Today I learned that random people can send you money on PayPal and disputed it | Hacker News Reader

Today I learned that random people can send you money on PayPal and disputed it

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54 pointsmikenikles68 comments

I know that FedNow isn't really a digital currency system and I'm not making any assumptions about how it's going to play out, but I hope one consequence of it is that sites like Paypal start seeing a lot more competition and lose a lot of power.

I know other countries have similar systems, but the US being a holdout and having terrible money transfer options despite being a massive market in the tech space maybe (hopefully?) is the reason that hasn't already happened?

I don't feel like I know enough to make any predictions, I'm just hopeful.

The dollar is already a digital currency, and its issuance is largely decentralized. Most dollars are issued by retail banks. What you can't do is self-custody the digital dollars or have an account at the Fed.

FedNow is going to be fine, just like ACH but faster. PayPal sucks in a lot of ways, but there are reasons you would use it over an actual money sending service like Zelle, FedNow or Wise. For what it's worth it's pretty rare that I have been materially adversely affected by the latency of an ACH payment. That's not to say I don't welcome FedNow with open arms, though, I very much do.

I used PayPal a few times because I didn't have a credit card. It is shit. Sending money from bank account to bank account without an intermediate parasite is not only efficient it's also more censorship resistant.

>it's pretty rare that I have been materially adversely affected by the latency of an ACH payment

What about every time you make a credit card payment (and associated fees)?

We don't use credit cards in place of ACH at the point of sale.

Debit cards maybe, but of course, debit card fees were significantly constrained in the US by the interchange caps in the Durbin amendment to Dodd-Frank in 2010. Non-exempt debit interchange (most of it) is capped at $0.22 + 0.05%. [1] In Europe it's been capped at 0.2% since 2015.

This compares to a FedNow transfer cost of $0.045 [2] - although I suspect there are significant bulk discounts here to financial institutions -- and surcharges to retailers. I'd call this "give or take the same" as the price of a non-exempt debit payment, but you may disagree.

I believe ACH clocks in at $0.003 in bulk to financial institutions.

Credit cards are not money transfer products so much as loan products. The actual interchange, the cost of processing cards, is quite low. In Europe it's capped at 0.3%. In the US most of the delta between what merchant acquirers charge and interchange is paid back to customers in the form of points or cash back, which basically just don't exist in the same way in Europe or other capped markets. Customers also like the insurance products, the ability to charge back, better fraud handling and the ability to batch their transactions into a single lump sum.

We pay a premium for these premium services.

[1] https://www.checkout.com/blog/revisiting-the-durbin-amendmen...

[2] https://www.frbservices.org/news/press-releases/012722-fedno...

How do retail banks issue dollars?

loans basically, I think?A deposits $100 you loan $97 of it to B who deposits that in their account. But A still has their $100.

Yes, also dollar creation outside of the jurisdiction of the Fed, like the Eurodollar market. These are US dollar denominated deposits in foreign countries at banks that don't have Fed accounts and can't even settle via Fedwire (instead relying on CHIPS).

The repo market is another example - and derivatives markets.

The main job of the Fed is be a clearinghouse. They don't really even know how much money is out there, let alone have omnipotent control over the supply. Monetary policy is only possible because of their role as a clearinghouse, but I digress.

> I hope one consequence of it is that sites like Paypal start seeing a lot more competition and lose a lot of power.

PP recently created their own scam^Wstablecoin PYUSD[1]

[1] https://www.paypal.com/us/digital-wallet/manage-money/crypto...

In Japan, illegal money transfers for criminal purposes to personal bank accounts have also become a social problem.

https://togetter.com/li/2172555

https://togetter.com/li/2015918

For the life of me I cannot understand anyone would use PayPal. I'd rather trust the postal system with an envelope of money. I have yet to see an area where there aren't better options.

At the moment I use paypal when my bank rejects a credit card transaction due to fraud risk. For example this happened yesterday when I tried to make a payment to a (very reputable) educational institution for an application fee. This is by no means a high risk transaction. In fact I would go so far as to say the payment could never in a million, billion, Brazillian years be fraud, but it was rejected.

But they take paypal also, so no bother. Do the transaction on paypal.

This kind of thing happens maybe once every couple of months for me, and is why I keep paypal around.

Edit to add: I think some UK banks are much more trigger-happy than the global average when it comes to flagging transactions as possible fraud. I once had to pay my tax bill (to the UK government) by paypal because the debit card transaction was declined.

> I think some UK banks are much more trigger-happy than the global average

For a good year, Barclays would ask me if my monthly Oyster purchase, for the same cost, at the same station, on roughly the same day of the month, was actually me doing it. Natwest, similarly, have blocked my "early September, about £1200, to Apple" payment for 5 years in a row now. It's infuriating.

