Though Stripe isn't yet a viable competitor for lots of businesses, because they haven't sorted out the international thing at all yet, but they're working on that (as PayPal well knows).
I was pretty negative in the previous thread, but it seems like this is more than just PR. I will see this weekend when a project I was helping with goes live (well, hopefully the cash will come).
I'm also migrating my product over to Stripe for all new accounts moving forward in a couple of weeks.
I know those two events aren't connected in any way, but I wonder if they're starting to feel the heat a bit now that there are more viable alternatives out there for easy subscription payment collection...
I'm using stripe & paypal for a new project. Absolutely LOVE stripe, but there's about 40% of people who prefer paying with paypal so I keep it around. Really nice to not have to rely on it anymore though.
I hope they continue with this. They were the only game in town for so long (short of getting a full merchant account) that they didn't have to bother to fix these kinds of issues.
PayPal's had for years a policy of not holding funds of well-established accounts with a good history. Either this is a broadening of that policy to more accounts, or a PR move to get more people to know about it.
This text has appeared in my chargeback notices back to at least mid-2010:
> Usually, when a buyer files a chargeback and the card issuer reverses the charge, we temporarily hold the funds until the issue is resolved. However, because of your low dispute rate and consistent sales volume, we're allowing you access to the funds while we investigate the chargeback. We want to extend this courtesy to our valued customers, because we know how inconvenient it can be to have your funds held.
That's not how chargebacks work and even PayPal doesn't have the ability to change that system. When someone charges back a PayPal payment, the funds are removed from PayPal's bank account and deposited to the cardholder's bank before PayPal even gets notified.
Their allowing you to keep the payment until the dispute is decided is actually PayPal floating you a loan on faith that if you lose the dispute, you won't have disappeared along with your balance to reverse it then. Of course, for disputes only within the PayPal system, PayPal's a bit safer not immediately reversing the payment.
Because part of PayPal's service to their customers is that you can dispute a transaction and they will work to resolve it. It's one of the features that protects (and therefore attracts) consumers. Clearly, it causes negatives for sellers. It's a trade-off.
Consumers want chargebacks. They let you get your money back when you get scammed or your payment information is stolen. Does that never happen in Europe? Nobody ever takes your money then fails to deliver the product/service? You never have your information stolen and used to pay for something you didn't authorize?
Please don't play dumb; it's not the appropriate level of discourse here. Is your police department going to open an international investigation into how many USB cables a Canadian company shipped or didn't ship to you? You know that realistically, if you wire money to an account of someone untrustworthy, you have no recourse at all. There's no guarantee there's even an account on the other end to recover money from.
With credit cards, millions of people pay millions of merchants they have never done business with before while completely protected against fraud. The chargeback dispute process is completely international; the burden of proof is on the merchant no matter where in the world they are. And the protection is guaranteed for months, even if the merchant has disappeared.
For certain people in certain circumstances, they won't do the gobsmacking, business-killing thing they've been doing. It's not so much a step in the right direction as just tilting their head toward it.
Cue people whinging about a system they know almost nothing about.
Why are there so few true paypal competitors? Because paypal makes it so difficult to compete against them with their stellar service and low fees? No, because it's a legitimately hard problem, and you can't really avoid doing what paypal does while still abiding by all the relevant laws and financial regulations.
ugh i'm so sick of PayPal and have been working with them for years. Its time to bail. We currently use it mainly for foreign transactions. Time to find something else.
Well, let us know what you find, then -- what rates, ease of setup, currencies supported, etc..
Regardless, I'm not sure why you'd say now is the time to bail, as opposed to any other time -- now that they're finally trying to fix some of the problems (effectively or not TBD, of course).
This is going to be a largely unpopular opinion here, but PayPal actually works really hard to limit fraud. They froze my account and "robbed" me of around $2,000 dollars (and I complained about it here) maybe 2 years ago, holding that cash for around 8 months until I got them all the paperwork they needed (it had to do with a non-501c corporation accepting donations).
