they have a good system, a flat 25 cent transaction fee isn't bad. As a merchant I dislike using credit cards at smaller shops since they have to eat the 3%. Paypal fees are even higher than CC companies, I wouldn't use them even if I trusted paypal.

Re:Paypal competitor

[JohnnyLingo]

All the other comments here stated PayPal's fees were below 2%. I would have to check my math, but I think 2% is *lower* than 3%, not higher.

Re:Paypal competitor

[JohnnyLingo]

Absolutely correct - it's a cool idea with many advantages, but it only works at the regional level and requires a partnership with all the local banks. That's easier said that done, as Bling Nation is finding out - http://www.americanbanker.com/issues/176_109/bling-nation-mobile-payments-1038582-1.html

Re:Paypal competitor

[witherstaff]

Instead of recounting your fingers and toes, perhaps you could check paypal's fee schedule and see that for anything under $3000 a month merchant fees are 2.9% + 30 cents. In an ISP setting I only had a few % of clients pay with paypal, never paid less than that percentage. So yes, 3%

FDIC

[glodime]

People should know that not all Banks in the USA are required to be members of the FDIC. You should look for the FDIC seal before opening an account at any bank if you want your deposits insured by the FDIC.

NFC (RFIF) is a HUGE problem..

[cheros]

The problem is that NFC (the RFID idea) and PCI are in conflict - PCI asks for more security, while NFC rips a large hole in it.

The whole RFID card idea is based on the concept that you can only read the card from nearby. Any beginner with radio technology knows that transmission depends on the amount of power you use, the quality of the aerial and the quality of the receiver. Guess what - you can pick up a single NFC enabled card from about 30 meters, and in a crown 10..20 meters is enough to pick them out one by one. The "protection" is randomly ask for PINs, but as they are not tied to cards you can just fail a transaction that needs a PIN.

The interesting thing is that the industry actually seems to know all this, and brought out those stupid things regardless - why else would a credit card company VOLUNTARILY limit its ability to get you into debt by setting a low transaction limit?

As for your conclusion - I concur. Given the reputation that Paypal has regarding customer care I think they ought to focus on that first before growing.

However - there IS actually a way to enter shops for Paypal. But it's not via the "traditional" card route..

Re:NFC (RFIF) is a HUGE problem..

[JohnnyLingo]

This is a really good point. Security and Convenience are always inversely proportional, and the trickiest part as I see it is predicting where consumers will fall. Google Wallet looks like it will have fine security, but lacking convenience and I just don't know if it will ever take off. It will be interesting where PayPal comes in on that.

Re:NFC (RFIF) is a HUGE problem..

[cheros]

I have looked at both. As a matter of fact, I have looked at a good 50 new "solutions" involving cards and mobiles, and all of them focus on symptoms, not causes. That's why none of those solutions will actually take off - sooner or later will they run into the same flaws and will be exposed.

Re:Paypal?

[tehcyder]

Paypal is so 2001.

2011+ is Bitcoin.

Paypal still has the slight advantage that you can use it to buy actual things from actual people.

Re:Catchup

[JohnnyLingo]

Not really. Dwolla and Google can accept payments, but still ultimately have to charge it to a bank account or debt/credit card. In other words, they are middle men. PayPal essentially acts as its own bank. Huge advantage for offering simplicity, features, and lower fees.