Yeah. It's completely nuts. Especially when you consider how little of the actual fraud they seem to manage to stop. It's like someone needs to go in there and give them a stats 101 talk about type I and type II errors, because they somehow manage to defy all the rules of logic and have extremely high rates of both.

The real travesty is that the credit card companies have had over 25 years to standardize a secure payment system and get it into browsers, yet have still failed to do so which is why we have fraud detection heuristics and their associated false positives. SET was launched in 1996, for crying out loud:

https://en.wikipedia.org/wiki/Secure_Electronic_Transaction

Your own link mentions the technology(3D secure), but all cards issued in the EU have mandatory 2FA for online payments in the form of 3D Secure. I usually have to verify in an app. This results in very little fraud.

Additionally there's the Payment Requests API from W3C which is compatible with Apple Pay and Google Pay.

>rejects a credit card transaction due to fraud risk

This actually happened to me yesterday, thing is, the merchant doesn’t use paypal or anything except card, so kind of suck it up :/

I've had payments rejected when Revolut thought the payment was fraudulent, but I just get a notification in the app asking if it was me. If I click yes, I just do the payment again and it goes through.

Had it happen recently in the US when paying for a hotel room. They immediately froze the card when it was swiped through the machine by hotel staff. Clicked yes in the app, and it went through.

Paypal is useful, because it transfers money instantly. Sending money in an envelope isn't an option when you want something instantly. As a buyer, it also offers a form of protection from fraudulent sellers, which you also don't have with the postal service.

I can do that with other services too without risking PayPal though. If it is national transfers I can both use a national payment app or even a bank transfer - both instant transfer.

PayPal might give some protection but it also freezes some accounts and keep the money. No other service I have heard of have as bad a reputation.

10-15 years ago (when I started using paypal) most Europeans didn't have a credit card and most US-based services (and things like Ebay and Dealextreme) didn't accept anything but credit cards and paypal. And this sometimes is still the case.

Credit card is a rarity in Europe, because what we call a "credit card" is actually a debit card. Credit card are available at a premium, and while they offer some other advantages, few people use those. Visiting the US is actually one of the compelling reasons to get one.

In France (and I'm going to guess similar rules exist in other EU countries), businesses are required to accept at least 2 different payment options. They choose which 2, for example Apple Store accepts cards or ... cash. Buying a Mac with cash is a funny albeit slightly stressful experience.

To clarify, what I as a Dutch person would define:

- Debit card: payment is immediately subtracted from the bank account. "Normal". No charge backs. Accepted almost everywhere. No or nearly no charge per transaction (for the user). Return debit possible (when returning an item)

- Credit card: payments either summed as a loan or monthly charged from the bank account. Charge backs possible. Costs additional money each year, and some transactions may also cost 10 or 15 cents. Not accepted everywhere, mostly in diners or super markets - not in most retail stores. Most people don't have a credit card and/or don't use it regularly.

That's not true. Debit cards are more common, but credit cards are also very common in Europe:

https://www.theglobaleconomy.com/rankings/people_with_credit...

I see that 50% of people in Belgium have credit cards and I suspect it's because bank cards until very recently used to be almost only usable in Belgium, and not for online purchase (except at some Belgian stores). So you would need a credit card for a "normal" modern online life.

Not sure if it's still true but it also used to be the case in Canada while I lived there a decade ago or so.

Bank cards today seem to be double more and more as Mastercard/VISA debit cards and I think the amount of people bearing credit cards might decrease in the future. At least that's what has been happening with a few people around me.

Almost nobody in Europe uses credit cards. We use debit cards, various types (immediate, deferred, ...).

It was also the case 10-15 years ago. The usage has became much higher, but it was already all right by then.

Except Germany, for cultural reasons.

Plenty of people have credit cards in Europe. In 11 countries, the majority of people do, in fact:

https://www.theglobaleconomy.com/rankings/people_with_credit...

France is listed at 40% and there are no issuers of credit cards for the general population in France across the main banks. I do not know where they took the data from, but this is far from being the reality. Idem for Poland and Germany.

That statistic is about possession though, the parent comment is talking about usage. I'm in the one-third of my country that has a credit card, but I use it maybe five times a year, while I use my debit card daily.

A same-bank-as-your-cash-account credit card set up for full payment at the end of the month, so there is no financing.

Technically a CC, feels like a DC. Thats my experience in EU a I worked in Banking in many countries .

My reason for getting a credit card as soon as possible when I moved to Germany, was being able to switch the country of residence of some of my services to Germany, because they only accepted a local credit card as proof of residence here. Google was the main culprit in this regard. Mind you, the credit card itself is a serious joke - it's designed to be useless as far as I'm concerned. You cannot change the billing date, the app doesn't even show you the cutoff date. You cannot change the pin at all - if you request a new pin, they send you a new card.

