
PayPal Hates Conferences – Especially OpenCamp - johns
http://openca.mp/blog/paypal-hates-conferences-especially-opencamp/
======
URSpider94
I agree that PayPal is acting horribly in this situation, but it is worthwhile
to look at the world from their perspective.

From reading many of these stories, it's clear that PayPal wants to cap their
risk. For a brick-and-mortar business, their risk is the difference between
sales that have been billed and product that has been received by the
customer. That might account for a week or two worth of sales volume on a
rolling basis, so a business doing $100k a year of PayPal transactions will
typically only have $3k-$4k at risk, which is on par with what PayPal will
earn by serving such an account over 18-24 months.

For a conference, however, there might be six months of revenue for pre-
registration before the actual event takes place. If the event planner then
absconds with the money, PayPal could be on the hook for the entire amount,
which has long-since been withdrawn and spent. Take that same hypothetical
$100k business for a conference, now all $100k of it is at risk, and PayPal
only stands to make $2,500 or so off of that.

It's pretty clear that the credit card companies have PayPal by the short-and-
curlies, in the sense that PayPal themselves will be on the hook for any
chargebacks.

I call this the "wash my Ferrari" problem. If you do a good job, you make $10.
If you scratch the paint, you're out $10,000. Not a good risk.

Open question to HN: how could PayPal do a better job of handling the
situation?

~~~
wdewind
>Open question to HN: how could PayPal do a better job of handling the
situation?

By simply being up front about their terms. If they don't care about events
then they should set a policy not to support them, it's that simple. Don't
lure people in and then make their lives a pain in the ass once you're holding
their money. They know better than anyone how they can make events work, if at
all.

I agree, PayPal is often over criticized considering the spectacular
international fraud resolution and prevention work they do that goes, mostly,
unthanked. True, we should remember the alternative is processing the payments
ourselves, but if you are going to offer a product, offer a good one or not at
all. Especially when so much money is at stake.

~~~
ubernostrum
_I agree, PayPal is often over criticized_

If what's described in the linked article is correct, they deserve the
criticism. There's fraud prevention, and then there's organized harassment and
extortion. The examples given are of the latter, and if it were me I'd just
hire an attorney and file a lawsuit with enough zeroes in the damage claim to
get wide press coverage and, thus, the attention of someone who's actually
accountable.

~~~
wdewind
The definition of quoting out of context...

As I mentioned, to criticize PayPal's inflexibility in situations like this as
"harassment and extortion" is melodramatic and misunderstands both the work
they really do, and the number of times you aren't saying this about the
people on the other end of the transaction.

~~~
ubernostrum
Step one of the process was repeated demands for verification, re-verification
and re-re-verification, which in my book is harassment; there's a level of
verification that's reasonable to protect against fraud, and there's a level
of verification which adds nothing to the protection and serves only to
frustrate.

Step two was "you don't want to play our game? Fine, we'll lock up your
money". That's extortion, plain and simple. Given the reported background
behind it, there is nothing reasonable about it. And no matter how much good
work they may do in other cases, it provides no excuse for the conduct
described in this case.

Or, more succinctly: there's a very good reason why Paypal has such an abysmal
reputation, and it's not because they're portrayed unfairly in cases like this
one.

~~~
wdewind
>And no matter how much good work they may do in other cases, it provides no
excuse for the conduct described in this case.

That's just not true. It completely disregards reality. In a fantasy world
where life is totally fair you are correct. Back in the real world, failure
rate is a VERY relevant stat, and is never expected to be 0. The system and
processes in the company have been optimized to handle certain types of cases
extremely well. They will fail on other cases (like this one).

My argument is that they should change their policy to simply not support the
cases for which their system isn't perfected, but you are using a volvo and
expecting a porsche. But just because this one case was a failure does not
mean the system is failing in general. It's not, there is a reason PayPal is
so successful.

------
dotBen
I would like to know what EventBrite's take is on this (they are the ticket
management agency this and most events seem to use, the facilitator of the
payment to PayPal, and lead generator to PayPal).

The issues PayPal are raising (Events are risky, don't make PayPal much money)
are the same for every one of EventBrite's customers.

On their own each event is powerless against the might of PayPal, but in
aggregate EventBrite has some leverage against PayPal given the amount of
business they send PayPal's way each year.

