Thank you! After reading the story I headed to the comments to look for this exact comment! This story was super, super sketchy! The tell was it didn't at all mention the products or services they sell. Since any normal person would mention the products/services they sell front-and-center as key information to the story, I went ahead and assumed the problem was the products or services they offer were illegal/sketchy/questionable/against TOS.
So I came here to see if anyone looked up what sort of products and services they offer.
I am wondering why PayPal cares in this case? I had no idea what PBNs where before this thread, and I agree they are spammy and should be dealt with (by google presumably), why does PayPal see the need to ban this company? I assume PBNs aren't illegal, so PayPal wouldn't face legal jeopardy.
My guess is either Google is encouraging PayPal to do this ban or PayPal is afraid of some societal backlash if people realize they are profiting off of spam.
I am honestly happy they are attempting to limit spam, but just surprised they are harming their bottom line to do it.
It's deceptive and unethical. There should be no surprise that legitimate payment providers like PayPal and even Visa/Mastercard would not want to work with them.
PayPal also does not do business with many Porn Websites, which are generally legal.
I am truly disgusted by this comment and those with a similar sentiment below. Selling PBNs is not against Paypal’s TOS, regardless of whether or not you happen to dislike them. The point is that PayPal falsely asserted that a business violated its TOS, and that means that it could happen to anyone else - instantly and without explanation. That is the problem here.
I just googled PBN. It looks like it is a black-hat, completely inauthentic SEO tactic that has no legitimate value. Why on Earth or you defending them? Am I missing something?
You are indeed missing something. I am not defending them. But if they are doing something that PayPal hasn’t banned and obviously found acceptable for 12 previous years, it means that all businesses are in immediate danger of being instantly banned without explanation on the whim of any of thousands of PayPal employees. That is a huge problem, and should concern everyone that depends on them for payment processing.
If you are subject to the whims and value judgments of individual PayPal employees, rather than policy documents, that is truly scary. Sell something that happens to offend a random employee's moral, political, or religious sensibilities? You might lose your account. What happens if a relative of a PayPal employee decides that you weren't fast enough with customer service, and tells them about it? Can that employee go searching for your account and kill it simply because they have a relative that wasn't impressed with the speed of your customer service?
The point is that these companies establish written policies for a reason. If those policies are not being followed, then businesses shouldn't use PayPal - not because they want to defend PBN sellers, but because their own business may be at risk even when they do nothing wrong.
> it means that all businesses are in immediate danger of being instantly banned without explanation on the whim of any of thousands of PayPal employees
This has always been the case. Paypal is extremely liberal with funds they seize or what accounts they shut down. At least, that's the image of them I've had for over a decade. Maybe they've since changed...but I wouldn't store any real amount of money in Paypal for any amount of time.
Ummm....no. As a software engineer, I can assure you there are not "thousands of PayPal employees" that can just ban businesses at will. I don't even think engineers working on that particular piece of software have any jurisdiction over that.
Time and time again people post complaints that PayPal banned them "for no reason", without cause, etc, but invariably when you do your research, they have violated the TOS, and they have often been warned by PayPal many times. They were scamming someone, exploiting return policies and systems, etc. People will conceal those facts, as well as their own actions which led to their consequences.
The issue here is that this company did not violate PayPal's TOS, yet they find themselves in this situation. BTW, I had a similar experience with PayPal, though my account was not open for 12 years. I didn't violate any TOS, and had no chargebacks - as in not a single one - and yet my account was effectively ghosted. I was handed a bunch of hoops to jump through, I jumped through them, and then nothing happened. The account sat in that state for so long that PayPal was eventually required by law to turn the money over to the state as abandoned. Only then was I able to get the money back - from the state treasurer (years after the fact).
So if your policy documents don't actually govern your policies, then employees are banning businesses based on their personal value judgments. That is problematic for a large number of reasons.