The only good way I've found to use the card is through Paypal, ironically. At least this way I can see, down to the minute, what I spent and where, which the bank is unable or unwilling to show me.

Which credit card did you get in Germany? (I am seriously interested in that question)

Deutsche Bank - just about the only real use it has for me is to build a credit history here. If you consider using this bank in Germany and you're not a big business, avoid them like the plague.

Ha, I did not know that credit history was a thing in Germany. This is really surprising, given how Germans are averse to banking cards (vs cash or the special ATM cards)

There is no credit on the cards you get in the EU, except if you ask for some. By default there is no.

A credit card is, well, a credit with rates etc. You may pay a part and the rest runs as a credit. You have a specific contact for that. Also a credit card can be issues without a backing bank account. Our cards always (in practical sense) are backed by an account.

This is not how the cards work in the EU. You have delayed debit but no credit (formally - in practice you spend the money of the bank obviously, but you have to pay in full after 30-45 days).

American Express is a system that is used by companies (for various reasons) and this IS a credit card, but people use it for business related reasons and its delivery is triggered by the company.

I live in Spain and I absolutely have a real credit card. The interest rate is awful(18%), but as long as I make a minimum payment each month, it's up to me when I pay it off.

Ah! Which card is it? (which issuer). Is it attached to a bank account?

Is it common in Spain to use CC, as opposed to Debit Cards (usually delayed payment ones)?

It's a Mastercard(Platinium) issued by one of the major gas station chains in Spain. I end up with 10% discount on gas because of it. Though looking the BIN up, I can see some bank is the ultimate issuer of the card, just with branding being that of the gas station chain. I don't have a bank account with the issuer of the card, so they do direct debit from my bank account once a month to cover the minimum payment. A lot of banks allow you to apply for a credit card with them even if you don't have an account with them.

I don't think it's super common to use them day to day as I do. People often use them to split payments for big ticket items. But by using it, I get percentages when buying food and other specific items, so I just run the card and pay it off immediately.

I have had a card that could work for online payments for nearly 20 years... They really were not very rare in many places of Europe.

It depends on what you mean by "use PayPal". To give out my debit card details as infrequently as possible, if a business supports paying with paypal I'll use them as the payment provider. I don't store any money with them though.

You usually don't need a paypal account for that though.

Having said that, it can bite you in different way. Paypal keep an association of last email used in a transaction with a card number.

For example, I had paid for a vps hosting using paypal payment (without a patpal account) with one card, using my email address in the billing details. Later one we bought something for my partner with the same card, but using her email address in the billing details.

Subsequent payments notifications for my vps hosting were sent to her email address.

Disposable/virtual cards are a great alternative to that if you have a good banking system that provides them (e.g.: Revolut in Europe)

PayPal is excellent for sending money (buying) for the same reason it is terrible for receiving money (selling).

Essentially, the buyer is always right, and so, as a buyer, it is very easy to get your money back in case of a problem. The seller is the one who gets all the fees, and needs to justify himself if there is a dispute. Sellers offer PayPal because even though it is really bad for them, it gets them customers.

They also have the best fee rates of payment processors for small businesses and craft show/ event venues. There is no cost unless you sell too.

I use PayPal for when I'm buying stuff from websites that I use very infrequently. I "trust" (in the lightest possible sense) PayPal more than a random website with my card details. Making it go through PayPal seems safer?

I've used paypal frequently for 15 years and never had a single issue at all.

I don't get the angle of the "random people" here - is it just to cause a nuisance by causing target accounts to incur fees? I mean it's stupid but a lot of PayPal stuff is stupid.

> To a point, I am suspecting Paypal pretends to be the random online stranger that sent me the money and then disputed it

I would highly doubt this.

> is it just to cause a nuisance by causing target accounts to incur fees?

Most likely, they give money to a random email address using a stolen card, then dispute it and receive that money back, but now it's clean money because it comes from Paypal.

I suppose, I'm not sure how far these cases get pursued but it feels like you could track the movement of money between a stolen card and the scammer's account if you really wanted. But maybe they give up after seeing a charge to PayPal

It could work within one country, but I suspect they would use stolen US credit cards to get funds on Paypal, but then transfer that money to a bank account in another country where Paypal is unlikely to be able to get it back.

So the owner of the credit card should get their money back from their bank (or credit card company? Not sure how that works in the US) which might get their money back from Paypal if they want to bother, but it's probably too difficult for Paypal to get their money back from some bank in a country where they might not even have physical presence.

Ahhhh yeah that makes sense

PayPal is the pinnacle of stupidity. I've sold the same digital product many thousand times, and this has happened multiple times:

Some customers decides to try to get it for free by paying and then creating a PayPal claim by lying that someone else made the purchases or that it was not delivered. And this usually works, and people tell others, so more people abuse it.

