Everyone has known for years that Paypal is awful, regularly steals large amounts of money held by perfectly legitimate customers, and does it all through inscrutable, unfriendly, customer-service processes.

I know this, man.

Yet Paypal is bigger than ever, and there's no glimmer of improvement on the horizon.

So either we assume Ebay, the parent corp, is so clueless about milking Paypal for profit while reinvesting as little as possible back into it, or we assume Ebay has a reason for not improving Paypal in any significant way in the past 5+ years.

I'm starting to suspect there's a great financial reason for Ebay to keep doing this. And it might be a similar financial strategy that Amazon has famously used from day 1. Amazon collect payments immediately, yet ships items much later. This means their cashflow is always more than their inventory expenses at any given moment. For however much time there is until that gap closes, Amazon is in a great position—essentially getting a short term loan, and if you consider their volume of transactions, that is billions of cash being held in floating pools.

What if Paypal provides a similar benefit to Ebay's bottom line? Paypal isn't a bank, so they can do whatever they want with the held funds. I suppose what actually happens to the held funds is a corporate secret they guard carefully. But I bet it props up Ebay's cashflow in a major way. If Ebay changed ways and forced Paypal to provide better guarantees, much like a bank, then their cashflow would take a hit.

Good idea or am I off?