Oz Round Table
The Oz Round Table boards => The Round Table => Topic started by: Philip.Cohen on January 02, 2010, 11:13:47 AM
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Cupie suggested that we should have a thread dedicated to PayPal media matters; I was thinking the same thing, so here it is. Could I suggest that posts be keep relatively simple and let the linked articles speak for themselves. Of course, a brief summarising paragraph is appropriate and indeed desirable.
“Is PayPal good for your ... business?” A short PayPal horror story
http://blog.apparentsoft.com/business/124/is-paypal-good-for-your-microisv-business-a-short-paypal-horror-story/
The best PayPal horror story I have yet seen; says it all about eBay and its associates; a must read ...
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This is not an individual horror story, but it's definitely an indication of how far Ebay/Paypal will go to bend the rules....i.e. Paypal themselves are the Horror Story........When the Anti Money Laundering legislation came in, Ebay/Paypal made the following announcement:
https://www.paypal-education.com.au/aml/
The interesting parts of this announcement were debated a while back by another member but pertains to this thread also....
"Some Business account holders have recently received, or might soon receive a request to validate your Business account information in accordance with Australian Anti-Money Laundering laws. Apparently this is permitted.
Under the new law, once your account reaches a certain transaction level (as determined by the Australian authorities), we are legally required to prevent you from making payments and withdrawing funds until we have verified your business account details, however you can still receive payments.
If you do not respond within 45 days, the law requires us to place a full limitation on your account and you will not be able to make payments, withdraw funds or receive funds.
This is not apparently the case under the Anti Money Laundering legislation which states that:
The Act changes the way that financial service providers interact with clients. It requires reporting entities to identify and verify clients, which means they are likely to need to collect more personal information about clients. The Act also imposes monitoring, reporting and compliance obligations on regulated entities, which will require significant changes to systems and process and training of staff.
Apparently It makes NO mention anywhere of withholding funds or freezing accounts, in fact it states clearly they are to VERIFY, monitor and collect further information and then report to the Australian government.
Apparently one individual contacted AUSTRAC and was asked to send them Paypal's Announcement and information pertaining to accounts being frozen under Anti Money Laundering legislation, as apparently Austrac do not require or condone such action....
If your account has been frozen and Paypal tell you it's a requirement of the Anti Money Laundering legislation, pick up the phone and call AUSTRAC....then call the BFSO and lodge an official complaint.....
Paypal have recently been placed on notice for Breaches of the Anti Money Laundering Act, and have been told to lift their game specifically where it concerns verification. All other financial entities of this nature have 100pt ID, Paypal does not, but AUSTRAC have now demanded that all accounts even those under $1000.00 activity be verified......and that will mean they will have to implement general verification eventually...Jesus, one of the biggest problems in detecting money laundering is 'anonymity' and complete lack of verification.....I hope AUSTRAC kick their arse back into line....
.....here is the link regarding Paypal being in breach of the legislation.....already.....lmao !!!
PayPal agrees to strengthen systems under money laundering laws
Tuesday, 24 November 2009 10:52
James Thomson
http://www.smartcompany.com.au/index.php?option=com_content&task=view&id=36038&Itemid=314&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+smartcompanyallcontent+%28SmartCompany+All+Content%29
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Here's a question...
My seller friend and I are ramping up efforts to get their website up and running. They already have a list of people who are interested in their products and want to buy - but don't trust eBay. They are waiting for the site.
Indications are that there will be increased interest and increased sales are anticipated. The difference in site costs and PayBay fees will allow for better prices AND better profit margins, especially for slow moving and seasonal products.
We are not expecting a quantum leap, since inventory will be progressively added, but an increase nonetheless which we hope will steadily climb in line with inventory on offer. However, a quantum leap is not out of the question.
For most of the 'untrusting' customers (ie untrusting of eBay and/or Paypal) we see the use of non-Paypal payment methods being most popular - but there will always be those who will want their products shipped ASAP and Paypal is attractive for that.
Some questions...
* Are Paypal able to differentiate between slow growth of sales (as in a developing eBay business) and a subsequent period of faster growth due to an expansion of a business? ... or do they just stick a flat rating on you and get narky when you go over their 'safety marker'.? (Seems the 'quantum leap' scenario is a guarantee for disaster)
I'm stopping there. Don't think I'm going to be convinced by any pro-Paypal opinions.
I think we might just leave Paypal with eBay stuff.
Think I'd rather see how to expand their merchant facility to utilise their bank's gateway processing and keep bank deposit, internet transfer, money orders and cash on pickup available.
Might have another look at Paymate, too. It's been a while and they have made some changes since last looked at.
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definitely have a close look at paymate brumby and get them to come out and talk to you, they actually have a number and real people which is a huge plus, i recall getting a personal email and follow up from one of their marketing people, they used to be good like that and they are faster at getting it to your clients bank than paypal, its easy to put their fast checkout on your ads in html
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there are a number of other payment options that now compete with paypal and paymate would be worth investigating those as well and IF google checkout works down here would be worth exploring
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Seems the 'quantum leap' scenario is a guarantee for disaster
Yes, this one is almost guaranteed.
