Exactly How Screwed Is PayPal? (Hint: Very) | Hacker News Reader

Exactly How Screwed Is PayPal? (Hint: Very)

pandodaily.com

78 pointsdavidedicillo80 comments

If you're based in the USA, if your business is largely with Americans and conducted exclusively in USD, then: yes. You're in luck.

What's that? You're one of the 6.7 billion people who don't live in the USA? You want to conduct business in more than one currency? You're not an American company?

Then guess what: you're still stuck with PayPal.

Nobody seems to get that PayPal's killer feature is not its userbase. It's that it's everywhere and has multi-currency support.

I would very much like to use Stripe or Braintree or whoever there is who doesn't resemble the truly and sincerely Kafkaesque[1] experience of dealing with PayPal. But until I, as an Australian, can do business with foreigners in their currency then Stripe and the like are basically useless to me.

All I can do is lick the windows.

[1]: I'm semi-serious. Read The Trial and tell me it wasn't written about having a PayPal account frozen.

When you consider that estimated North American internet usage makes up less than 20% of total internet usage[1], I don't think PayPal has anything to worry about for a long time.

They are the almost defacto standard for personal payments online will keep them in the top spot for a long time due to network effects. Without a serious shift in usage, its hard to see that changing any time soon.

As an anecdote, my grandmother passed away last week. Her 86 year old sister back in Germany asked us if we had PayPal this week so she could send flowers for her funeral. It may not be a "hot" company in the US, but its still highly relevant to the vast majority of internet users, even ones that are only just venturing onto the web.

[1] I don't know the actual number as everywhere I've looked suggests between 13% and 15%. I figure less than 20% is a safe bet.

"PayPal has [nothing] to worry about for a long time."

I'd be careful, sometimes these articles are alarmist and over-reacting but a lot of times they predict the downfall of companies years ahead of their demise. Digg, Palm, Kodak, Yahoo, etc... A lot of these companies all display similar patterns right before things start to get bad for them. They stop innovating, they start getting surrounded by competitors, they get too comfortable thinking they're "too big to fail" and have the "network effect".

Look at Palm alone, it was a leader in PDAs and in a few short years it was gone. The internet and technology are changing at extremely fast speeds. One year you're safe, the next year a competitor has taken your market share. It all happens so fast now. Easier to start, easier to implement, easier to set up, and little by little it's no longer hard for your client to switch payment systems.

Digg, Palm, Kodak and Yahoo are poor analogies to PayPal. None of those companies had positions which were defensible against a better technology. PayPal does.

PayPal's barrier to competition isn't technology. It isn't service. It's not network effects.

It's that they've done the infinitely tedious schlep of jumping through thousands and thousands of hoops all over the world to make it possible for me, an Australian, to do business with a person in the UK in USD if that's what I require.

Nobody else can do that unless I arrive with millions of dollars in tow. Nobody else comes close.

I desperately want that to change.

That's not really an insurmountable barrier.

Once someone wins the US market, they'll use their treasure trove to enter other markers and then in a few short years we'll see paypal vanish.

Once someone wins the US market, they'll use their treasure trove to enter other markets

Sorry, reality disagrees.

Hardly any of the american Paypal-competitors give a flying fuck about the rest of the world. And many of them have been around for the better part of a decade.

The would-be gorillas 'Amazon Payments' and 'Google Merchant' are US-only and US/UK respectively.

Notice I said "won" the US market.

Paypal is still completely dominant in the US. Amazon Payments? Google Wallet? They're no where near even proving better than Paypal in local competition.

So you're a startup and your model or base is international — and all you need to do is wait a "few years".

If your model and base are international, you're overreaching.

All startups have to start small and evolve from there. Once you prove your ideas in one market, its easier to duplicate your success in others.

I would not advice a startup to take a lot of funding, then attack the international market initially.

That kind of pre-mature scaling is reminiscent of Webvan.

International might include not in the US.

I presumed you meant international as in more than their home-base nation whatever it may be.