But when you suddenly start making real money, the game completely changes. You start getting personal phone calls from real people, you have actual phone numbers that you can call, they contact you at your cell phone, and they tell you things like "Due to rule xyz, we would technically have to freeze your account, and the next time you log in, you'll message saying if you don't provide information a, b, and c, you'll get locked out of your account; don't worry, that's not going to happen, but please work with us to determine what we can do to meet our technical requirements for donations coming in to non-profit organizations" and "We've been noticing customers filing chargebacks, however we do recognize that your chargeback rate is far below the usual x% [I'm not allowed to disclose this number] so we'll just front you the money until we rule the dispute; we also noticed you're no longer bothering to dispute the chargebacks, is there a particular reason? Is there something we can do to help you improve the process?"
You get personal phone calls like "We noticed your sales volume this month has dropped by x%, is there something we can do to help?"
Basically, I have come from hating PayPal and searching desperately for an alternative, to recognizing that they are doing their best and working very hard on a very difficult problem. I have worked with startups that are loved here on HN that have tried to solve the same problems, and I must say that though I was initially impressed with their work, they did not know what they were getting into, and I now actually prefer that my customers check out via PayPal than via my credit card processor alternative that I initially set up to spite PayPal (but, of course, it's important to have both PayPal and a traditional credit card processor for checkout).
EDIT
Yes, of course. Downvote me for providing some insight that puts PayPal in a positive light. How dare I.
I'm interested to know at what point Paypal starts doing this. We have around 100k per month of turnover through them and we don't seem to get any special treatment.
In fact, they put a 40k fixed reserve on our account and a 10% 90 day rolling reserve as well. This is despite our chargeback rate being low. (The performance benchmark page reports 0.00%)
That said, I do concur that Paypal is much better at preventing fraud. We get perhaps 1-2 chargebacks per week on Paypal and more like 10 per week using Stripe. This is also with us fairly aggressively refunding payments that we suspect are fraudulent on Stripe also.
> Due to rule xyz, we would technically have to freeze...
This leaves me wondering, how clearly are PayPal's rules spelled out (I've just avoided PP like the plague, since I can) to help merchants avoid gotchas? Are freeze-worthy violations presented boldly ...or only buried in tiny TOS-like legal documents?
I agree that PayPal does a good job to deal with a very, very hard and very real problem of fraud but that's not the issue. The issue is the part that comes after the account freeze, the part that frequently seems to take a large amount of internet frenzy to get PayPal to pick up the phone and go 'we're really sorry, we'll sort it out today'.
They're getting better, and taking steps in the right direction but they really need to step up the processes for dealing with the aftermath of it, blocking something for fraud is a good thing, making someone run around for months and months is a bad thing.
Your story is no different than what PayPal sent in their email to a select number of account holders; that they will continue to freeze accounts (or as you put it, "rob" people) until you have an outstanding account performance (or as you put it, start making real money).
Never mind having had a clean track record for years, your reputation, credit history, no chargebacks, no disputes, you will still be held to the same scrutiny until you start performing "outstanding".
Your experience only shows they've always made exceptions and the email they sent out is just to make that fact public which doesn't change a single thing.
One problem is their own, their customer service is, in a word, shitty. That's their grave and it's up to them to dig themselves out of it or wallow in it.
The other big problem is one of expectations. Unfortunately, they have trained people into believing that transferring money back and forth is frictionless and painless. Which, at a small scale it generally is with paypal. However, once you get into the range of taking a significant amount of money via paypal (defined as around median US income or higher) then everything changes. When you start using paypal as a processor for your personal business then all sorts of financial regulations come into play and all sorts of business rules imposed by VISA and MC come into play as well.
And then people do stupid things like take pre-orders for something that won't be shipping for months (a VISA/MC/legal nono) or take donations without being registered as a non-profit org. and you mix in a good helping of problem #1 and a lot of people end up having more than a few bad days.