If you are dealing with oversea customer, maybe take a look at www.2checkout.com
(Vendors that are located in Great Britain, Australia, and Canada are able to receive payment via Foreign Currency Electronic Funds Transfer (FCEFT) in their own currency.)
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Fortunately, Low, my seller friend deals with mostly Australian customers. They import from the USA and Gt. Britain - providing a range of products not found locally as well as excellent pricing on those that are available elsewhere.
They have had a couple of overseas buyers - but the funniest was someone in the USA buying a product that my seller friend had obtained from the USA. It was readily available in the States - if you knew where to look!
International sales are not sought because postage costs usually make purchases uneconomical - but sometimes someone is willing to pay it and there have been several successful international sales, but not a significant percentage of business.
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Americans embarrass me.
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but the funniest was someone in the USA buying a product that my seller friend had obtained from the USA. It was readily available in the States - if you knew where to look!
Arr. I do this. Often I buy things from oversea seller where I know I can get it locally. But don't ask me why. I don't have an answer.
Move to my country. And you quickly change this to
Malaysia embarrass me.
We are the laughing stock.
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Malaysia sounds too much like Malaria.
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Soon we will take over Zimbabwe.
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Do they have Chemtrails?
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NO. The jet engine is in Argentina now.
http://www.malaysianmirror.com/homedetail/45/24010
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Arr. I do this. Often I buy things from oversea seller where I know I can get it locally. But don't ask me why. I don't have an answer.
Move to my country. And you quickly change this to
Malaysia embarrass me.
We are the laughing stock.
[/quote]
I loved Malaysia ... this is where I spent a bit of time ... fantastic location , built into the side of a mountain and the valley ..... magnificient hotel attached ..........( just to stay on topic I tried to pay by pay pal and they dont accept , what a horror story ! )
the whole place must have cost an absolute fortune , it even has a manmade beach
http://www.sunwaylagoon.com/waterpark.asp
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( just to stay on topic I tried to pay by pay pal and they dont accept , what a horror story ! )
Truly horrible. But this will change as paypal accept Ringgit now.
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http://www.sunwaylagoon.com/waterpark.asp
Gay.
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I do not see the need for PayPal for a registered business if it can accept payment by credit card or debit card or eftpos or bank transfer or cash or money order or (if an established customer) cheque or bank cheque...
What protects me most? Paying by credit or debit card.
What leaves me most at risk? Cash in a back alley. (Unlikely scenario.)
What sort of dismay and despair must go through the minds of small businesses who must accept PayPal, and who find that their entire profit (and possibly more than their profit) is willy-nilly appropriated by PayPal for a significant period of time? Businesses need fluid funds; without it, they cannot continue to operate. What particularly worries me is when drop-shipping businesses fail to supply purchased goods to the customer because PayPal holds back most of their funds, so they can't actually pay for the goods. This effectively means PayPal don't have to worry in the slightest when buyers who've not received their goods lodge a dispute, true. It effectively means PayPal shouldn't need much time to "investigate" a claim, true. It means PayPal should be able to hand over a full refund almost immediately. But since there's a significant gap between the claim and the refund, and since PayPal's notions of investigation are, in my view, largely nominal, that timeframe indicates to me a period of "we're going to play with the money".
This of course impacts normal (in-stock) businesses as well. They can supply the goods purchased from existing stock - but how on earth can they pay for further stock from their supplier? Their supplier may need to be paid pro-forma; at the very least, invoices need to be paid within a certain timeframe. Without the money to pay, which for most businesses (and especially for businesses already struggling) comes from profit which PayPal are HOLDING BACK, the business has a forced drought period. Without stock, the business is wasting its time listing on eBay or having an online store; it can't effectively build its presence because it either can't supply what it's advertising or it stops advertising.
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Paypal .... with a reputation, already earned, that guarantees their growth will be limited to incremental from sellers who don't wield a big stick.
Fascinating business model.....
A seller finds a market, develops it, learns what makes it tick - then when they come up with a brilliant product that people just can't get enough of....
... Paypal freeze their cashflow and put them out of business.
Real Smart.
Juicy fodder for a court case, too.
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Flocking Fascists!!!!!
(http://i146.photobucket.com/albums/r271/rontello/Thread%20Stuff/NoVulturesAllowedImageInvertedColor.jpg)
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The reality is that the PayPal model would work perfectly if it was as an extension of the banking system—as is the credit card system. Under such circumstances the banks “know” their customers and therefore don’t interfere in the activities of account holders unless something very unusual is happening.
I have had such an experience with my bank: I received a phone call from the card company and the matter was sorted out, without any of the unbelievable nonsense so typical of PayPal, as expressed in the OP link, undoubtedly trying to protect itself rather than the customer.
I find it quite amazing and extremely disappointing (and distressing) that the banks and their credit card company partners have not yet introduced a like system and put this miserable, amateur excuse for a payments system out of its misery.
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Hear ! Hear !!
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After reading Phil's last post ... how did I expect that response, Cupie?...! LOL
Mind you - I don't disagree.