I think it's possible to start a Paypal competitor for just Germany, then grow from there.

But it'd be far more difficult to start a Paypal competitor that targets all of the EU.

Being accepted internationally is not a proprietary technology. It's not something that ONLY PayPal can do. It happens to be something ONLY PayPal does at this moment. But honestly, give Square or Dwolla 7 years and they'll jump on the international bandwagon as well. The benefits are too numerous for anyone in that space to ignore international payments.

Also, BitCoin. I wouldn't even consider it an option for myself for so many reasons but BitCoin is truly international and the only thing that comes close to PayPal at the moment. I'd rather not have to ask the other party to spend 6 and a half hours reading and understand exactly what bitcoin is, how it works, and weather or not they can trust it. Then spending 7 days moving money from Bank Accounts to Dwolla to MtGox. But it is an option. Especially for large sums of money IF it's from people you trust and IF they know how bitcoin works. But that's too many ifs.

http://pin.net.au

You're welcome.

Thanks. I saw them when it was first discussed and immediately requested an invite.

Unfortunately it still means that I am missing out on dealing with 6.698 billion people in their own currency instead of 6.700 billion.

I seriously can not wait until they either leave beta, or stripe comes to australia. The race is on!

If you think that the primary problem in payments is technical, maintaining data integrity while bits get shuffled around, then you tend to expect that things like user base, convenience, user experience, aesthetics, etc. will have a big impact on the rising or falling popularity of any particular payment service.

If, on the other hand, you think that the technical problems are just the foundation and the big problems are actually things like regulatory compliance, fraud reduction, reducing cost of payments, and maintaining strong relationships with processors, governments, and banks then the landscape looks a hell of a lot different.

Paypal has already tackled the easy problems, and has been tackling the harder problems a lot better than any of the competition, with the very significant exception of customer service. If you want to trade money between any two individuals on the planet paypal is by far the most likely solution to the problem aside from air mailing gold coins. And paypal spends a hell of a lot more effort on things like detecting and mitigating fraud (and money laundering, and phishing, and so on) and expanding into more countries than most of its competitors. That's why they're still on top.

Well ... yes. I never thought the problems were purely technical.

That doesn't change my simple reality: the only game in town for me, right now, is PayPal.

And boy do they know it.

Yes, I'm agreeing with you. My point is that most people who think "paypal is doomed" probably don't understand the business with any degree of sophistication. Paypal has spent the last decade wriggling into every corner of the global economy, that's not something you can replace with some clever ruby code.

I think I was confusing the global "you" for the personal "you".

Which is why, despite its formal awkwardness, we have the option of the indefinite personal pronoun "one":

"If one thinks the the primary problem in payments is technical [one is mastaken]".

Personally I prefer the less formal compromise of "someone" (or "somebody", "anyone", "anybody" etc. with the choice depending on context and meaning):

""If anyone thinks the the primary problem in payments is technical [they are mistaken]".

I don't think you should have been downvoted.

While one can use 'one', it does as you say have a certain British awkwardness that doesn't endear it to the Australian or American ear.

> I don't think you should have been downvoted.

Deserved because of the typo? One probably shouldn't make such mistakes when discussing grammar!

I suspect though that most down-voted before fully reading and comprehending that in my comment I said exactly what you just repeated - that "one" is correct, but stuffy, and that there are other, better alternatives to "you" when referring to a broader readership.

> Then guess what: you're still stuck with PayPal.

Another thing is that PayPal works without a credit card in most cases, it can directly withdraw from my bank account.

Exactly. I don't have a credit card, because direct transfers are much more popular here (Poland). Amazon won't accept my debit card nor a direct transfer, that kept me from buying there.

Funny enough, I came here to argue more or less the opposite.

In many countries, the standard payment problems have been largely solved locally, at least for the local markets. In the Netherlands, a wide selection of payment providers will give you the ability to receive payment through virtually any method.

Merchant accounts are easy to get, and the most popular local form of payment, iDeal (direct "my bank to your bank" payment), is supported by all banks and can be easily implemented without the need for any payment provider. The vast majority of all only transactions in NL go through iDeal.

