Ordered something from a Japanese auto parts exporter, one month later nothing has arrived.
Email them, no response.
Use their online inquiry form, no response.
Open a problem case with PayPal... response within 2 hours and item in my hand 4 days later.
With a credit card I'd dispute the transaction and then... well there is no line of communication tied to the dispute. Perhaps they'd email me, perhaps not. Either way I wouldn't actually get the item like I did.
That's a very US-centric view. PayPal is an abstraction layer.
In Belgium, for example, many people do not use credit cards (although adoption is increasing thanks to online shopping). It was quite common a few years back to ask if a friend or family member could order something for you if you knew they had a credit card. We use debit for everything (Maestro combined with some Belgian Atos system). PayPal allows many people without credit card to pay via SEPA Direct Debit instead.
Maestro is compatible with MasterCard though so should work anywhere a credit card does?
Tbh it's only a handful of EU countries that randomly shun internationally standard debit and credit cards. I was in Turkey recently and everyone was using and accepted CCs. Even tiny coffee shops. No idea why Germany et al can't get it together so people don't have to build these ridiculous integrations. The EU has also capped fees to a very low amount. Makes no sense.
> Maestro is compatible with MasterCard though so should work anywhere a credit card does?
Maestro is MasterCard. [1]
But in my experience you cannot use a Maestro everywhere you can use a MasterCard. Most online stores in Germany will use SOFORT or giroPay instead of Maestro. Sixt doesn't permit car rentals with a debit card.
> No idea why Germany et al can't get it together so people don't have to build these ridiculous integrations.
Several reasons I can think of:
1. You need to be an adult and pass SCHUFA to get a credit card. Minors can pay online with Lastschrift or SOFORT/giroPay from their account.
2. Germans are very debt averse, and when you can buy things online with SOFORT/giroPay or Lastschrift, there are very few things you really need a credit card for (e.g. certain rental car companies like Sixt)
3. Only ~35% of Germans have a credit card, so a business would be foolhardy to exclude 2/3rds of the market by only accepting credit cards. [2]
> Maestro is compatible with MasterCard though so should work anywhere a credit card does?
Not for online shopping. My debit card with maestro logo on it can't be used for online CC payments because it's not a credit card and doesn't have any of the details on it that you'd need to fill out for a CC payment.
PayPal _was_ Stripe/Square before they existed. Early on it was the easiest way to accept online payments by a long shot. In modern times it is not competitive in price, features, nor UX. I still use PayPal, but 100% of those transactions are for eBay so with this change I will no longer be a PayPal user.
Paypal's future will be cross-border and online shopping stuff.
For example, CC ownership in the EU is nowhere near as widespread as in the US, and SEPA direct debit (Lastschrift) is a bureaucracy/maintenance nightmare for merchants: basically, you have to archive the SEPA direct debit authorization for every customer and keep it on file, and you have to store the real name, address etc. of the user, even if you otherwise would not need it at all. And in the event that the debit process fails (it's not instantaneous, it takes a couple days to clear in addition) you have to hunt after the customer to get your money.
With Paypal, you essentially have your money a) guaranteed (because Paypal will deal with a debit failure, not you) b) instantaneously available c) without the need to securely store sensitive account data of your customers. Downside is buyer's protection stuff and Paypal's sometimes wildly inconsistent policy enforcement.
PayPal is an abstraction later for accepting payments from different sources.
Why don't people just use credit cards directly?
From the consumer's perspective, PayPal serves as a platform that stores their payment and shipping details in one place, meaning that in order to make a purchase from a new vendor they don't have to faff around with credit card numbers and shipping details on every purchase.
From the vendor's perspective, PayPal is significantly less effort to integrate with than a traditional payments gateway. It means that vendors don't store card details themselves, which means compliance is easier. I've not used it as a vendor for years, but I understand it also provides things like basic order management.
Stripe/square take care of pos
Yes, but PayPal existed before either Stripe or Square, and provides substantially the same service.
venmo/bitcoin handle peer-to-peer
Not directly – a payment processor of some kind is still needed to fulfil the same use cases. Not to mention the extensive other difficulties with those systems.
what is paypal's future?
Pretty much the same as the other options. Don't get me wrong, PayPal has lost some of its moat and the Stripe API in particular is much nicer, but it provides substantially the same services as competitors, so there's not much reason to switch unless the offering from elsewhere is more attractive.