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Ah Brumby...but it's so logical, and at least then nobody is relying on defacto verification.......and of course, Banks are EFT Code signatories.....Phil and Countess are right, bank products are a much better bet for serious businesses....and as far as equivalent products is concerned.....Paymate is a better choice than Paypal.
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I find it quite amazing and extremely disappointing (and distressing) that the banks and their credit card company partners have not yet introduced a like system and put this miserable, amateur excuse for a payments system out of its misery.
Philip paypal was purchased by e$bay, and e$bay business model applied. The paypal amateurs who started PP then became professionals left. And the zero service, maximum $ , e$bay model applied with staff paid at lowest possiable cost worldwide.
Banks can not afford to follow the law at the rates of $2 in $100 with all the disputes and crooks paypal attracts. Paypal receives and transfers funds with effectively Zero ID checks. Easy to scam sending or receiving. Paypal never queries credit card charge backs for instance, even if the charge back is from the holder of credit card and goods signed for at that address. No profit in it for PP . If a bank tried that the banking ombudsmen would not only return all monies the bank would be fined as well.
The carrot PP has is no details of payer are exposed, it seems safe to buyer and insurance is "claimed" to be provided. PP is all smoke and mirrors the receiver of money always pays and loses.
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Shyer,
The banks already take that risk with their credit card system (at between one to three percent commission, depending on volume, from the seller, and 20% pa interest rate on extended payments from the buyer).
The material difference is that the banks only give credit cards or terminals to their verified banking customers; banks don’t verify customers simply because the government says they must, but because they want to be able to find you if you don’t pay off your overdraft / credit card. Banks therefore “know” their credit card customers in a way that PayPal never can, because PayPal is not a bank and therefore can never have the banker’s knowledge of the person.
The only effective difference between a credit card transaction and a PayPal transaction is that with a credit card transaction the receiver of funds may have a terminal and a little more referencing may be involved as the credit card company will be liable for any fraud on the card holder by a “merchant”. But that’s what they get their 3% commission and 20% pa interest rate for.
Every bank’s online customer is a ready market for the banks’ version of a like card/terminal-less payments system.
The simple fact is the PayPal operation is effectively a banking-type function but PayPal is not a bank, and unless they can sell their operation on to the major credit card companies, they are always going to be an unsatisfactory, erratic, “clunky” operation, and the sooner they are “put to sleep” the better.
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Ahh.. the EFT code. If only Paypal would sign it.
Whilst it is optional, that'll never happen - unfortunately.
There are two things I see which do not exist today, but - in time - I believe will, which will change the playing field and Paypal will feel it...
1. Effective cyberspace legislation and enforcement. This is in its infancy and has a long way to go - but the pressures are on! Globally. I can see that Paypal has done the world a great service here - by providing case studies of 'loophole' and marginal operation legalities, aiding and abetting of fraud as well as a thousand and one stories on failure to exercise an ethical 'duty of care'. Bet the Tax office would like some ideas thrown in, too.
2. (Effective) Competition. There ARE other payment systems out there and, as much as Paypal may be a market leader, those other systems are only benefitting from Paypal's darkening reputation (I know - some of you already see it as being black as the ace of spades). Those other systems don't seem to have as big an issue with some of the things Paypal have difficulties with, so there must be answers out there. The more these answers are investigated, the greater the competition potential and I fully expect the Banks are in the game.
If Paypal continues with its corporate arrogance and juggernaut approach, the fleet-footed and innovative will be ready to cope with the (soon, I hope) emerging 'new age' of eCommerce payments - and the lumbering dinosaur set in its ways will...
Well, you know.
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lmao....Brumby, I'm sitting here watching Jurassic Park III.....no really !!
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I hope that anybody who finds any Paypal DNA in a million years' time isn't tempted to try and bring it back to life ... would make a velociraptor look like a canary.
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brumby why did you sell those mulga wood bookends to someone else?? hmmm
repeat after me i am a bad boy
they were so cool with the little brass anchors ... find the buyer and get them back for me TONIGHT (please)
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I hope that anybody who finds any Paypal DNA in a million years' time isn't tempted to try and bring it back to life ... would make a velociraptor look like a canary.
:10:
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PAYMATE is the answer i will email them tonight and get their marketing person to come online one night on my thread re all this or we will start a Paymate thread and (hopefully) we will NEVER have to call them "Preymate" lol
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Hi Gr8, like to know if overseas buyer can pay with paymate? If yes, how is the exchange rate goes by?
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We can't ignore something that I think is a pivotal point - and that is the reason why some sellers are not bothering with merchant facilities.
If their business sprang up on eBay and they have got to accept PayPal, it is understandable that they cannot see the sense in the short term of having to pay PayPal fees and ongoing merchant facility fees. I feel some sellers have not even investigated whether it is worth it for them, being dissuaded by other people's discussion about what it would cost them to have merchant facilities. The fact is that there are some extremely affordable online payment solutions around, and I can assert from experience that the costs are not only not as bad as some think, but it's actually better than PayPal would be - for me.