Most payment providers also offer multi-currency support, but it's only a very small part of the market that needs that. The use of PayPal is very rare and becoming rarer by the day. It's about as old school as seeing a "made for Netscape" button on a website.

There's only one area where PayPal is easier and more accessible, and that is very low budget private stuff like donations on a small software project. But given the constant horror stories about PayPal, any solution that targets that market effectively will wipe PayPal away in a matter of months. And then PayPal will be history in the Netherlands.

< In many countries, the standard payment problems have been largely solved locally, at least for the local markets. In the Netherlands, a wide selection of payment providers will give you the ability to receive payment through virtually any method.

Is it really? Sometimes I feel the Netherlands is the only country where it's been solved. Who of you live in a country with a satisfying, cheap, standard local payment provider?

In Germany and Finland direct bank transfers are a usable option. They have no fees for the buyer and very low fees for the seller (as a business account holder at an average German bank, you pay 45 cents per transaction regardless of size to receive payments). In Finland, depending on the bank, you don't even have to pay that. This is similar for all eurozone countries. In the UK there are a multitude of local payment providers as well. The real issue is cross-currency, cross-continent payments. There is no simple solution for selling to US customers paying in dollars if the seller is in the EU. The only serious player in that field is paypal.

In Sweden you can either use bank transfer, invoice (provided by Klarna), and I do not think accepting credit card payments is hard either.

Almost no Swedish businesses who target the Swedish market use Paypal. Paypal is mostly use by Swedish companies when they want to target any country in the world (for example Minecraft).

Dealing with the Swedish credit card providers isn't really any nicer than dealing with PayPal, but it feel better to be dealing with a local company in case something goes wrong.

In Europe bank transfers solve the person-person transfers so there's no need for PayPal for those situations, but for small fry accepting credit card payments it's hard to beat.

>Funny enough, I came here to argue more or less the opposite. In many countries, the standard payment problems have been largely solved locally, at least for the local markets.

Well, the same is true for the US --there are worthy PayPal killers there. But it doesn't matter much in a global era. If you want to be able to accept payments from and to everywhere, PayPal is the only game in town.

For an internet business that is not a pizza delivery or a local florist, the Netherlands only solution you describe is a non starter.

Stripe is quickly adding countries. Have some patience before you copy and paste your rant again.

https://answers.stripe.com/topics/international

Are they?

If you'd read the original article you'd know.

"Has anyone under 30 ever bid on something on eBay?"

What a load of shit. I'm 25, and I use ebay all the time.

Sure, you can make the argument that Etsy and Amazon are taking business away from eBay. But suggesting that they have replaced eBay as a platform is ridiculous. This is also a very USA-centric view to take. I'm from Australia, so using Amazon is a pain due to manufacturer export restrictions, and the often prohibitively expensive shipping costs. So in many cases eBay is a better alternative. And as for Etsy, it serves a niche. If you want to set up an online store to sell kitschy homemade toot, knock yourself out and use Etsy. But if I want to sell some of my second hand stuff, eBay is what I'm using.

For a company run by Sarah Lacey (who takes pride in having a Chinese presence) Pando Daily is a shockingly north American centric publication.

I also get the sense they want to be the first to say something is happening rather than could happen, at the expense of accuracy.

Australia is partly to blame for its own woes there -- Amazon have said in the past that they won't set up a .au subsidiary while there are parallel import restrictions on books.

All hail the luvvies, who made all books more expensive for all Australians, so they could protect a handful of novelists, playwrights and poets.

Explain how there's parallel import restrictions on books here? Last I heard there isn't any. I thought the only reason Amazon & co don't setup shop here is that its cheaper for them to ship books direct from the UK than pay Aussie-level wages.

If there is an "Australian" edition of a book, it is illegal to import copies printed elsewhere and resell them. Or, as it's also known in polite circles: retarded protectionist bullshit.

http://www.theaustralian.com.au/archive/business-old/shorten...