~~~
oneplusone
I am one of the co-founders of Guestlist. Wee are not event close to the same
scale as Eventbrite, but I can give some insight.

Of all the events hundreds of events we have hosted we have only ever received
one complaint from a purchaser. Somebody was apparently using our service to
sell "power leveling" sessions for a game the he never received the service
after he paid. The ticket price in this case was $20 I believe.

At the same time we have moved over $700,000 in the last 12 months all through
PayPal. $20 is a very small percentage so I don't really see events as a high
risk. Of course, EventBrite is much larger and they probably attract more
scammers.

We exclusively use PayPal as our payment processor and have yet to run into
them closing down somebody's account. Our main trouble with PayPal lies in
their terrible interface and people being able to override the pingback url.

~~~
mgkimsal
They shouldn't be able to override a pingback URL if you're using encrypted
URLs. The issue I'm finding is that many shopping carts and libraries aren't
using encrypted URLs. :/

------
FluidDjango
The problem is that PP empowers bureaucrats (like the "Kathleen" identified in
the OpenCamp story) to act capriciously, without reference to pre-established
(and pre-published) standards and policies.

One commenter below the OC story describes how he has used the PP/EventBrite
combination successfully and comfortably for a couple years. That's great for
him (for now).

The problem is the _unpredictability_ of how PP may treat any customer in the
future, without regard for their past performance/association with PP (as in
the OC case).

Personally, given the number of (unresolved/unexplained) horror stories I have
heard with PP, I would not advise anyone (ANYone) to risk any business
connection with PP (beyond what they are perfectly happy to lose) - no more
than I advise people to take their retirement funds to a casino.

------
RiderOfGiraffes
Perfect timing. I'm about to open early-bird registration for an event (
<http://www.mathsjam.com> ) and we're emailing people on our "registered
interest" list to ask how they want to pay. We were going to offer PayPal, but
this has convinced us otherwise.

We will now not offer PayPal as an option.

For reference, we will offer direct bank transfer and cheques in advance. We
are also dealing with the venue, and they may offer CC facilities, but that's
still being negotiated.

I understand PayPal's position, but I'm not going to run the risk of having
them continue to accept money on my behalf, then not give it to me.

------
GFischer
How is the YC-funded competition doing? ( WePay, right? <http://wepay.com/> )

~~~
jasonlotito
> Does WePay allow international (non-US) payments? Not right now, but we hope
> to soon.

So, still very limiting.

~~~
maushu
Yeah, might as well use a merchant account. Not cheap but still...

------
ck2
PayPal figured out awhile ago they have millions of users and that every
customer is easily replaceable.

Anyone that thinks having an account for quite some time or is doing $xxxx in
business per month is some kind of safety net is kidding themselves.

------
yason
What sensible alternatives are there for PayPal with international money
transfers? Is a plain wire transfer too expensive? In Europe, I'd just do a
BIC+IBAN transfer to another European country.

~~~
patio11
European banks have arrangements which make that economical, but transfers
between e.g. Japan and the United States or the UK and the United States cost
about $60. Also, American banks put consumers through a wringer to actually
effect a transfer, since it is one of the highest fraud risk operations a bank
is capable of _and_ typical American consumers do international wire transfers
very seldom.

------
ig1
<http://www.amiando.com/> seems to be pretty popular among event organizers
these days, there's a couple of other providers also specializing in the event
ticketing market. In fact I think Amiando even did the Launch48 event which
was sponsored and hosted by PayPal.

~~~
dotBen
True, but don't confuse ticket management for payment gateway. They are two
separate steps.

Honestly, EventBrite or Amiando should offer their own payments system as they
easily have enough traffic to make it worthwhile I would have thought.