Given that, why aren't sellers checking out what payment facilities might be better for them in the long run? Are they so tied to the idea of buyers preferring PayPal? Are they so tied to eBay being a necessity for their business? Are they so riveted to the notion that PayPal is "safe" that they ignore the whole question of being able to accept credit card and debit card payments?
I'd like to throw a few more points for consideration into the ring.
1. Banks could not do exactly what PayPal does - for a reason. PayPal's fee structure and dispute & claim resolution and handling of funds are unique to it. Banks have much more stringent requirements, and concurrently you'll notice that the requirements for business accounts and payment gateways (to enable a seller to sell online by accepting credit card payments) are certainly more rigorous than PayPal. What tests of your credit, reliability, standing and ability to pay do you need when you start accepting PayPal?... Er... er... well, they don't actually check that, do they? No. And there we are - huge difference between business account with payment gateway model, and PayPal-accepting seller.
2. Is this why some sellers don't want to try getting merchant facilities? Is it contributory to it? Do some sellers just think it's all too hard, too ongoing a cost, too much of a commitment? Do they think of PayPal as the easy option? Or do they actually think PayPal is safer for sellers than accepting credit card payments? Honestly?
3. I suggest that the identify requirements for a business account with payment gateway is one reason why fraud is so much easier via PayPal than it is via a business account with payment gateway. Fraud can still exist via the latter... but it's harder for obvious reasons.
4. Are sellers sitting down and doing the mathematics to work out their costs? Are they including risk factors if they accept PayPal? Are they seeing beyond eBay to a viable business with a powerful e-presence? Are they seeing beyond the restrictions of PayPal to being able to decide on their own business strategies? For that matter, are they thinking in terms of being able to cancel a transaction, to accept or reject a credit card, to refuse a transaction on the basis of feeling suspicious about it? They can do that. They can check with the issuing bank to see whether the country and/or address matches the country and/or address of the cardholder.
5. Well, there's still the issue of how someone without a debit card or credit card can buy from another country or from an online seller. Clearly there's a technology issue and there are security issues... but yes, I think that can be done, with computers possibly having a slot for EFTPOS cards. That should enable sellers with existing business accounts and payment gateways to accept such modes of payment. But will that help when people are worried about identity theft, worried about entering PINs online...? And what about buyer protection in that case? Legislation's going to have to expand to cope with it all, and I think the EFT Code of Conduct will have additions. Should such modes of payment have the same degree of protection as credit card payments? Can that be justified financially and security-wise?
6. What about non-businesses that want to send money to each other? In Australia, we can transfer money between bank accounts without being slammed by a huge fee, but to make an international bank deposit is between $20 and $30 - clearly not a viable fee for items whose total cost is around $20. It would effectively double the cost. So banks could make it possible to use any of a number of conduits (such as Paymate) as well as create their own for fund transference without copping that cost. But that still doesn't address the issue of security and fraud. Whose fault is it (well, actually, whose responsibility is it) if the money goes through without any technical hitches, but the paid-for item ends up not arriving? Since this will be dealing with international commerce, we get into sticky waters. Seriously, how will such issues be resolved? Who takes the financial risk? And how will it be paid for?
I think these points are well worth taking into account, and may show the possibilities of solutions by pointing out some of the problems and issues.
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Hi Gr8, like to know if overseas buyer can pay with paymate? If yes, how is the exchange rate goes by?
Hi Low,
Yes they can Low and thats what it is set up for, hang on will post a link for you, also if you are selling they provide an HTML direct pay link for you to paste into your body HTML on your ads, they used to charge the buyer a fee ages ago but now they dont and I believe their exchange rates are comparable to Paypal if not better but I will check, as mentioned before I will get them to come in and tell us more about it, i used to have it on all my ads, and also I think its easy enough for you to offer Paymate to a seller as payment just like Paypal it gets sent to their email and they can withdraw it,
low they are way faster getting the money into the sellers account or bank apparently, i intend hitting the paymate train this year really hard, i have never had a problem with Paypal apart from bad service but their transfer times for echeques is lousy and the chargeback horror stories are really scary, Paymate apparently are very fair on all that compared to paypal but thats only hearsay re Paymate
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http://www.paymate.com/cms/
for Low my m8!
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2. Is this why some sellers don't want to try getting merchant facilities? Is it contributory to it? Do some sellers just think it's all too hard, too ongoing a cost, too much of a commitment? Do they think of PayPal as the easy option? Or do they actually think PayPal is safer for sellers than accepting credit card payments? Honestly?
re above countess, getting merchant facilities from any bank is a long and arduous process, yes they have reps that come out, but its quite a bit of time and cost to set up and not worth it unless you are doing a fair old volume of sales via your own gateway or similar online imo to me to be worthwhile I would have to be doing like $5,000-10,000 a month through cc to justify it
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re this point -
4. Are sellers sitting down and doing the mathematics to work out their costs? Are they including risk factors if they accept PayPal? Are they seeing beyond eBay to a viable business with a powerful e-presence? Are they seeing beyond the restrictions of PayPal to being able to decide on their own business strategies? For that matter, are they thinking in terms of being able to cancel a transaction, to accept or reject a credit card, to refuse a transaction on the basis of feeling suspicious about it? They can do that. They can check with the issuing bank to see whether the country and/or address matches the country and/or address of the cardholder.