> The issue here is that this company did not violate PayPal's TOS
Untrue. Often the exact breach is legally prohibited from being publicly shared, but if a company is banned, then a TOS breach has happened. There is an unbelievable amount of red tape and compliance within every process, both digital and human, that occurs with regards to money and transactions. Especially in the fintech space, PayPal internally is bound to governmental regulations and auditing far more strict than any regulations imposed on customers. To suggest that PayPal can just close accounts at whim for any other reason than enforcement of legally binding terms and confiscate customer funds is simply absurd.
First, no company is ever “legally prohibited” from telling you what specific section of the TOS they allege that you violated. Second, with regard to PayPal not closing accounts on a whim, it happens literally everyday. See http://www.paypalsucks.com/ and countless other sites like it. Even the BBB lists nearly 8300 complaints against PayPal in the last 3 years - https://www.bbb.org/us/ca/san-jose/profile/payment-processin...
> First, no company is ever “legally prohibited” from telling you what specific section of the TOS they allege that you violated
Again, misplaced assumption and personal opinion. With some circumstances, especially if regulating bodies become involved, a company can be ordered by government to not share any further information with the other party, as well as freeze their funds. And even in the circumstances where that does not occur, I don't think a company is obligated to spell out for you what you violated. Sure, I agree that doesn't always look the best and it can seem like it happened "for no reason", but personally my opinion is that if someone told me I have violated TOS, I can read the few paragraphs for myself and figure it out. And they have over 250 million users, 8300 complaints over 3 years doesn't seem bad, and it looks like most of them were resolved. I get it, money gets people upset, and it's always tempting to see the "big bad corporation" turning its back on the little guy, but I personally feel like it gets blown out of proportion a lot. There's always more to the story...
Being in the industry, it just frustrates me when people think these big companies can do whatever they want at will, when really their hands are often tied much more than you think.
it just frustrates me when people think these big companies can do whatever they want at will, when really their hands are often tied much more than you think
I know my experiences with them very much fall in the “big company doing whatever it wants at will” category, and I am not alone. Scores of others over the years have wound up as frustrated as you are by these comments in their dealings with PayPal.
especially if regulating bodies become involved, a company can be ordered by government to not share any further information with the other party,
This would apply to an absurdly small percentage of the accounts that PayPal closes on a daily basis.
This seems a little bit like saying that companies should be held to similar standards as governments ought to be, with regards to “the rule of law”, and the whole “the law should be publicly stated, and laws shouldn’t apply retroactively” thing.
Which is, a claim worth considering? I am not convinced yet.
I suppose that the fact that PayPal is a money transfer service, which is necessary for many kinds of businesses, and maybe kind of a monopoly, that could be a reason to treat them as more like a government than some businesses should be treated?
> But if they are doing something that PayPal ... obviously found acceptable for ... years, it means that all businesses are in immediate danger of being instantly banned without explanation ...
That's no news. Many PP user are fully aware of that fact. There have been similar cases over the years, completely unrelated to PBNs. That's the deal with PP, take it or leave it.
Because if what they are selling does not break any laws PayPal should not ban it. Or do you don't want PayPal to treat the world as their app store and pick and choose which software or service they find ok to sell.
Here is PayPal's TOS (although they may have multiple for different aspects of the service, and definitely for different jurisdictions), in case anyone else wanted to take a look: https://www.paypal.com/us/webapps/mpp/ua/acceptableuse-full
Ooof, PBNs are literal spam. They're designed to game Google by producing a deluge of low quality content with backlinks on whatever search terms you're hoping to squat on.
True, but as long as there are rules, somebody is going to find a loophole or a way to game the system. I'd personally be more concerned with Google improving their product or with society's increasing reliance on a single company's service and our unwillingness to consume information critically.
PBNs are garbagey, but trying to put them all down is unrealistic. And even if they could be stopped, it would only be a band aid fix, not addressing the real problems.
Hundreds of sites have been brought down for hosting pirated movies thanks to laws against that, don't know why putting down PBns would be unrealistic.
I read your comment as suggesting that certain actions aren't a good use of time or that they shouldn't be done because they don't fully solve the problem.