Paypal offers one extra thing over the top, which is the ability to easily get your money back if the seller screws up.
I use this a lot with sellers in the UK. If you ask them directly for a refund because they forget something or sent you crap (dominos are good at this), it is like getting blood out of a stone. Even being polite, some people will just jam the phone down and tell you to fuck off.
If you pay with paypal, they usually don't even respond and the money just gets returned after 2 weeks by default with paypal. If they do respond they usually just refund a portion anyway.
So what you're getting on top is arbitration.
If you use your credit card, you're pretty screwed here in the UK unless the amount is over £100.
Once I had a charge to my PayPal account for something I didn't buy. I fought with PayPal for about 2 months and they kept giving promises and failing to deliver.
One call to my credit card company and I got the money back via chargeback to PayPal.
From the business side, it doesn't make sense. As a consumer, I pick PayPal if it's an option. It's an additional layer of consumer protection. I also have a PayPal prepaid card that generates card numbers on the fly so I can have single purpose credit cards.
Venmo is US-only and bitcoin is a usability disaster area with either unpredictably slow transactions or unpredictably high fees.
Paypal solved the "small merchant" problem of getting set up to receive money for selling goods and services on the internet. There are a lot of downsides to the seller, but those are generally because the question of where the default cost of fraud should be borne has ended up there.
(Bitcoin of course pushes all responsibility for fraud onto the buyer, and I don't know how Venmo handles it)
As someone who has sold a few items in the £300-700 range over the last few years (car audio equipment and graphics cards, mostly), I've been surprised and annoyed at all the fees involved. Paypal takes a 4-5% cut, then a couple of weeks later ebay will mail you asking for their 10% too. And then are listing fees etc.
Unless there are special promotions on it feels like a real gouge.
PayPal fees are 2.9% plus $.30 which is industry standard for accepting a credit card, exactly the same as Stripe.
eBay takes 10% of the sale price, which is what is too high. You have to pay eBay fees on shipping now too because for years people would list their products as "$.50 with $30 shipping" to skirt eBay fees.
To really understand how it got this way, you have to understand the history of eBay. eBay started out as basically, similar to Craigslist, you'd post auction items and once the auction was won, everything was done off eBay. You'd email (actual email!) your shipping address and inquiries. Payment was arranged privately between buyer and seller, usually done in physical money orders or personal checks sent through snail mail. You could do wire transfer, I guess, but I always paid with money orders. Sometimes for items under $10 I'd even send cash.
PayPal came along and filled that niche of people who wanted to pay by card and accept credit card. PayPal was just another method of payment that sellers could choose to accept.
Eventually eBay became a "platform," more like a store, where you'd handle all payments/customer service through eBay. eBay then bought PayPal and made PayPal the only accepted method of payment.
Recently PayPal was spun off again as it's own company.
They only got so high when Paypal was required as the default to sell on eBay. Before that fees were lower - half or even less.
Add in the succession of anti-seller changes and eBay has become a rather toxic place for sellers. eg Refunds given to buyers who claim they were sent an empty box or broken item resulting in seller being out fees and the item. Even with proof of sending, delivery and weight. Or the pay via Paypal, collect item, scam. Many cases in the media over the last year or two.
Little wonder there's not the activity of a few years ago.
This is one of the major reason sites like craigslist keep holding out and growing strong despite ebay. Eg in france "leboncoin" has become one of the mainstay, it's free and has no fees, they make money by selling listing "bonuses" (get at the top, etc ...).
If you're selling a 100e item every couple of months, ebay fees and overall costs look ridiculous. I guess that's also why ebay turned more and more toward commercial sellers, but by doing so they also took that weird spot being neither a good b2c store nor a good c2c place, at least in my mind.
Still, they are very well ranked for traffic share in France (they're at 17th, leboncoin at 7th, amazon at 6th).
Adyen means something, just not in English. Their website says it means “again” in Surinamese, probably because a previous business of theirs was rolled into what is now Worldpay.
Paypal is in this weird place where the whole set of reasons why it's so successfull with buyers is exactly why it is hated by sellers.
As a buyer, I will definitely pick it over any other option, and will pick a seller offering it over one that doesn't, even if the price is slighly higher. That's in fact pretty much the only reason I grown to use Agoda over Booking 99% of the time, and why I now use mostly Qatar Airways for my Europe <-> Asia travel.
