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Comment by netcan | Hacker News Reader

In Australia, businesses usually go through banks for online payment via credit cards. The banks are under similar constraints and chargeback fraud is a serious problem. Just because you delivered a product & have a signature doesn't mean the customer can't call the CC company, lie and get their money back. That doesn't even touch on stolen numbers and such.

However, when you deal with your bank, you usually have a business banker with a name, a phone number and an office. You are never in a hopeless support ticket black hole. That makes a big difference.

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And for that privelege you've got to pay big bucks in monthly account fees, pass the 'merchant application' process and pay a percent on top of all your transactions. You'll also have to setup a credit card processing system and secure all those credit card details you've been collecting on your site. Good luck with getting an online-only merchant account as a new company with no trading history, because it's not going to happen.

With PayPal you can be operating in an hour. They're also cheaper than all banks, unless you have some serious transaction volume. You can hook it into a simple website and start processing payments without even a https cert.

Of course, any serious site will want their own merchant account, credit card processing and the rest. But before you get to that point PayPal is a very handy shortcut that has enabled millions of small sites and sellers.

When PayPal starts charging and acting like a bank, then you can compare the service levels. I personally think, that for the transaction scale and amount of fraud they have to deal with, PayPal does a relatively good job. They aren't saints, but for the vast majority, PayPal transactions work as designed.

In other words : you get what you pay for.

I agree, but I think you exagerate. Banks are often harder to work with. But, since they are the alternative (actually businesses often have both) most businesses I know deal with, it's worth comparing them.

It's not that hard to get an account, especially if you already exist as a customer, even a private one. The costs tend to even out over a certain volume but again, they aren't that high. I'm not sure how easy it would be if you weren't a company, didn't have an address and weren't a customer.

In Australia the most common setup is site + payment gateway (bank or 3rd party) + merchant account. If you are using some existing ecommerce software (hosted, bought or OS) it usually integrates pretty easily with large payment gateways. It all costs about 2-$400 per year plus processing fees, not much different to in store CC processing. I think it ends up at parity with paypal at around 50-$150k depending of total transaction volume (depending on transaction sizes), so you are right that it doesn't scale to micro business levels very easily.

But banks, difficult and bureaucratic as they are do compete for business clients and they do it mostly on the back of customer service.

With paypal you don't get what you pay for. If you transact $7.22 per year you get the same service as $722k.

>With paypal you don't get what you pay for. If you transact $7.22 per year you get the same service as $722k.

That's a good point actually. Maybe the anti-PayPal meme might die a little if you could actually get preferred service (and not frozen accounts) if you have a history of processing payments over a certain level. They already know who that is because they give you better pricing for volume.

One meme is businesses launching on paypal, transacting a lot on week 1 and getting frozen for being a suspicious newcomer - also variations on that. For many types of business (eg retail), that's a cash flow showstopper.

Banks' solution to this sort of thing is low tech. Have a local banker talk to you, maybe pay a visit.

It's not as hopeless with PayPal as it was in earlier years. Now you can get someone on the phone within a few minutes.

Glad to hear it, but I think that just shows us how low the bar is. If it's urgent and important, most businesses can get someone in their office within hours. Obviously it depends on how much business you do with them, but that's OK. With paypal businesses transacting $10k per year month get similar treatment to someone who sells a used ipod once a year.

Also, I've heard examples where this is not the case. Eg Couldn't get Paypal to pick up the phone even though paypal was holding $100ks of their money. (http://mixergy.com/dodocase-patrick-buckley-interview/)

This kind of sentiment is important. Can WePay survive if PayPal decides to improve customer service and cater to small groups?

You mean like 3 years later? But seriously, I started using Paypal recently to collect money and so far, everything is fine. I did get some checks but it was resolved after a few calls and some faxes. Not a lot of money was involved so it was not a life or death situation. I understand they do need to check for fraud but some of the cases I read do send chills up my spine.

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