I think many sellers are just lucky like me and have not seen the ugly face of Paypal, I came close a few weeks back when on another site (not ebay) wherein i had the customer from hell who was talking before her items even shipped about making a chargeback, a serial nasty, i thought i would have my first Paypal problem, i think once you go donw that road, Paypal flag you and you are more likely then to have funds held back.
What i find highly annoying about Paypal is the time they take to process echeques, in a recent case nearly $100 US left my bank on a Monday and took until the following Tuesday to clear to the seller, in other words Paypal played with it on the money market for at least 6 days, i have threatened many times to leave them over their poor service, but the trouble is everyone wants to use them, if people could get used to paymate would be better, but then my worst fear is Paypal/eBay buy them out when they get big lol
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http://www.paymate.com/cms/
for Low my m8!
Thanks Gr8. But they don't like Malaysia. (http://www.paymate.com/cms/index.php/component/content/article/35-payments/195-list-of-countries)
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no problems low, if ever you need me to bid on something for you from anywhere its no problem just let me know
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from their website
Why you should sell with Paymate
eCommerce for Professionals!
If you want:
- To give buyers the simplest way to pay (we don't need them to register)
- To remain in control of your money (we pay direct to your bank account)
- To get paid faster (we pay the same day*)
- To lose less money to fraud (we assess every transaction)
- To fight unfair chargebacks (we argue your case with the banks)
- To stop wasting time on administration (we handle your back office)
- To enjoy personalised client service (we respond in one business day)
[*US Sellers will receive payment in 3-4 business days.]
Then you need to make Paymate your only payment option on eBay or your website!
See what our clients have to say.
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the au link on paymates website -
http://www.paymate.com/cms/index.php/au-services
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faqs at Paymate ....
http://www.paymate.com/cms/index.php/faq
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hmmmmm, USED to be an all aussie company .... no mention of it here
The Company
Paymate is a US company with offices in Silicon Valley, USA, Ottawa, Canada, and Sydney, Australia. We provide information, risk and financial management services tailored for global e-commerce.
wonder who owns em now? i am going to ASK
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The Team
Paymate is managed by a small but highly experienced team with a background in banking, payments and information technology.
Garrett Gafke is a Director and Chief Executive Officer of Paymate and has a deep background in leading payments companies such as CyberSource, Trintech and Verifone. He has been building successful technology companies for over 20 years in Silicon Valley.
Dilip Rao founded Paymate in 2000 and remains President of the companyl. He has over 30 years of experience working in Information Technology and Management Consulting with banks and corporates in Australia, Asia and the USA. Dilip holds degrees in Physics, Electrical Engineering and an MBA from the Indian Institute of Management, Ahmedabad, India.
Sandra Parsons has been with Paymate since April 2001 as VP, Operations and has over 30 years of experience in banking and payments, working with the ANZ Bank.
Ted O’Malley has been with Paymate since May 2001 as VP, Client Services and has over 35 years of experience in merchant services and payments, workign with American Express.
Pete Cion is VP, Engineering and has been in the electronics payment industry since 1993. As a Software Engineer and Engineering Manager, he has worked with such well known payments companies as Princeton TeleCom, HP/VeriFone, Trintech, CyberSource and Citibank. Pete holds a degree in Electrical Engineering from Brown University in Providence, RI.
Peter Chen is Manager, Technology & Systems and has over 15 years experience in systems design and applications development.
Regulatory Compliance
Paymate holds an Australian Financial Services License (AFSL) which means we are regulated by the Australian Securities and Investment Commission ;D ;D ;D ;D ;D ;D(the equivalent of the Securities & Exchange Commission in the USA) to protect the interests of our clients. This license requires Paymate to comply with strict financial and operational controls and be independently audited for both financial and license compliance on an annual basis.
Read more about the Paymate AFSL.
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Paymate fees ...
sorry to hijack thread, maybe we should move this to a Paymate thread countess?
Paymate fees, NO fees to buyer on ebay.com no mention of ebay.com.au
http://www.paymate.com/cms/index.php/au-services/46
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ok last post ... re paymate, maybe move em please mods to a paymate thread... as smee would say i had a little too much red cordial this afternoon ... lol
eBay.com Payments - for Sellers
Buyers can make payments for purchases on www.ebay.com in US Dollars via Paymate, which is now integrated into eBay Checkout for ease of use.
Sellers on www.ebay.com can now select Paymate as an approved payment option and link their eBay account with Paymate for ease of use.
PLEASE NOTE: eBay sellers must have a Feedback Count (AS AS SELLER ) of at least 10 in the last 6 months, with a Positive Feedback Rating of at least 98%. eBay sellers must validate their Member ID by linking it to Paymate.