It's safer (I don't give my CC to anyone else, they can't lose it nor give it so whoever, and they have very good buyer protection procedures in place), and it's more practical (don't need to find my CC and fill the numbers, don't need to ensure it won't hit my CC monthly spend limit as it use "prelèvement" by default [charge me from my bank account directly, bypassing my CC]).
As a seller I hate it, integration is terrible and fees are terrible. But anyone who has them and tries to remove them knows it translates to lost business. On a websites once we simply moved paypal from the default to one of the side option you could pick and it lead to significant lost sales in A/B testing.
This is a good point. But it seems like the advantages of PayPal from a buyer perspective are derived from a subset of its features, rather than the core of the product itself. It is possible to create a business that masks your credit card, for example, without also creating a de-facto bank and merchant processor. See Privacy.com for an example.
Yeah until you get to the "show the physical credit card used" fraud protection that is now common, "I used paypal" works but a "fake card" that the merchant didn't know about ? Good luck missing your plane if you don't have agree to let them take a card print before boarding.
I mean, I agree overall, but I also like the fact that Paypal is registered as bank in the EU (luxembourg) and has to follow all corresponding legislation.
(might be different in the US, where depending on the state it's either registered a bank or a much less refulated "payment processor")
It’s still a “real card.” The name and billing address are the same; it’s just the number that changes. AFAIK (not affiliated) Privacy.com integrates with MasterCard in the same way as prepaid gift cards or employee expense account credit cards do.
Regarding presenting your “real card,” doesn’t using PayPal cause the same problem? Paying for airline tickets is clearly a special case. Also, are you sure you even need to check in with the same card you paid with? Usually those systems that ask you to “swipe your payment method” are only reading your name from the card, and combining it with a confirmation number to look up your reservation. I know for a fact this is how trains in the UK do it, because I can buy a ticket with PayPal, and then use any credit card with my name on it to collect the ticket from the machine.
I should point out again that I'm Europe (France) based, so this might be different than the US. Note that when I say swipe the card, I mean putting the card and typing your 4 digit pin.
> Regarding presenting your “real card,” doesn’t using PayPal cause the same problem?
No because when a marchant offer paypal, they know it, and they know you paid that way in advance.
There is a very big difference between "you paid with a system that doesn't have a physical card, you knew it, we knew it, and we specifically allowed you to do it", and "you used CC payment but you don't have the corresponding physical card, we didn't know or approve this, and your explanation is that you use some sort of service online that hides the real card".
Considering this is done to prevent fraud prevention, I'm sure you can see why this is very different.
> Also, are you sure you even need to check in with the same card you paid with? Usually those systems that ask you to “swipe your payment method” are only reading your name from the card, and combining it with a confirmation number to look up your reservation.
Hotels, airlines and others are using it as a fraud prevention and they explicitely require the card, of a proper copy of it to be present. They often explicitely state it on the checkout page, and on the printed receipt. The one time I had to go around this, Emirates phone support asked me to have a printed copy of the card AND a printed copy of the national id card of the card owner at check-in.
With that said, they didn't actually check any of it, and this was before 3D secure (Emirates current official policy is that you don't need those documents if paid with 3d secure). But still, I would rather be safe than being blocked at the airport.
I know somebody who worked at Paypal. There was a simple scheme they used to do on a regular basis. Once somebody has accumulated a sufficient amount of money on their account, they would freeze their account and tell them to send incredibly detailed documents confirming the sources of all incoming transactions. Completing that request would take the average user a long time, then afterwards Paypal would take a couple of weeks "analyzing" the documents. In the meantime, they were free to handle the frozen assets as they saw fit, such as investing in stocks. After those few weeks, they would (not always) unfreeze the account and pocket the investment profits. If there was anything wrong with the documents, they would extend the period the account was frozen or simply keep the money for themselves in some cases.
I call bullshit. Investing frozen cash into stocks sounds far too complex, and you can imagine so many pitfalls (how the hell do you fudge the accounts for missing cash if the investing loses cash?)
Of course there's no "evidence". If I had evidence I would go to the courts instead. This is an anecdote.
The pitfalls you mention can easily be covered if overall the practice brings profit, since you can cover potential losses with profits from other cases.
