Hacker News Reader

Comment by gst | Hacker News Reader

Actually, in Europe Paypal operates as Luxembourg-based bank.

Technically, this is true. Being based in Luxembourg, however, effectively abrogates the effect of the regulatory aspect of things. I am not au fait with the ins and outs of Luxembourg's banking laws, but I do know it is a grey area of banking in the wider scene. Countries that tax worldwide income (e.g., US, Germany) routinely decry Luxembourg as a tax haven. I suspect, therefore, that Luxembourg does not regulate or apply its laws to commerce that occurs outside its borders. As I noted in the last round of "Paypal-was-architected-by-robber-barrons", Amazon in Europe is also incorporated in Luxembourg. Aside from its proximity to Brussels and being at the centre of western Europe, this is almost certainly for tax reasons. That is, they don't ship (or ship pitifully little) to Luxembourg itself and so pay considerably less in taxes than they otherwise might. Similar, though considerably less convenient, havens also include Jersey, Gibraltar, and Cyprus, all semi-autonomous regions belonging to the UK that attract businesses by taxing only commerce that occurs between two parties within their borders.

FWIW, I wouldn't touch PayPal with a barge pole. We use RBS WorldPay because 1. we get favourable terms as we have an account with RBS, 2. we get 1% transaction costs with no monthly fees,and 3. we get fraud protection by RBS WorldPay for free.

The tech folk at RBSWP are not the sharpest tools in the shed, but RBSWP itself has proven to be good for us financially. Another one that is quite popular but whose breadth of availability I do not know is SagePay.

How do you get no monthly fees? We have an account with NatWest (RBS group), but the site says 20 euros/mo.

Talk to your WorldPay account manager. We started off at 20 pounds/mo + a set transaction fee and then switched to 1%. It doesn't hurt so much when you are first starting out and it gives a helpful percentage to use in projections.

Thank you, I've send them a contact enquiry. How can it be so cheap, though? PayPal does 3.4% + $0.35, and WorldPay does just 1%? Is there a catch?

Paypal is regulated by the luxembougish banking association. The most important rule is "know your customer". If you don't do that as a bank, you will go to jail if you have dirty money coming in.

I suspect all those crying foul in the past (also the minecraft) guy never provided identifying information (an email and a name is not enough!) and when your account exceeds a certain quota, you have to provide these information.

" I suspect, therefore, that Luxembourg does not regulate or apply its laws to commerce that occurs outside its borders."

is just plain wrong.

It may be. But it is true that most tax havens, including the other three I mentioned, do not tax anything that does not happen within their borders. That is why there is the infamous address in the Caymans to which some 8000 businesses are registered, according to Obama.

What you are claiming holds for Delaware (which is in the USA!). Just google for delaware tax haven.

What you said is not true. According to the first link in the google search you recommend...

http://www.lectlaw.com/filesh/bbg33.htm

"Delaware LLCs pay a $100 annual tax and are otherwise tax free if no business activity is carried on in the US, most of its members are not US citizens or residents and it does not invest in US companies."

That's a lot of if's that there's no way a company like Amazon could satisfy. Also:

"Although there is no state income tax, as with all states no matter their particular tax laws, all US companies (or any entity for that matter) are subject to applicable federal tax laws & reporting requirements."

In other words, of course US taxes are still payable for companies incorporated in Delaware.

Does this mean that the horror stories of frozen assets donn't/won't happen to European accounts?

Considering that this story was from Europe, that doesn't appear to be the case.

Just recently a story was published in Germany where they evaded their responsibilities as a bank by clever shifting of responsibilties between eBay, PayPal and the credit-card issuer. So in case of a TV shipped to a identity thief chargebacks were no longer possible (I cannot find the article right now).

Another story where PayPal doesn't provide chargebacks to the customer after paying a non-shipping company:

http://www.heise.de/ct-tv/artikel/Video-Vorsicht-Kunde-80133...

(Update: I had the description and the video mixed up...)

I can assure you (from my own experience) that these horror stories also apply to EU accounts. In fact, the article was written about a Dutch PayPal account.

I can confirm that they are sitting on 2000 GBP of mine and not responding to anything.

Stop contacting them, and start contacting the relevant authorities.

It's looking increasingly likely that I will have to sue them.

I also confirm. My account is frozen for no good reason since 1 year. No reply to any mails. Germany.

I once used my Bank to get back my money from Paypal. Paypal took an amount from my credit card. So I called the bank and told them, Paypal did it without authorization. I had to fill a form and got my money back within a few days. I gave Paypal only access to my credit card, not to my bank account. Although they claim in their terms and conditions that this is correct (account OR credit card), I assume this is the main reason why my account is frozen. I can't even close it or delete data.

Reply on news.ycombinator.com