As for "cheaper to ship from the UK", you're thinking of the Book Depository, who take advantage of subsidised export rates.

This is true. We have largely removed all tarrifs and disincentives to import here, but when it comes to books the local publishers have a stranglehold over the market.

Ironically, they are dying anyway because you instead of reselling the books here, consumers just buy them directly from sites like amazon.com.

Meanwhile, Angus & Robertson and Borders have closed, and it's damned hard to find a bookstore any more. Which means that publishers can't sell there books as there are very few retail outlets they can sell their material. I'm really not shedding any tears - books are far too expensive in Australia.

When I moved to Australia last year, I simply couldn't believe the prices for books. A simple trade paperback would likely set you back 15-30 AUD! And don't even get me started on technical books...

There are a lot of people who are pirating technical books in Australia.

Indeed there are. I _want_ to reward the authors of technical books, but there's no way I'm going to pay the outrageous prices Australian distributors want. It's still much cheaper to buy from Amazon and pay shipping from the US/UK to AU than buy locally. That assumes 1) you can find a bookstore and 2) they have the title you want in stock.

And Aussie retailers wonder why people are revolting and buying online...

This is why protectionism kills markets.

Yeah - I've used Book Depository, they're excellent. Also there is an Amazon subsidiary who I've ordered off as well - Amazon.co.uk - their official address is in luxembourg or something (obviously some tax dodge).

You, being merely a single example of an individual who does not fit her statement, does not invalidate her point that it's a marketplace that an older demographic audience uses.

If she (and you) could demonstrate that as being true (or false) with research and statistics, then she (and you) would have a leg to stand on.

Draftable isn't getting paid to peddle anecdotes though.

Most of my friends and younger brothers friends have used eBay to sell second hand stuff and buy tickets for various events. I have never heard of Etsy.

I am not a great fan of ebay but if you want to shift something second hand its pretty effective.

A handful of people do not make a trend. However, I feel the comment on eBay being abandoned by under-30's is one of those statements made by someone living in a tech bubble and not in the real world.

eBay isn't hip or cool. That said when you want a good price for something, whether buying or selling doesn't matter. You want a good price and you don't want to get conned. eBay nails both of these.

I stopped using eBay 6 years ago, and for 5 years before that I used it every week, for buying and selling. eBay is fast becoming irrelevant. And I'm not in the US either.

>I stopped using eBay 6 years ago, and for 5 years before that I used it every week, for buying and selling. eBay is fast becoming irrelevant. And I'm not in the US either.

What part makes the above statements not anecdotal?

Hint: However much the venture investors in my blog want me to tell you it is

But everyone invested in my blog, that's how you know it's fair!

It also feels like a thinly disguised way to send traffic to NSFW Corp.

Yeah, there's a lot of bullshit in this article.

Wow, that's a shockingly bad article, even from Sarah Lacy's standards. Here's a summary:

"Here's a list of PayPal's fringe competitors" -> PayPal is VERY screwed

"Ex-PayPal co-founder says bad things about PayPal, while investing in a small competitor" -> PayPal is VERY screwed

"Young startup has a better user experience compared to 10-year old behemoth" -> PayPal is VERY screwed.

Sure, some of Lacy's Valley friends are making (or investing in) interesting products in the payments space, but man, does she let her 'network' write all her articles or what.

I'm going to ignore all of this article except for:

"The first step was Canada, where Stripe has just gone live. It’s actively working on Western Europe too."

This isn't even true is it? There's no mention of this on their site/blog. Nothing on Google. Their Twitter feed even recently replied to someone saying it isn't in Canada.

It is in a private beta in Canada as of last weekend. You can ask them for an invite.

Awesome! "just gone live" is a bit misleading then.

I read it as live but not public. You're reading tech blogs, their main beef is to get news as soon as possible.

Live means that it's publicly available as a finished product, doesn't it? Private beta is not "live". That's like saying a stage show has opened when they're doing a dress rehearsal.

