Why Isn't Paypal More Successful?
avc.com
avc.com
For instance, I auctioned off a motherboard on Ebay. The guy paid for it with Paypal. Sent off the motherboard. The guy refused delivery, and then accused me of not sending it.
Being a nice guy, as he actually didn't receive the motherboard, I refunded the guy his money.
Then he filed a complaint with Paypal for me not sending the motherboard. Paypal would not listen to my side of the story at all, even though I had proof of shipping and proof of his refusal of delivery.
So then Paypal gives him the money (from my account) for the cost of the motherboard. So the guy walks away with my $200, and Paypal doesn't care, and does nothing, and actively seems to want this to be the outcome. This wasn't bad customer service. This was company policy.
There's a reason this site exists, and why I tell everyone to never, ever use Paypal if they can help it:
That level of fraud and cases like the one you highlight seems like a really big problem that isn't easily solved.
It seems they have this policy as it is cheaper to deal with an unhappy seller who has little/no protection legal or otherwise (especially if they have used thier PayPal balance for payment) and who will generally not chase them through the court system (in which case PayPal will argue it is a case between the buyer and seller, not PayPal and the seller), than an unhappy buyer who often has the backing of thier credit card company (or bank) to fight chargebacks on thier behalf and in most cases win.
As a vendor/retailer, especially if you have your own ecommerce store or sell high value items, be VERY wary of PayPal and only ever complete transactions if all buyer details match and protections are in place (buyers are verified and items sent only to card billing address).
Posted something similar a while back, http://news.ycombinator.com/item?id=361361, and it is sad to see little has changed.
This is a great response and encapsulates many of the issues I have with PayPal. I would add to it that enough people have been burned by PayPal to give it a lousy reputation; you can't write a post about the company without people chiming in with horror stories. My family's business -- see www.seliger.com -- is the kind of company Paypal would presumably want to use their service, but after I had a bad experience with them, I never would.
The first comment on http://news.ycombinator.com/item?id=626518 Hacker News answers, "Because they appear, from many people's perspectives, to be nothing but scam artists?" With this kind of reputation, why _would_ people use Paypal.
But then, after he refused delivery, he claimed I'd never even sent the motherboard, and filed a claim with Paypal -- despite the fact that I had a tracking number, proof of it getting to his location, and then online indication that "recipient refused delivery" or whatever it said (don't recall exactly -- this was five years ago).
After that, he never responded to my emails, and just disappeared completely. He was obviously in it to scam someone -- likely many people -- and it worked quite nicely. Quite clever, actually.
I began using Paypal right when they launched, when it was an application for beaming payments over the IR ports of Palm Pilots (remember that?!).
I continued to use Paypal after they migrated to web payments and discontinued the Palm support.
About four or five years ago I became hugely disillusioned with Paypal and never use it, and refuse to support it at my two ecommerce companies.
Why?
As a customer:
* Supporting Paypal is a signaling mechanism. It says "I am too rinky dink to get a merchant account".
* The dispute resolution process drags a third party in.
* The account can be frozen.
* The appeals process is laborious and indeterminate.
* There are too many steps at checkout.
* Paypal wants to force me to upgrade to a full verified account. I have to supply too much information. I have to wait for 2 deposits to clear, then report their sizes.
* Even for the 1-off "act as a merchant account" process flow, if I try to use a credit card that has previously been registered with Paypal as a full account, Paypal will NOT LET ME do the one-off transaction; I have to come up with a (long forgotten) password to the Paypal account.
* There are about 50 more user-interface horrors that I don't recall right now, but I would seriously (seriously!) hit my fingers with a framing hammer before I would use Paypal again. I don't have emotional reactions to most brands. Apple? Eh. Windows? Sort of dislike it. Amazon? Sort of like it. ... Paypal? HATE HATE HATE HATE HATE.
As a merchant (http://Smartflix.com and http://HeavyInk.com), I won't use Paypal because
* all of the above
* crappy admin interface
* crappy interface to delegate rights to other employees
* fear of having funds frozen
* inability to re-charge a credit card for follow in transactions (unreturned DVDs, late fees, etc.)
I wish Paypal nothing but death.
--- Travis Corcoran, President http://SmartFlix.com "What do you want to learn today?"
* PayPal support leaves a lot to be desired. They lock accounts without reason and don't offer much support as to why.
* Transferring money from your bank to your PayPal account takes a long time. Even longer if you are not from the US.
* Many people have credit cards. Why add another middleman?
Less personal but relevant issues:
* PayPal makes you spend money that you HAVE. A credit card doesn't.
* Branding. Not everyone trusts companies with their credit card, why would they trust a company that has very little do with the process over one who is actually vending the item/service.
Not strictly true, you can register a credit card on your Paypal account and charge that each time you make a transaction if there are no funds in PayPal.
As a customer, at this point I shop only at merchants where I already have a account memorized (which in practice means "amazon.com") or via Paypal or Google checkout payments, which I can also authenticate from memory. Everything else is just too much of a hassle.
I can see the seller-side complaints against Paypal as valid, I've just never experienced them myself. As a buyer, though, I completely sympathize with the linked blog. Paypal or something similar (Google checkout, Amazon affiliates) really should be more popular than it is.
I'm not sure this is what keeps people from using Paypal on the consumer side but from the vendor side I can attest to how damaging this can be. At my work we took PayPal for donations until one day a donor called and told us Paypal "wouldn't accept money" I looked into it and found they had, for whatever reason, decided we weren't a non-profit. They then locked the account with not so much as an e-mail to us.