NB: We regret that Paymate is not integrated into Checkout on www.ebay.com.au, though we are an accepted method of payment. To suggest this option, please contact eBay Client Services in Australia.
See also: eBay.com Payments - for Buyers.
why NOT australia>? tres weird, you can still use it but its not in the aussie checkout but IS in the US checkout go figure (cupie?)
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oh an i joined (again) btw, i was joined before but cant remember my details lol, seems all new now anyway and they are in silicon valley
nice talking to myself .... lol .... again ....
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ok i said it would be my last and it ..... wasnt lol
this is really good reading about paymate and what they describe as an 800 pound gorilla - ebay australia, scroll down some interesting reading, beggars me how they got offered checkout on ebay.com but NOT on ebay australia? I would have thought that was a natural progression? go figure ... this is their own blog and explains a few things, and it does not sound like ebay own them .... yet and hopefully ... never
http://paymateblog.blogspot.com/
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What bookends?
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Countessa,
The fact is, all the non-bank payment facilitators are simple middlemen that stand in between two banks. The banks could do directly anything that PayPal or the others can do and they could undoubtedly do it easier and better!
The banks already take all the similar risks, that PayPal does, via their credit card system: they will literally give a credit card to almost anyone and to cover the risk involved at the card end they charge 20-22% pa interest on any extended payments. To get a credit/debit card you have to have a bank account; everybody has a bank account; even the homeless person who lives on the street has to have a bank account to get their social services payments. And therefore the banks should “know” everybody.
We can do local electronic funds transfers for which banks charge a nominal fee; we can do an international electronic funds transfers for $20 (plus a fee for any FX conversion); but, for such nominal fees, the banks accept no responsibility for the circumstances of the transaction.
The banks’ credit card system is the banks’ system whereby they accept the risk of any fraud by the person receiving the funds (the merchant), in that if the transaction is fraudulent or not as contracted then the bank will reverse the charge and recover the funds from the merchant. To cover that risk, banks charge the receiver of the funds a one to three percent commission fee (depending on volume)—similar to that charged by PayPal, I imagine.
Then there is the convenience of any banks’ system, the merchant’s daily receipts are credited directly to his bank account the following day, not held separately as they are by PayPal and have to be retrieved, for a fee, from PayPal.
However, I am not here talking about a credit card merchant facility; I am talking hypothetically about the banks introducing a card/terminal-less system similar that of PayPal, etc.
Do please explain to me why any PayPal-like card/terminal-less system the banks could come up with and run in parallel with their credit card system would not therefore be more reliable, more convenient, easier to use, and probably more cost effective than the clunky PayPal?
It does not really matter if such a payments system is infested with fraudsters or not, the difference is the banks know were those fraudsters live, PayPal doesn’t. And, the banks offer an effective resolution service; PayPal doesn’t. I have no doubt that if the banks do introduce a like system, PayPal will sink like a stone.
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WHEN banks get rolling on this - I am betting they will blow the market wide open. Perhaps not overnight, but I believe there will be some revolutionary changes that will shake up a lot of smug thinkers.
There will, no doubt, be several issues to be addressed in regards to legislation, governance and risk management. There will also be some technological innovation required - such as immediate inter-bank funds transfer.
On this latter point, a friend of mine had an outage with their internet banking latelast year ("Which Bank" Do I hear you ask...?) that was accompanied with an explanation that sounded suspiciously like a preparatory move for just such a possibility.
Banks could then provide 'instant payments' - without the need for a middle-man.
As for international transfer costs - I believe the high fees still around are a legacy of 50 years ago when it was a big deal to send money overseas. Times have changed and I see these fees falling - in line with the expectations of todays global community and eCommerce demands.
Domestic and international funds transfer is a growing business that is reaching further into the hands of the smaller, by size, but greater by number, merchants - with no small thanks to the internet.
... and where there's lots of money moving around, don't you think the banks will want a bigger share of the action?
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Brumby,
So true, why would our greedy banks not be eyeing this bit of the “payments” market? After all, “payments” is their business. Why would they not want the whole of the action if they can take it? All they have to do is do it properly. They already have the greatest advantage of all over the non-bank providers, that of being able to minimize their risk by their better “knowing” of the participants involved in the transactions.
I say “greedy” because this is what drives all “for profit” organizations, particularly those publicly listed organizations whose directors and managing executives rely on the organization’s apparent profits to line their own pockets (sometimes they don’t even worry about any profits while lining their own pockets).
And if the banks can slot such a like system into their existing internet banking structure via their own “middleman” (as they do with the universal credit card system), is it not simply incomprehensible that they will not (eventually) do so?
I am not sure that we will ever see truly “immediate” interbank transfers as banks still have to settle with each other periodically and I understand that that is still a daily occurrence—they apparently still don’t trust each other for more than 24 hours. Regardless, I think that having such receipts credited directly to your account on a daily cycle, as is the case with local credit card transactions, would keep most people happy and would certainly be a great improvement on the PayPal system.
My only surprise is that the banks have not yet done anything. I just hope that they do it soon; hopefully, while “turkey” Donahoe is still at the helm of the good ship “eBay”; I dearly want to see this arrogant fool of a man do his little song and dance routine for the markets as his fleet of rusting hulks eventually sinks beneath the surface of the water.