It seems reasonable that they're investing their float. It seems possible they're creating Byzantine regulations in order to increase that float. No evidence, but it doesn't sound complex to me - money is fungible, and all that.
I've heard this a few times over the years, I'm not sure if it's urban legend, speculation, or based on something that actually happened. OP claims they worked at Paypal so they may not be willing to go into detail, or it may just be completely made up for Internet points (which so far seems to be backfiring).
I came across a video[1] a few days back while looking at electric car hobbyist stuff that makes the same accusations as OP. According to the Youtuber, when he had hundreds of transactions at once via a group buy on an account that he claims has moved millions of dollars through Paypal as a business account, Paypal froze the funds and he suggested to his customers that Paypal did it so they could invest the funds for six months and make a ton of interest. It's a bit tin-foil-hat sounding but it's just plausible enough to make one wonder.
We used to use Paypal as payment processor but when someone opens a case on whatever issue then all of our TOS goes to the bin. Paypal dont care how you want to run your business since they enforce their policy and "after careful consideration" their automated system refunds the money to the buyer.
Paypal dont care if the buyer abuses our company's TOS or what was the issue. They just refund anything even after 6 months. (I wear my shoes off in 6 months) They dont care how the item has been returned, in what condition etc... they just refund. This is why buyers just love it and exactly this is why we got rid of them and started to use Stripe. With Stripe we can decide if something was faulty or got broken or the buyer just want to abuse our TOS. Stripe dont involve and let us control our own business. Yes... we have tons of customers turning away and we have lost revenue. We knew this and we 100% accept it. We use Stripe for 3 years now successfully and nobody tells us what money we MUST return. We sell £300-£800 worth of parts, tools. We rather loose revenue than accept "received empty box" claims. We the seller pay the Paypal fees but Paypal's policy built on buyers protection only. So no thanks... we would rather give our fees to someone else (Stripe) who actually let us run our own business. For us Stripe = FREEDOM Good luck to Paypal but we will never deal with them again.
55 comments
[ 3.1 ms ] story [ 114 ms ] threadStripe/square take care of pos, venmo/bitcoin handle peer-to-peer, what is paypal's future?
Ordered something from a Japanese auto parts exporter, one month later nothing has arrived.
Email them, no response.
Use their online inquiry form, no response.
Open a problem case with PayPal... response within 2 hours and item in my hand 4 days later.
With a credit card I'd dispute the transaction and then... well there is no line of communication tied to the dispute. Perhaps they'd email me, perhaps not. Either way I wouldn't actually get the item like I did.
Until you opened too many claims, then they'll disable your account. Source: friend who worked at PayPal customer support in Ireland.
In Belgium, for example, many people do not use credit cards (although adoption is increasing thanks to online shopping). It was quite common a few years back to ask if a friend or family member could order something for you if you knew they had a credit card. We use debit for everything (Maestro combined with some Belgian Atos system). PayPal allows many people without credit card to pay via SEPA Direct Debit instead.
Tbh it's only a handful of EU countries that randomly shun internationally standard debit and credit cards. I was in Turkey recently and everyone was using and accepted CCs. Even tiny coffee shops. No idea why Germany et al can't get it together so people don't have to build these ridiculous integrations. The EU has also capped fees to a very low amount. Makes no sense.
Maestro is MasterCard. [1]
But in my experience you cannot use a Maestro everywhere you can use a MasterCard. Most online stores in Germany will use SOFORT or giroPay instead of Maestro. Sixt doesn't permit car rentals with a debit card.
> No idea why Germany et al can't get it together so people don't have to build these ridiculous integrations.
Several reasons I can think of:
1. You need to be an adult and pass SCHUFA to get a credit card. Minors can pay online with Lastschrift or SOFORT/giroPay from their account.
2. Germans are very debt averse, and when you can buy things online with SOFORT/giroPay or Lastschrift, there are very few things you really need a credit card for (e.g. certain rental car companies like Sixt)
3. Only ~35% of Germans have a credit card, so a business would be foolhardy to exclude 2/3rds of the market by only accepting credit cards. [2]
[1] https://en.m.wikipedia.org/wiki/Maestro_(debit_card)
[2] https://qz.com/262595/why-germans-pay-cash-for-almost-everyt...
They also have fees, PayPal is free for the buyer.
