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Comment by ary | Hacker News Reader

I hear you. Though you have to admit that Paypal's heavy-handed "fraud protection" is a big part of why people want a viable competitor.

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There are lots of bad stories about Paypal, but I've made a different experience today:

Paypal: Used it for years without any problems so far. As buyer and as seller.

Dwolla: Registered an account several weeks (months?) ago. Didn't use it since then. Today I've tried to log into my account and it seems that essentially the account has been locked and I'm required to upload a photo ID in order to get my account unlocked.

So it seems that other payment providers aren't really better than Paypal. I'm glad I don't have any money stored on Dwolla - let's see how they handle the situation.

my theory is that any payment provider that grows large enough will eventually become just like PayPal

when you enable international processing fraud rates spike (double-digit percentages in some countries) and you end up building an agressive fraud protection scheme like PayPal have

the new startups have the advantage of only serving a relatively small less risky market, and being obscure enough not to be a target of fraud groups

these new startups have nice features such as simple API's etc. but I haven't seen anything yet that is revolutionary in terms of technology that will break out of the fraud/blocking cycle

Edit: to add, I am not being dismissive of the new startups, on the contrary I am using Swipe on a new product, and I really do hope that one of these guys nails this space

Compared to my own experiences with even normal merchant account providers, and what I've read of 3rd party processors like 2Checkout, and looking at the state of payment processing for adult sites... if the same people that use PayPal and had problems with fraud were to go anywhere else, they'd probably find it even worse. You only hear about PayPal because it's so ubiquitous with 232 million accounts, so many of them with no other experience with any other method of accepting payments.

It's a difference in expectation. PayPal tips the balance incredibly far in favor of the person spending money, to the point of royally screwing people who receive money, because far more of the former exist and the latter want to get paid. People don't just want another PayPal, they want something less broken. We could do with some decently balanced payment systems, as well as a few "caveat emptor, all sales final" systems, but all of them have to get traction with the people spending money and those people don't see any problem with PayPal.

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