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Philip and Brumby,
Those last two posts sum it all up really, yesterday i got my BGPS in a twist over this but really it all boils down to what you say, if (or when prolly more like) the banks do enter the market it will have the effect of moderating savagely (the only type of action ebay and preypal understand) their ability to continue to unfairly dominate the market. It must only be a matter of time, banks are not perfect either but when the benefits outweigh what they have to trade off to fully enter the online payments marketplace they will do it and are probably as brmby hints doing it already or preparing for it, which would be a massive positive change, as Philip points out they have all the resources existing to do it safely.
RE why ebay australia dont allow Paymate when they do in the US that is a mystery to me but who cares, very dog has its day and they will have theirs.
My guess re why they have taken their time, the banks, is that its because of what they are trading off, by doing this they do away with their highly lucrative interbank exchange and money market plays and trade it imo for a better one, they gain far more on the roundabout than on the swing, because even though they lose the ability to charge $20 odd for an intercountry transfer, they gain all those extra funds from online trades and will get to play with that and probably only offer the same time terms as Paypal do to compensate themselves.
If another decent international player like google for example (it never happened yet but was muted) enters the ebay small auctions and bins market for the home sellers that really can deliver the global audience AND the banks do enter the online payments market ala paypal/paymate style, then that would be a pretty savage double whammy effect on ebay and paypal.
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It does not really matter if such a payments system is infested with fraudsters or not, the difference is the banks know were those fraudsters live, PayPal doesn’t. And, the banks offer an effective resolution service; PayPal doesn’t. I have no doubt that if the banks do introduce a like system, PayPal will sink like a stone.
....and.....the Banks are EFT Code Signatories and are therefore accountable....Paypal isn't on both counts.
I predict that the Anti Money Laundering Legislation is going to squeeze Paypal either into compliance, or right out of the marketplace. The one key factor underpinning the legislation is VERIFICATION....which we all know Paypal avoids kicking and screaming all the way. As we know, they are in breach of the Anti Money Laundering Legislation and have been put on notice to clean up their act....Austrac is demanding verification, without which, money laundering and financial terrorism cannot be monitored or reported or addressed.....and of course, that's what the legislation requires them to do.
They are NOT lawfully able to suspend accounts or withhold funds under that legislation.....I may give AUSTRAC a call today and ask what they need to officially look into Paypal's unconscionable conduct in the name of this legislation. Worth a call to find out. I may also look into what the breaches were specifically and what they mean. From what I can gather, the Noose of Mandatory verification is starting to draw tighter, and I predict that they'll have to start verifying all account holders in the future, or they'll be fined by AUSTRAC....
Simply put, they cannot comply with the legislation if they are refusing to verify account holders....it's NO HOW YA MAKE PORRIDGE !!!!
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And, don’t forget that PayPal is not a bank: everything PayPal does to move money about has to be done through the bank with whom they do their banking, just like you or I have to do when we want to move some money. PayPal is a parasite that has served its purpose by coming up with the original concept of this form of payments system, but unless they have some sort of protection via patent or copyright, then it is about time they retired (hurt) and let someone more able do the job.
Come on bankers, extract that finger!
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The other side of the coin is that PayPal would be a very desirable customer for any individual bank, as PayPal has to do all of its funds transferring through some bank, and you can bet that PayPal has permanent feelers out for an even better deal on their banking that they can get from any other bank that would like their business.
Obviously, there is an incentive for any individual bank to tout for this business; but why bother when they all could have it all (as they do now have it all with their credit card system) via a similar card-less system running in parallel with their credit card / internet banking systems.
After all, every internet banking customer is already set up to go with any banks’ system; they already have all your verified details; they already have your email address …
What else do the banks need but to put the various interfaces together and make the announcement …
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As I said, the issue of responsibility is an important one that has got to be addressed before any such process by banks can go underway.
Whose responsibility is it if I, for instance, buy a leather handbag handtooled by Federico Mileno, send my money instantly to the US account via a PayPal-like process (except through my bank to...? to their bank? to their...?), and when my parcel arrives, it contains a fake leather handbag mass-produced in China? Or the right sort of handbag but slightly scuffed? Or a different colour? Or I detected the stitching looked wrong and it seemed like a knock-off fake although genuine leather?
Do I expect the bank to reimburse me?
How does an Australian bank have any jurisdiction and power over a US citizen?
Does the Australian bank have the power to access the US citizen's US bank account?
US banks have a completely different set-up - different rules, different security... so I must ask again: into what account would my bank-issued instant payment go?
I love the idea of banks being able to offer a comparable payment method, but we must sort out these issues first. PayPal's answer is clearly not going to be a bank's answer, because banks have a much higher responsibility to clients than does PayPal. That is why I pointed out no bank is going to be able to be exactly like PayPal. It will have different complaints and fraud-dealing procedures - and we must understand this process before we speculate further, surely.
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This is a classic example where legislation will need to evolve ... on a global front.