I understand the dissatisfaction with half-measures. But I would argue as long as the actions have a meaningful impact and there isn't a promising alternative, it is still worthwhile.
If you look at their other (past/sold) projects, it's part of a suite of software they've developed for "autoblogging", scraping, automatically reposting articles from prewritten databases, "enriching" them with random images, etc. It's very clear what industry they serve.
That raises another question: why couldn't Paypal simply say this?
I can imagine several plausible reasons, related to potential liability, but does that mean that if we're trying to outsource business functions to specialist firms that we can't expect them to be transparent in their operations?
Having worked in a different industry that also had to ban people I can make an assumption: they don’t need to, and doing so never makes anyone happy, so why bother. If they said it was because of their spam business, the owner would do exactly what they did on HN: “but we didn’t use PayPal for our spam business” - this won’t change the decision.
But failing to do so leads to increased operational costs, as customers contact CS again and again, demanding the rationale. It can also lead to negative press.
It's pretty easy to no longer support someone who is banned. The negative press is usually OK because like in this case, and in many others I've seen on HN, the one complaining is usually in clear violation of stated policy. It's completely reasonable to disagree with and complain about that policy, but they rarely do so explicitly, it drums up more support when the policy violation isn't made a highlight.
In my opinion the reason for ban, even though mentioned that unrelated to their SaaS offering, is likely higher number of transactions with parties who have been also baned for some shady practices.
Such rat clusters are usualy nuked in batch.
> we're not using PayPal to process our SaaS products
Disclosure: I used to work in payment industry.
Unfortunately from the brand's perspective (Visa, Mastercard, etc.) it doesn't matter which of your product is using their channel to process payments, if the business is involved in doing something shady, the whole company will be flagged. If you already passed KYC 12 years ago, but your business _today_ won't pass KYC if you were to apply again, then it's a matter of time until you get kicked out.
No denial that you’re selling software designed to spam. Interesting.
Maybe you should focus on making your business run in the ethical clear first. You’re not getting any sympathy from me that your unethical practices got you cut off from financing.
And it took PayPal 12 years to flag their product as Spam? In any case, PayPal should be a payment processor, not a enforcer of arbitrary business standards, like tagging something as spam 12 years too late.
The city state has its own currency, monetary policy and legal system, enough for the department of state to treat HK as an independent entity as far as trade is concerned. Given the vast amount of money and good flowing through through HK I find it hard to believe any established payment processor would lack familiarity with the status of Hong Kong. It looks more like a (poorly) made up excuse to ban undesirable users.
If you read the actual blogpost, it was more likely an administrative mistake earlier in the process that was then difficult to undo, and no one really giving a fuck on paypal's side.
Attribute things to incompetence before malice and all that, especially when attributing it to malice requires thinking they made a fairly odd decision to outright lie to customers about why you are ceasing doing business with them.
I have to agree. With the amount of money involved internationally with HK I highly doubt Paypal would just decide to shut down an account because of that. If that was the really the case there would have been a LOT of other accounts shutdown.
This sounds more like an excuse from Paypal, who I fear talking bad about in case they decide to ban me too :P
Thank you for sharing this story, I have added it and Niteo to my growing list of PayPal (and other financial service) bans: https://gitgud.io/TornTongues/torntongues/#paypal (contributions welcome). Kafkaesque indeed...
As demonstrated by a $50k+/mo account who's Google reps only recommend one-size-fits-all strategy and can't be bothered to listen to feedback that such a strategy only works with advertising to end customers and not B2B advertising.
The account rep is just a marketing vector for Google to their paying customers.
The lack of customer service in the Silicon Valley is a pervasive problem.
* Cody Don on YouTube teaches the masses about science and regularly gets banned. His videos are rated G to PG. Despite millions of viewers and dollars of Revenue, there is nobody he can call.
* Uber charged $1500 to my debut card a few months ago. There's literally nobody you can call about it.