There is pretty much no way to get an actual person at paypal so I had to upload scans of our proof and just wait for paypal to "review them." All in all it took 9 days to remedy the situation and who knows how much money we lost in the meantime.
Worse yet, I'm almost sure we lost a couple first time donors forever simply because seeing "This Paypal account has been locked" makes a company (us) look disreputable
That's the banks' fault. They still take their sweet time clearing checks, and screw customers over in other ways so it's not surprising that it takes a long time to transfer cash from them
PayPal says it should take 6-8 days for a money transfer. In my experience, I have found it takes 6-8 days before I see it withdrawn from my bank account. After that, it can be up to another 6-8 days to see it ever show up in my PayPal account.
That's an understatement, I had my account locked (for no reason, it just randomly got locked one day) and spent about 45 minutes trying to get through the phone system (being hung up on by the phone system around 15-20 times, because it seemed at the time those options were unavailable).
It gets a little overblown when you start actually drawing tree maps to try and map out what options end up with hangups, what ends up with reroutes (and eventual hangups) and what gets you to speak to an operator, who redirects your call, which ended up in a hangup.
In the end, it took about an hour to sort through, but only about 5 minutes of talk time.
There are a few things about Checkout to love. They take more responsibility for fraud than any other payments provider I know of. That has a lot of value, particularly for online retailers. The rates are better. They don't have the reputation for being shifty that PayPal has, though they'll probably earn one in time. When it comes to money, people get grouchy fast. Any mistakes, any perceived unfairness, any slight, will be trumpeted from the mountain tops (or sites like paypalsucks.com). It's just the nature of the business.
I've never had a problem with PayPal, and we have $10k+ in our account most of the time, and I've been using it since nearly the beginning of its existence.
I'm considering dropping merchant services payments altogether on our online shop and taking just PayPal, Google Checkout, and Amazon FPS. I haven't yet talked to enough customers to know whether this is a sane course of action, though.
Amazon, come on guys, support Canada already! Help us out!
It's quick, easy, convenient and they're the only company I'm aware of that makes it easy to pass money around from place to place internationally. (That is, there are many local services, but as a Brit who does 80%+ of billing in US dollars, it's pretty much unbeatable.)
They haven't been able to (a) build a user experience that users really feel confident with. (b) find and fix all sorts of other problems their users might have.
I think b, while not a problem is the real issue. Missed opportunity. Online banking, managing your personal finances, investing, budgeting as well as paying & accepting payments online. All these things are still difficult and as such, most people don't do any more then the minimum to solve a very big problem.
They might use online banking to access accounts or pay a bill when the bank forces them.
The possibilities they missed out on by achieving so little in the past 10 years are enormous. From the creation of an alternative, underground economy that they talked about in early days to the creation of a platform where you manage all your money. They could have shaken up the industry become a bank focusing on transaction/small savings accounts and the rest of the small retail stuff that banks hate doing. They could have become the front end for banks.
* A lot of the dispute resolution, customers service issues and such that make up the bulk of comments here are a problem. But they are (I think) caused by a combination of regulation, oligopoly & problematic incentives.
That said, when things did go wrong it was a major PIA to correct them. When their fraud detection kicked in because of my traveling, the hoops to get the account reactivated were enormous.
When doing business through Paypal, I had to take in account the fraud rate, which for virtual properties was quite high.
Most likely, for normal people selling normal things, the hassle is just not worth it.
I'm a platinum card holder of a major credit card and I had exactly the same issues (except my card was deactivated for 2 weeks). I don't think this is a PayPal problem per se but one of a general lack of customer service standards in the finance industry.
Of course I always travel with at least one spare card, so it doesn't inconvenience me much if they need to cancel a card and send me a replacement. But I wonder how that would work if I didn't regularly return to a fixed address? How do the digital nomad types handle these problems?
I've never had a problem with paypal (or ebay for that matter) but I use both sparingly. Most of my paypal transactions occur on Newegg and other large-ish online shops. I wouldn't use it for a large purchase with a private party simply because I don't trust private parties with large purchases, no way I see for any intermediary to smooth over human nature.
Not only there was no indication that the payment would occur automatically, nor were there any way to cancel it. Absolutely unbelievable.
I immediately canceled my account and never used PayPal again.
It turns out that at least 80% of people choose to use PayPal. Even big corporations where I thought PayPal would be an anathema choose PayPal in preference to ShareIT.
In cases where people won't deal with PayPal it seems like they won't deal with ShareIT either and they ask for a direct invoice. Despite my initial expectation, I've never had someone tell me they specifically wouldn't use PayPal who then chose to use ShareIT, even though I do make a point of asking in cases where they insist on a direct invoice.
I'm not sure what any of this means, but my experience is that when given a choice between PayPal vs another provider they probably haven't heard of, they do use PayPal. I think if there is a bias, it is against all such 3rd party payment providers vs. directly supporting credit card transactions. As one commenter suggests, not supporting credit cards yourself is a strong signal that you're not a well established, reliable software vendor.
However, the eBay horror stories of people getting screwed over and the various facilities supposed to protect them failing miserably usually include PayPal in some way. PayPal has become known as the payment processor used on eBay, and not much else, and with eBay's reputation these days, that's not a good thing.
In fairness, the PayPal arm of the company seems to be just as much to blame for eBay's reputation as a scam haven as the rest of eBay.
It's kind of funny, PayPal was a buyout that had obvious strategic benefits for eBay's core business and has ended up as a disaster for PayPal. Buying Skype was a rather odd decision but didn't seem to prevent Skype from being a success.