~~~
dotBen
My bad. Both have moved on since I last reviewed their offerings (and ran an
event).

Which then prompts me to ask... why is OpenCamp not using EventBrite's own
gateway then? PayPal thus circumvented.

------
mgkimsal
Interesting - I'm planning a conference soon and this makes me a bit nervous.
Good luck with your fight!

------
neurotech1
Amazon Payments might be an option <https://payments.amazon.com/>

Seems like the market is there for a PayPal alternative. It would be an
interesting start-up. I'm putting together a Wiki soon to spec out the
project.

~~~
johns
Having recently talked with some people at Paypal, I would never want to deal
with the regulatory challenges they have to deal with. The challenge is
dealing with that and fraud. Square might be on to something with requiring
credit checks, but then you're narrowing your market. Do you have some ideas
for dealing with these considerable hurdles?

~~~
dkuchar
They chalk up more than $250 million in annual fraud losses as a cost of doing
business - there's a network of fraud artists that have cut their teeth on the
PayPal network.

Being the innovator, PayPal grew up with these fraudsters, building an in-
house database of knowledge about how to handle them as they cropped up one by
one.

If you're talking about building a PayPal competitor at this point, you're
launching at a point when there isn't going to be as much investor interest in
your startup combined with a mature fraud ecosystem prepared to shut it down.

And those are only the problems we know of.

------
cmelbye
I've read too many of these horror stories, and I've come to the conclusion
that I will never, under any circumstances, use PayPal for anything other than
small personal transactions. Even then, the fees are almost enough to make it
not worthwhile at all.

------
there
_But despite the long term and multi-account relationship we enjoy, they’ve
gone so far as to force me to send them copies of my drivers license and
social security card to some strange physical address_

after what kind of verification?

------
il
Get a merchant account and take payments yourself. PayPal isn't worth it for
anything more than selling your junk on eBay.

~~~
neurotech1
They seem to support "Power Sellers" very well, selling physical goods, and
screw everyone else.

------
p858snake
Have a talk to a lawyer friend and see if it amounts to harassment/invasion of
privacy? and if it does see if they will have a little talk to them about it.

------
ahoyhere
Hate on PayPal all you like, but next time, try opening a merchant account to
charge credit cards directly. You'll need...

1\. to incorporate and file an LLC agreement

2\. to go in person to open a corporate bank account

3\. display photo ID, in person

4\. show proof of residency

5\. show proof of business address

6\. get checks for that biz acct

7\. fax/paper mail all sorts of notarized stuff to ANOTHER company to open a
merchant bank account

8\. rinse and repeat to open a credit card processing account, fax/paper mail

9\. talk with reps on the phone because something inevitably goes wrong

10\. Pay a total of about $1200 for all the above services,

11\. not to mention at least 2-3 hours of traveling around, even if you live
in a city where it's all available nearby.

You will also likely be subject to a personal credit check since your business
is brand-spankin-new.

So, yes, PayPal didn't treat you all that nicely... they treated you exactly
like you'd be treated if you set up to open your own CC processing.

FTR, we've had no problems selling tickets to all _our_ events, but we didn't
open a brand new PayPal account to do it - we used our longstanding one.
Sounds like you opened a brand new PayPal account, right? I assume that since
you mentioned that you had another, longstanding account. That's like saying
"I have good credit, but my friend Joe doesn't, so we applied for the credit
in Joe's name." It doesn't transfer.

Also, just in case you think you should use Google Checkout instead - if you
think PayPal is bad, brace yourself, since Checkout is 100x worse:

[http://slash7.com/2009/03/26/google-is-evil-worse-than-
paypa...](http://slash7.com/2009/03/26/google-is-evil-worse-than-paypal-don-t-
use-google-checkout-for-your-business/)