Not for online shopping. My debit card with maestro logo on it can't be used for online CC payments because it's not a credit card and doesn't have any of the details on it that you'd need to fill out for a CC payment.
For example, CC ownership in the EU is nowhere near as widespread as in the US, and SEPA direct debit (Lastschrift) is a bureaucracy/maintenance nightmare for merchants: basically, you have to archive the SEPA direct debit authorization for every customer and keep it on file, and you have to store the real name, address etc. of the user, even if you otherwise would not need it at all. And in the event that the debit process fails (it's not instantaneous, it takes a couple days to clear in addition) you have to hunt after the customer to get your money.
With Paypal, you essentially have your money a) guaranteed (because Paypal will deal with a debit failure, not you) b) instantaneously available c) without the need to securely store sensitive account data of your customers. Downside is buyer's protection stuff and Paypal's sometimes wildly inconsistent policy enforcement.
PayPal is an abstraction later for accepting payments from different sources.
Why don't people just use credit cards directly?
From the consumer's perspective, PayPal serves as a platform that stores their payment and shipping details in one place, meaning that in order to make a purchase from a new vendor they don't have to faff around with credit card numbers and shipping details on every purchase.
From the vendor's perspective, PayPal is significantly less effort to integrate with than a traditional payments gateway. It means that vendors don't store card details themselves, which means compliance is easier. I've not used it as a vendor for years, but I understand it also provides things like basic order management.
Stripe/square take care of pos
Yes, but PayPal existed before either Stripe or Square, and provides substantially the same service.
venmo/bitcoin handle peer-to-peer
Not directly – a payment processor of some kind is still needed to fulfil the same use cases. Not to mention the extensive other difficulties with those systems.
what is paypal's future?
Pretty much the same as the other options. Don't get me wrong, PayPal has lost some of its moat and the Stripe API in particular is much nicer, but it provides substantially the same services as competitors, so there's not much reason to switch unless the offering from elsewhere is more attractive.
I use this a lot with sellers in the UK. If you ask them directly for a refund because they forget something or sent you crap (dominos are good at this), it is like getting blood out of a stone. Even being polite, some people will just jam the phone down and tell you to fuck off.
If you pay with paypal, they usually don't even respond and the money just gets returned after 2 weeks by default with paypal. If they do respond they usually just refund a portion anyway.
So what you're getting on top is arbitration.
If you use your credit card, you're pretty screwed here in the UK unless the amount is over £100.
One call to my credit card company and I got the money back via chargeback to PayPal.
I've never found PayPal to be that simple.
seller -> paypal -> card company -> real money
Paypal solved the "small merchant" problem of getting set up to receive money for selling goods and services on the internet. There are a lot of downsides to the seller, but those are generally because the question of where the default cost of fraud should be borne has ended up there.
(Bitcoin of course pushes all responsibility for fraud onto the buyer, and I don't know how Venmo handles it)
I've said wait until eBay ditches Paypal, you will lose many users. Well noone cared and I guess all people involved got their bonus payed and left.
As someone who has sold a few items in the £300-700 range over the last few years (car audio equipment and graphics cards, mostly), I've been surprised and annoyed at all the fees involved. Paypal takes a 4-5% cut, then a couple of weeks later ebay will mail you asking for their 10% too. And then are listing fees etc.
Unless there are special promotions on it feels like a real gouge.
eBay fee: $51.5 PayPal fee: $15.24 Total: $66.74
That is too much IMO. I don't sell anything on eBay, but I didn't know it was that high.
For more household-type items I prefer gumtree.
eBay takes 10% of the sale price, which is what is too high. You have to pay eBay fees on shipping now too because for years people would list their products as "$.50 with $30 shipping" to skirt eBay fees.
To really understand how it got this way, you have to understand the history of eBay. eBay started out as basically, similar to Craigslist, you'd post auction items and once the auction was won, everything was done off eBay. You'd email (actual email!) your shipping address and inquiries. Payment was arranged privately between buyer and seller, usually done in physical money orders or personal checks sent through snail mail. You could do wire transfer, I guess, but I always paid with money orders. Sometimes for items under $10 I'd even send cash.
PayPal came along and filled that niche of people who wanted to pay by card and accept credit card. PayPal was just another method of payment that sellers could choose to accept.