* Lose your Instagram/Twitter/Gmail? Too bad, because it's free, you're treated as cattle.
> Uber charged $1500 to my debut card a few months ago. There's literally nobody you can call about it.
Your bank. You dispute the charge. Uber can deal with your bank. It doesn't matter it was a debit card. It means you're missing the money immediately, but doesn't stop you from disputing.
I wouldn't even attempt to contact Uber in this situation - a fraudulent charge on a credit or debit card = call card issuer or bank. I don't care what the company is, I call card issuer.
unfortunately, most banks have the policy of first asking you to resolve it (or at least show evidence that you've tried).
I would say, sending uber an email would work, or calling their number (which, they actually do - if you lost a phone in an uber, they have a number which lets you call them to get the contact details of the driver of the car you were in).
That's the second comment in two days I've seen along the lines of "You can't risk pissing off Uber because they might ban you." What a sad codependent relationship to be [ADDED: or feel you are] so locked into some uncaring tech service that you feel you basically have to just put up with whatever mistreatment they dish out.
Yeah, you don't call Uber in this case. You immediately call the card issuer and report fraud. In the case of debit charges, reacting quickly is absolutely key.
Always pay with a credit card, it's much easier to reverse this kind of stuff versus a debit card. There is literally no good reason to ever use a debit card.
>There is literally no good reason to ever use a debit card.
A good reason would be if you don't have credit cards because you have serious problems controlling your spending and you're at a place where you can't pay with cash, such as an unmanned gas station, payment terminal, on a plane, a cash-less business, etc.
I agree with the overall point, either use cash or use credit. Debit only if cash and credit aren't available.
Someone should come up with a credit card that has a dynamic hard limit connected to a checking account balance. Paid daily, too, so the checking balance is almost always caught up. Seems like it would meet the needs of those people while letting them benefit from protections, rewards, etc.
Any reason this couldn't work? Does it exist already?
Debit cards exist but credit cards are often the better option if you're going to use plastic.
The problem with debit cards is because certain transactions aren't instant in the US if there's fraud on your debit card at just the right time then your rent check can bounce, your external transfers are returned, etc, and all that stuff comes with fees and headaches.
Credit cards also come with rewards whereas rewards on debit cards are rare and not as good if they exist. Credit cards usually have auxiliary benefits like (depending on the card) return protection, purchase protection, extended warranty, travel insurance, and more, whereas debit cards have nothing of the sort. THere's no interest due on credit cards if you pay your bill in full every month.
The problem with credit cards is, of course, you have the ability to spend more money than you have, and you can dig yourself into a hole if you don't use that power responsibly.
How likely is fraud on your debit card, though? On credit cards, it's trivial, because the number you need to authorise a transaction is prominently displayed on the card and needs to be shared with the merchant, all of which is of course horribly insecure.
Bank transaction cards in Netherland, presumably all of Europe, and I would hope the rest of the world, authorise the transaction in a reasonably secure[0] way between you and your bank, and the merchant only gets the money.
[0] The main insecure part is that keys are short, because they need to be memorised. But with modern automatically-blocking chip cards, there's no way to brute-force that as far as I'm aware.
There’s no such thing as a “bank card” you talk about. It’s called “debit card” and is the exact same thing, with the exact same baseline security.
What is confusing you is probably that European banks push 3D Secure really hard, so most online transactions are further verified, and that chip&pin cards and online readers are prevalent - the same thing Americans call “Apple Pay is supported”.
The European (I assume, I only know the ones from Germany) debit cards are distinctly different from credit cards or the debit cards you described in that they
* don't have the credit card like information like card number, verification number or CVC code.
* They are directly linked to a bank account like you described.
* They have the account number (IBAN) printed on them. Knowledge of that number doesn't get you closer to the money in the account, though.
* To actually use them on an ATM or at a POS, you usually use chip and pin. In the POS case, the POS randomly chooses between PIN and your hand written signature as proof of ownership.
* You can't directly pay with them online, though (ignoring extra features some variants have).