Basically every single time someone tries to commit "friendly fraud" as the card networks calls and it(customer tries to scam seller by lying), there are a handful of transactions from one person. PayPal usually rules 90 % of the cases in favor of the buyer.

However, there can be 20 purchases during just a couple of hours from one person and card, and somehow PayPal is certain that purchase 6 and 10 was legit, while the rest was someone who used the card without permission. That seems probable, right? Even on a account with a flawless record for over 10 years I've had this happen so many times. Usually when this happens I have to spend hours on this and contact PayPal by phone to get the money back. Usually the customer gets the money too, for some absurd reason.

PayPal's fraud system is absolutely garbage, and so is the standard email support. Contacting account managers at least gives you what seems to be a human response.

I too got my PayPal account limited in 2012 as a result of a scammer who abused PayPal disputes.

The solution is super simple: make buyers pay to create PayPal claims and use the money to have real people quickly look over the cases. This is similar to how cases are handled for card networks.

Was the claim legit? Money back, including the claim fee. The merchant has to pay a fee, same way as today.

Was the claim not legit? Basically free money for PayPal, and some should probably be shared with the merchant for helping out with solving the fake claim.

At least in europe the scams on PayPal has mostly shifted from "unauthorized use" to "not delivered" as a result of strong consumer authentication.

This is super interesting to me. I am an amateur artist and I publish my stuff on instagram (@pamar).

In the last year I had multiple cases of people contacting me out of the blue and asking if I could draw a picture of their nephew's favourite dog (it is always a dog, and it is always for their nephew whose birthday is coming soon so there is an implicit sense of urgency).

I never actually pursued this stuff because it was obviously a scam of some kind (I draw mostly nudes, dogs or animals in general amount to less than 1% of my production so far, so someone starting their message with "I just adore your style can you please draw a dog for me..." is obviously either a scammer or blind).

Another clear sign is that they are obviously following a script (my standard answer is something alongside the lines of "Gee, thanks, but I do not really work on commissions, and I don't draw animals anyway" to which they would infallibly answer "Fantastic, would 2500USD be ok for you?" - at this point I just block them).

But I am still a bit confused about what the angle would be for this type of scams: assuming they send me 100$ and then open a claim against me because I did not deliver... at most they would get 100$ back after a few days. There is no actual profit, right? (I am considering one of my drawings basically worthless, I draw on paper, usually a5 or smaller).

Is this a laundering schema? What would they get out of it? (There are also lots of people asking to buy my stuff for NFT, I did not fall for that, either, but some other artist on IG explained to me that usually they ask you to create an account on some third party site... the account requires a fee, and after you have paid for it the NFT guy will just disappear - so in that case the way they get money from you is clear... but I still don't get how it would work in case of a physical item).

Any clues?

Another similar scam is they request to pay by cheque and overpay, asking for the overpayment to be returned. Even after the cheque has cleared it can be cancelled and they keep your overpayment refund.

https://en.m.wikipedia.org/wiki/Overpayment_scam

Apparently, read this somewhere else, the scam is that they will then change their mind and ask you to refund the money (probably suggesting you send it to them to avoid the refund fee). Once you have refunded the money, they then claim the original payment. So they started with $100 and now they have $200.

Ah ok, that would make sense, thanks)

(Btw, recently I had a guy who seemed legitimate in wanting to buy my stuff... I asked him to send 120USD... to a charity and just send me the paypal receipt.

He stopped answering my messages when I asked him the post address to send the drawing to)

As a consumer, if I was obligated to pay to file a claim with a payment provider I'd be disincentivized to use that payment solution. Also, if I had a real issue and the fraud system failed to evaluate the case properly/competently then I'd immediately cancel my account and avoid further use.

Despite being the only person who's ever owned my email address, someone else somehow has it added to their PayPal account.

Last I checked, Google's survey app inexplicably pays out to PayPal even though they have Google Wallet, and doubly inexplicably will only pay to what it thinks your email address is with no option to change it. So… someone in Brazil has my survey payments.

Umm... just do a password reset on their PayPal account?

Sounds illegal?

As in, I thought about it and that's the reason I haven't done it.

It's tied to your identity. If they commit any fraud it may fall back on you.

Don't do any more surveys?

Can't you reject funds the same way you're allowed to reject a request for funds? Is there something I'm missing?

Ha, I was just wondering about this, or rather, whether there was any way to disable receiving funds. Not that I could find, anyway.

I also coincidentally am having a spat with Paypal at the moment, hence my new username.

The title should be and "dispute" it

The concept of trusted third party becomes more and more annoying.

Look how quickly the PayPal Support AI got there to respond.

UPI allows sending money using phone number only in India. It is at much bigger scale than Paypal. Over last 6 six years not even once sent me free money.

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