However, the thing that many people don't appreciate due to their ignorance is that with a merchant account a bank is going to do all of these same things for all of the same reasons. They are going to "steal" (read: put a hold on) your money while they spend the time working out whether or not your questionable business activity is not actually fraud, or money laundering, or simply sufficiently risky as to require a higher balance to be maintained in case of charge backs.
Now, the more business you put through paypal the more it makes sense for them to dedicate real-live human oversight to your account, which can lead to leniency if they see that you aren't a fraudster/mobster/etc.
Make no mistake though, every single day paypal has to deal with those folks too, only we don't hear about it because no fraudster, phisher, or mobster is going to complain on the internet about being shutdown legitimately by paypal.
This is how it should work. This is why people try to make friends with their bank manager: the working relationship helps the bank know who the hell they're dealing with, and so means they can communicate better and have goodwill. That PayPal should do the same is, if anything, good.
It seems like PayPal is starting to realise the mistakes they have committed, and they are trying to rectify them.
Most importantly, PayPal know they are screwed. This reward isn't a reward, it's just an absurd incentive to prevent them losing their market share. This is just ridiculous, I don't see how liquidity of your funds is a a form of a reward, your funds should be liquid in the first place because it's your hard earned cash.
34 comments
[ 3.8 ms ] story [ 81.9 ms ] threadThough Stripe isn't yet a viable competitor for lots of businesses, because they haven't sorted out the international thing at all yet, but they're working on that (as PayPal well knows).
I'm also migrating my product over to Stripe for all new accounts moving forward in a couple of weeks.
I know those two events aren't connected in any way, but I wonder if they're starting to feel the heat a bit now that there are more viable alternatives out there for easy subscription payment collection...
I hope they continue with this. They were the only game in town for so long (short of getting a full merchant account) that they didn't have to bother to fix these kinds of issues.
This text has appeared in my chargeback notices back to at least mid-2010:
> Usually, when a buyer files a chargeback and the card issuer reverses the charge, we temporarily hold the funds until the issue is resolved. However, because of your low dispute rate and consistent sales volume, we're allowing you access to the funds while we investigate the chargeback. We want to extend this courtesy to our valued customers, because we know how inconvenient it can be to have your funds held.
http://i.imgur.com/a35fP.png
Their allowing you to keep the payment until the dispute is decided is actually PayPal floating you a loan on faith that if you lose the dispute, you won't have disappeared along with your balance to reverse it then. Of course, for disputes only within the PayPal system, PayPal's a bit safer not immediately reversing the payment.
In Europe we just use wire transfer for all electronic payment. It's instant and free. There is no such thing as chargeback.
Just call the police?
On auction sites there is also insurance.
>You never have your information stolen and used to pay for something you didn't authorize?
How? They would also need your bank account password and sms token.
With credit cards, millions of people pay millions of merchants they have never done business with before while completely protected against fraud. The chargeback dispute process is completely international; the burden of proof is on the merchant no matter where in the world they are. And the protection is guaranteed for months, even if the merchant has disappeared.
Why are there so few true paypal competitors? Because paypal makes it so difficult to compete against them with their stellar service and low fees? No, because it's a legitimately hard problem, and you can't really avoid doing what paypal does while still abiding by all the relevant laws and financial regulations.
Regardless, I'm not sure why you'd say now is the time to bail, as opposed to any other time -- now that they're finally trying to fix some of the problems (effectively or not TBD, of course).
But when you suddenly start making real money, the game completely changes. You start getting personal phone calls from real people, you have actual phone numbers that you can call, they contact you at your cell phone, and they tell you things like "Due to rule xyz, we would technically have to freeze your account, and the next time you log in, you'll message saying if you don't provide information a, b, and c, you'll get locked out of your account; don't worry, that's not going to happen, but please work with us to determine what we can do to meet our technical requirements for donations coming in to non-profit organizations" and "We've been noticing customers filing chargebacks, however we do recognize that your chargeback rate is far below the usual x% [I'm not allowed to disclose this number] so we'll just front you the money until we rule the dispute; we also noticed you're no longer bothering to dispute the chargebacks, is there a particular reason? Is there something we can do to help you improve the process?"
