
Why Isn't Paypal More Successful? - terpua
http://www.avc.com/a_vc/2009/05/why-isnt-paypal-more-successful.html
======
quoderat
Because they appear, from many people's perspectives, to be nothing but scam
artists?

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:

<http://www.paypalsucks.com/>

~~~
babul
Totally agree and hence now avoid PayPal at all costs.

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.

~~~
jseliger
Ditto. I just put up a variation on this response at the blog itself:

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.

------
tjic
Comment I left over at the article:

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?"

~~~
vaksel
What do you propose people use for user to user payments? If you buy something
from another person on the web, paypal is pretty much your only option. And if
you are the seller, its pretty much the only way to get your payment right
away.

------
ianbishop
I can think of a bunch of reasons:

* 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.

~~~
omouse
_Transferring money from your bank to your PayPal account takes a long time_

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

~~~
randallsquared
But in the context of "why don't people use PayPal" it still looks like PayPal
has a problem to the customer.

------
T_S_
Why is Paypal successful at all? It is really a pain to use, especially if you
have a problem. If eBay and a few other sites didn't more or less force me to
use it, I never would.

~~~
petercooper
I've been using PayPal for several transactions a month since 2002 with no
problems. They did temporarily hold my account when I went over a certain
limit, due to EU money laundering laws, but once I proved my ID, etc, it was
back up and running.

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.)

~~~
ijuhytgjh
But if you are a Brit that moves to the US you are screwed. Paypal.com won't
let you have an account because you already have a .uk account and the .uk
account won't let you have a US address. You can't close the account and use
the same email/credit card to create a new account because they are already in
the system. Calling support just gets you form letters

------
robryan
I find the fees for recieveing payments from ebay auctions kinda stupid. Just
eBays way of hitting you twice.

------
netsp
Paypal is a back-end company.

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.

------
sireat
I've had Paypal since 2000, and it was a boon when actively dealing with
virtual properties. More recently, I've come to love their virtual credit
cards for making one time purchases on sites which may not be entirely
trustworthy.

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.

~~~
petercooper
_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._

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.

~~~
mblakele
Hmm... I've had the opposite experience with my credit card issuers. When I'm
traveling a lot for business, I seem to have a card number stolen every 9-18
months. When this happens, the issuer always phones me before I notice any odd
charges (and then I phone them back to handle it, because anyone can claim to
work for the fraud detection department). Both companies have also been good
on the rare occasions when I've disputed charges.

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?

~~~
petercooper
Not exactly a solution, but I have five credit cards. A few of them I don't
even use any more but it's handy to have them there.

------
skorgu
Many sites perceive that accepting payment through paypal dilutes their brand.
Whether this is valid or not is open to argument of course.

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.

------
CrLf
I never used PayPal much, but I created an account to pay for a software
subscription a couple of years back. A few months later I got an email from
PayPal about an automatic renewal of that subscription that was failing
because the associated credit card had expired.

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.

~~~
sp332
That sounds more like an issue with the software subscription being automatic,
not some evilness on PayPal's part?

------
zmimon
I use PayPal and ShareIT to sell software. I originally set up two options
because I specifically didn't want people to have to trust PayPal. In both
cases people can buy directly by entering a credit card without having an
account.

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.

------
robg
Because ebay bought it?

~~~
obvioustroll
Indirectly, yes, I think that was a problem - by buying PayPal and closing
their own payment service ("BillPoint"?) they ensured PayPal never had to
worry about competition again.

~~~
weegee
and not to mention completely blocking Google Payments from having any part in
ebay auctions, and shutting down the excellent Western Union Auction Payments
service, where the buyer pays the fee to send the payment, and ebay can't
double dip in the fees (charging the seller a fee for the final value and then
charging the seller a fee to receive payment through paypal).

------
jamroom
I must obviously be in the minority opinion here, but I've been selling online
for over 6 years using PayPal, many thousands and thousands of transactions,
and really have had very few issues - no more then I have had with 2checkout
or Moneybookers. Their procedures are fairly normal, I don't feel their
customer service is any better (or worse) then other merchant providers I have
worked with, and all in all they do what they say they will do.

------
SecurityMatters
I have never understood why most people even created PayPal accounts. A PayPal
like system that worked well would be very convenient. But, when I go try to
create an account, I always get stopped by the Terms of Service. How could
anyone think that is reasonable? Why should I waive my cardholder rights for
an associated credit card? If you walked into a store and they asked you to
waive your rights under your cardholder agreement in order to use a credit
card, would you do it? And, then you read about the dispute resolution
process. It is clear that if you ever get any money out of the system, you
should just consider yourself lucky. I'd say that if you think of money in the
system as play money and don't care about any associated bank account or
credit card, then PayPal would be OK. Otherwise, it is not reasonable. I
conclude that most people don't read the agreement, and just hope.

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AaronChua
How does TipJoy compared to Paypal in terms of ease of use, transparency, APIs
etc?