Eventually eBay became a "platform," more like a store, where you'd handle all payments/customer service through eBay. eBay then bought PayPal and made PayPal the only accepted method of payment.
Recently PayPal was spun off again as it's own company.
Add in the succession of anti-seller changes and eBay has become a rather toxic place for sellers. eg Refunds given to buyers who claim they were sent an empty box or broken item resulting in seller being out fees and the item. Even with proof of sending, delivery and weight. Or the pay via Paypal, collect item, scam. Many cases in the media over the last year or two.
Little wonder there's not the activity of a few years ago.
If you're selling a 100e item every couple of months, ebay fees and overall costs look ridiculous. I guess that's also why ebay turned more and more toward commercial sellers, but by doing so they also took that weird spot being neither a good b2c store nor a good c2c place, at least in my mind.
Still, they are very well ranked for traffic share in France (they're at 17th, leboncoin at 7th, amazon at 6th).
They are significantly better for large consumer facing companies than anyone.
Ad-yen doesn’t seem too hard to say for me.
As a buyer, I will definitely pick it over any other option, and will pick a seller offering it over one that doesn't, even if the price is slighly higher. That's in fact pretty much the only reason I grown to use Agoda over Booking 99% of the time, and why I now use mostly Qatar Airways for my Europe <-> Asia travel.
It's safer (I don't give my CC to anyone else, they can't lose it nor give it so whoever, and they have very good buyer protection procedures in place), and it's more practical (don't need to find my CC and fill the numbers, don't need to ensure it won't hit my CC monthly spend limit as it use "prelèvement" by default [charge me from my bank account directly, bypassing my CC]).
As a seller I hate it, integration is terrible and fees are terrible. But anyone who has them and tries to remove them knows it translates to lost business. On a websites once we simply moved paypal from the default to one of the side option you could pick and it lead to significant lost sales in A/B testing.
I mean, I agree overall, but I also like the fact that Paypal is registered as bank in the EU (luxembourg) and has to follow all corresponding legislation.
(might be different in the US, where depending on the state it's either registered a bank or a much less refulated "payment processor")
Regarding presenting your “real card,” doesn’t using PayPal cause the same problem? Paying for airline tickets is clearly a special case. Also, are you sure you even need to check in with the same card you paid with? Usually those systems that ask you to “swipe your payment method” are only reading your name from the card, and combining it with a confirmation number to look up your reservation. I know for a fact this is how trains in the UK do it, because I can buy a ticket with PayPal, and then use any credit card with my name on it to collect the ticket from the machine.
> Regarding presenting your “real card,” doesn’t using PayPal cause the same problem?
No because when a marchant offer paypal, they know it, and they know you paid that way in advance.
There is a very big difference between "you paid with a system that doesn't have a physical card, you knew it, we knew it, and we specifically allowed you to do it", and "you used CC payment but you don't have the corresponding physical card, we didn't know or approve this, and your explanation is that you use some sort of service online that hides the real card".
Considering this is done to prevent fraud prevention, I'm sure you can see why this is very different.
> Also, are you sure you even need to check in with the same card you paid with? Usually those systems that ask you to “swipe your payment method” are only reading your name from the card, and combining it with a confirmation number to look up your reservation.
Hotels, airlines and others are using it as a fraud prevention and they explicitely require the card, of a proper copy of it to be present. They often explicitely state it on the checkout page, and on the printed receipt. The one time I had to go around this, Emirates phone support asked me to have a printed copy of the card AND a printed copy of the national id card of the card owner at check-in.
With that said, they didn't actually check any of it, and this was before 3D secure (Emirates current official policy is that you don't need those documents if paid with 3d secure). But still, I would rather be safe than being blocked at the airport.
Show some evidence, op.
The pitfalls you mention can easily be covered if overall the practice brings profit, since you can cover potential losses with profits from other cases.
I came across a video[1] a few days back while looking at electric car hobbyist stuff that makes the same accusations as OP. According to the Youtuber, when he had hundreds of transactions at once via a group buy on an account that he claims has moved millions of dollars through Paypal as a business account, Paypal froze the funds and he suggested to his customers that Paypal did it so they could invest the funds for six months and make a ton of interest. It's a bit tin-foil-hat sounding but it's just plausible enough to make one wonder.
[1] https://www.youtube.com/watch?v=t1rYgD8luGw