Which is no small ask...
Global 'laws' would be good to define, but each sovereign state has the right to determine their own legislation, so a universal playing field is barely conceivable, let alone ready to roll out.
Yet resolving these issues will become key to growth in eCommerce and since the convenience factor of the internet has become so incredibly powerful over the last few years, popular opinion will demand action. This will put the politicians into a position where (eventually - after years of dancing around the issue and playing with smoke and mirrors) some of them will realise the best way to score brownie points is to 'make it so'.
Never happen? O ye of little faith....
Would you have thought...
- 20 years ago ... that China would be a modern manufacturing force?
- 30 years ago ... that the U.S.S.R. would be no more?
- 40 years ago ... that the Berlin Wall would crumble?
- 50 years ago ... that you could buy a computer with a single week's wage?
- 60 years ago ... that man would actually walk on the moon?
Perhaps we might find an intermediate position - say an international eCommerce treaty where abiding by it would represent a marketing advantage. Similar idea to our 'EFT code of conduct' - but with a couple more teeth.
I don't know what, but I believe the question is not 'IF' ... but 'WHEN'.
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You are right brumby....things we couldn't conceive of once are now a part of everyday life we take for granted.
And it's not that far behind.....because of the cost to the World economy with E-Fraud, there is a agreement being forged with Western Countries at this stage, for international law enforcement cooperation.....I read an article about it a while back and will see if I can find it. The issue of E-Fraud is MASSIVE, worldwide and projected to go beresque this century if Law Enforcement worldwide don't adopt a cooperative management approach....and it's coming.
Also things like Child Grooming crosses borders and that too is something that International Law enforcement is looking into addressing cooperatively.....
I'll post the article when I find it...it was very interesting because once Law Enforcement in terms of fraud, money laundering etc, takes an International 'NO TOLERANCE' approach, that should spread to E-Commerce in terms of accountability/liability etc....
It's the Civil law part of it, that you'd have buckley's trying to make uniform.....Criminal Law is a different kettle of fish though.
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Countessa,
Stop seeing issues where there are effectively none.
Users would have previously agreed (as they have with credit card usage) that the bank (or credit card company) would have the power to arbitrate such matters and if necessary reverse such a payment, exactly the same power as they now have for a credit card reversal; that’s what they get their 3% credit-purchase commission for.
The complaints and fraud-dealing procedures would be exactly the same as they are for a credit card transaction—probably the same call centre, one where you can actually speak to someone without having to hang on all day! The individual banks don’t moderate the credit card system, they agree to their middleman, the credit card company, having the power to arbitrate between the participants, and that arbitration works perfectly well—even internationally, in my personal experience.
Obviously, there is some greater risk with shonky small-time individuals trying to abuse the PayPal-type system, particularly where there is no additional vetting of “merchants” as there is with credit card merchants, but just about anyone can get a merchant’s account if they are in any sort of business and are “known” by their banker. And the banks are still in a better position to offer this service because they “know” the participants better the PayPal ever can.
So, what’s the difference between a credit card transaction and a PayPal transaction? Nothing, except that the credit card transaction is based on a unique card number and the PayPal transaction is based on a unique email address.
Having said that, there still needs to be a differentiation between the credit-purchase transaction for which the bank takes a heavier commission (and accepts some responsibility for ensuring the veracity of the transaction) and the simple transfer of funds (ie, a debit card-type transaction) that attracts a lower commission fee and for which the bank accepts no further responsibility except for the transferring of the funds.
Don’t worry about “treaties”, the international banking community will sort it all out so that the system works as smoothly as possible and they can maximize their profits—as they have done with international usage of credit cards.
Again, It all comes back to the fact that your bank knows you; PayPal does not, and because they are not your banker, never can know you.
We don’t really have any problem with civil laws; in Western countries they are mostly based on the logic of the English common law system, and such law is practically universal; even where statute law is involved such basic matters as the law of contract and of fraud are usually not dissimilar.
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I've been thinking....
What is to stop the banks from actually refusing to deal with anything to do with Paypal?
Could they argue that it is an unsafe payment method because of all the fraud that happens there?
They can refuse to deal with bartering systems....so why not a system that, as was pointed out earlier today in another thread I think, an organization that is nothing more than a parasite feeding off the banks.
If they timed it right....they could cripple Paypal....then roll out their own version of a similar product.
Could that be interpreted as 'unfair trading'?
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Not at all.
It's called "Busting PayPal's Chops"!
Amen.
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Nice idea in one way, Roo, but whilst Paypal have huge dollars under their control, there will always be a bank that will be happy to oblige them.
No prizes for guessing why.
As for the idea: "they could cripple Paypal....then roll out their own version of a similar product." - I would say that the question of ethical conduct might come into it, depending on how such a move was implemented... but you could bet your boots that Paypal would be slowing up funds to build the coffers of the 'war chest' to back the litigation they would most certainly bring to the courts! Lots of kicking and screaming - you could count on it - in the nicest possible way, of course. Just watch your back.
I think natural competition would be much safer - and, oh, so poetic.