It's like saying the show is on, it's live, there's a reception for VIPs then there the general admission are allowed in.

Yeah, let's just ignore all facts, such as actual financials, those don't matter when you're a tech reporter who likes to make things up out of thin air, right?

I dislike PayPal, but this is a terrible piece, and what is it, fluff for NSFW, Corp.?

Completely agree. The most shockingly amusing part is in the second paragraph, where she uses the fact she has no financial proof as her financial proof...

All I can think about when reading this is Betteridge's Law of Headlines.

See: http://news.ycombinator.com/item?id=4092880

This has to be one of the most invaluable filtering techniques I've learned to employ in the past year or so in regard to sites like HN.

It seems obvious in hindsight, but I'd never realised how many article headlines ending with a question mark naturally contained so much fluff.

I now instinctively answer the question with a 'no' and move on without reading any further.

Q: "Exactly how screwed is PayPal?"

A: "No"

PayPal is not going anywhere for the same reason Facebook is not going anywhere - over time both created a solid presence for non-technical users. No matter how cool squared looks i can guarantee you a typical paypal user won't care because what they have works good enough. It's the same reason G+ will never be more popular than facebook. For a typical user there is very little incentive to switch.

"It may not be showing up in PayPal’s numbers yet. Indeed, by the time you start to see these things on the balance sheet, the damage is irreversible. The question is whether it can still be reversed now." So much Win in that small paragraph alone. So, the numbers are good, put you are not convinced... because why? Ah yes, the damage is irreversible - let's see how we can reverse the irreversible then, shall we? Mind, blown.

I have two reports of people having their accounts frozen for 6 months at paypal for no apparent reason, no recourse and no explanation.

I also have severe problems paying with paypal. Why is it that I can pay on amazon, apple, expedia etc etc very easily, never have a problem, but when I try to enter my credit card on paypal they do not allow the payment?

And yes from personal experience braintree is a million times better than paypal.

Personally I think it's time for ebay to get rid of listing fees and MASSIVELY increase it's listings.

These days I go to amazon first for used stuff since people can list there with no fees, so I get better deals.

The only place where ebay wins is one of a kinds since amazon will only sell items with SKU's or part numbers.

As far as I am aware Amazon is taking a larger percentage of the end sale, so could in fact cost more than eBay for businesses depending on how many products you are listing and how many are actually selling.

The reason listing fees exist is to reduce the amount of dumped crap onto eBay. Besides, for individual sellers, listing fees are basically gone (or de minimis) anyway. There's a perpetual 'promotion' for your first N listings a month to be free of listing fees.

Interesting how Yahoo Japan got away with having no listing fee. And continue to be successful with it. Cultural? Or just precedence since dominating the market there?

Tripe fails at a very important point.

Paypal subscriptions are dead simple to cancel and there is no way to for the merchant to make any funny business, at all.

Hint: the hint is misleading

"Has anyone under 30 ever bid on something on eBay?"

I'm under 30, and I just won two auctions in the past week, bidding on many more to buy at the lowest price.

Really, we're posting articles from Pando? And it's from Sarah Lacey to boot. This article can't be anything but accurate. Oh, hold on, never mind...

100% agree. The poster just wasn't thinking. But nor was the Author. I just bought 6 Computer Parts on Ebay! I am only 28. The Computer parts were by far the cheapest place to buy them and they worked 100% out of the box. I saved nearly $1,000 by buying them on Ebay.

Brand New goes to Amazon and Sometimes Ebay. But Second Hand items, I always hit up Ebay.

I'm 20 and use it all the time. Don't people buy used things anymore?

Not in my experience. I can't sell any of my used stuff on ebay these days, however years ago it used to be great. These days i basically have to throw stuff out! Things i've tried to move: speakers, leather jackets, fridges- nobody wants it on ebay any more. It's just a buy-it-now-opolis these days.

Set market prices and it will sell

>These days i basically have to throw stuff out! //

No freecycle-like groups in your area?

Reply on news.ycombinator.com