You get personal phone calls like "We noticed your sales volume this month has dropped by x%, is there something we can do to help?"
Basically, I have come from hating PayPal and searching desperately for an alternative, to recognizing that they are doing their best and working very hard on a very difficult problem. I have worked with startups that are loved here on HN that have tried to solve the same problems, and I must say that though I was initially impressed with their work, they did not know what they were getting into, and I now actually prefer that my customers check out via PayPal than via my credit card processor alternative that I initially set up to spite PayPal (but, of course, it's important to have both PayPal and a traditional credit card processor for checkout).
EDIT
Yes, of course. Downvote me for providing some insight that puts PayPal in a positive light. How dare I.
In fact, they put a 40k fixed reserve on our account and a 10% 90 day rolling reserve as well. This is despite our chargeback rate being low. (The performance benchmark page reports 0.00%)
That said, I do concur that Paypal is much better at preventing fraud. We get perhaps 1-2 chargebacks per week on Paypal and more like 10 per week using Stripe. This is also with us fairly aggressively refunding payments that we suspect are fraudulent on Stripe also.
This leaves me wondering, how clearly are PayPal's rules spelled out (I've just avoided PP like the plague, since I can) to help merchants avoid gotchas? Are freeze-worthy violations presented boldly ...or only buried in tiny TOS-like legal documents?
They're getting better, and taking steps in the right direction but they really need to step up the processes for dealing with the aftermath of it, blocking something for fraud is a good thing, making someone run around for months and months is a bad thing.
(Upvoted as it was a genuinely insightful post)
Never mind having had a clean track record for years, your reputation, credit history, no chargebacks, no disputes, you will still be held to the same scrutiny until you start performing "outstanding".
Your experience only shows they've always made exceptions and the email they sent out is just to make that fact public which doesn't change a single thing.
One problem is their own, their customer service is, in a word, shitty. That's their grave and it's up to them to dig themselves out of it or wallow in it.
The other big problem is one of expectations. Unfortunately, they have trained people into believing that transferring money back and forth is frictionless and painless. Which, at a small scale it generally is with paypal. However, once you get into the range of taking a significant amount of money via paypal (defined as around median US income or higher) then everything changes. When you start using paypal as a processor for your personal business then all sorts of financial regulations come into play and all sorts of business rules imposed by VISA and MC come into play as well.
And then people do stupid things like take pre-orders for something that won't be shipping for months (a VISA/MC/legal nono) or take donations without being registered as a non-profit org. and you mix in a good helping of problem #1 and a lot of people end up having more than a few bad days.
However, the thing that many people don't appreciate due to their ignorance is that with a merchant account a bank is going to do all of these same things for all of the same reasons. They are going to "steal" (read: put a hold on) your money while they spend the time working out whether or not your questionable business activity is not actually fraud, or money laundering, or simply sufficiently risky as to require a higher balance to be maintained in case of charge backs.
Now, the more business you put through paypal the more it makes sense for them to dedicate real-live human oversight to your account, which can lead to leniency if they see that you aren't a fraudster/mobster/etc.
Make no mistake though, every single day paypal has to deal with those folks too, only we don't hear about it because no fraudster, phisher, or mobster is going to complain on the internet about being shutdown legitimately by paypal.
Likely or not? Maybe the new CEO just realized that and is fixing the house.
Most importantly, PayPal know they are screwed. This reward isn't a reward, it's just an absurd incentive to prevent them losing their market share. This is just ridiculous, I don't see how liquidity of your funds is a a form of a reward, your funds should be liquid in the first place because it's your hard earned cash.