* To pay online if you only have one of those cards, you usually pay by wire transfer using your account number, the pin number from above and a tan (a single use number created for this transaction only). Money reaches the recipient between a few minutes and a day later.
* Practically everyone with a bank account has such a card.
Netherland is similar. Online payment is supported not through the card itself, but by the banks through a system called iDeal, which performs a bank transfer connected to a purchase in a webshop similar to how a PayPal transaction would work, except it doesn't rely on a credit card number, but on a through two-factor authorisation process between you and the bank.
The 2FA used to be done with one-time TAN numbers on paper, but many banks switched to a special device that generates these numbers on the fly based on your account, the amount transferred and some random number, and in recent years many banks are switching to a mobile app for dedication. But authorisation always happens through some form of 2FA between you and the bank, and never relies on sending any kind of sensitive information (like credit card numbers) to third parties (merchant, PayPal, whatever).
Sadly, iDeal is only supported by Dutch banks and Dutch merchants (and international merchants that care about the Dutch market, like Steam). I really wish there was something like this that was internationally supported. Relying on sharing credit card numbers, seems really backwards and terribly insecure. Well, it is terribly insecure, as evidenced by all the panic when a company leaks a million credit card numbers. You never get that kind of panic when someone leaks a million account numbers, because in a secure system, that's simply not enough to get any money out of that account.
The current setup seems to favor the card network providers / banks. There's not really an incentive to change. Why it's like that in the first place? IDK.
This is called a debit card in the US, and almost everyone has them - but the key distinction between a debit card and a credit card is that the debit card is a direct link to your bank.
People like using credit cards (or charge cards, like some Amexes) to buffer transactions between the bank and the merchant, so if the merchant screws up there is time to resolve the issue before the credit bill comes due.
If a merchant screws up with your debit card, or it gets skimmed/stolen, the only limit to abuse is how much money is in your checking account. If you just got a direct deposit from your employer and are expecting your rent payment to pull from that account today, but your account was drained because your debit card got skimmed at a gas station... not much you can do.
That's not a good reason, that's a reason for children. Responsible adults don't do this type of thing.
If you have serious problems controlling your spending, might as well spend someone else's money that you can discharge, versus just have no money in your checking account all the time.
I use a debit card because it makes it much easier to manage my finances. As soon as I pay for something, it's immediately deducted from my bank balance, so I can always see exactly how much money I have. If I screw up and try to spend above my balance, the transaction gets blocked, because I have overdraft protection turned off.
(And, I have money in other accounts for emergencies.)
This is convenient, until someone steals your card number and you spending power goes to $0. This really sucks when the rent/mortgage is due, because oops, check bounced (which is a felony in my jurisdiction).
Credit cards are also subject to holds.
It might be convenient today, but it's like driving around without your seat belt on. It might allow you to enter and exit the vehicle quicker, but that's not really the point.
The bank that offers me 0.2% more interest isn't worth it because their customer service is reprehensible garbage.
When something goes wrong my good bank - First Direct - are going to answer in 2-3 rings, and they're going to fix it, their founding philosophy (I happen to know some of those founders by chance) is that customers must feel "totally taken care of", if the customer wants a £2M mortgage at 2am on a Sunday, then you can't tell them "Oh I'm sorry the mortgages team only works 9-5". I have never come off a call to them thinking they should have done more or done it faster, on the contrary I'm often surprised how effective they were able to be.
Everything about this approach can be replicated. If every bad bank loses its customers we all get better banks.
> There is literally no good reason to ever use a debit card
Unless you're trying to get out cash from an ATM, or make any other cash-advance-like purchase. Then there's a really good reason to use a debit card instead of a credit card. It's the only time I use my debit card.
> Always pay with a credit card, it's much easier to reverse this kind of stuff versus a debit card. There is literally no good reason to ever use a debit card.
What is a debit card exactly in the US? I'm familiar with US-style credit cards, and find them horrible, expensive and insecure. I normally pay simply with my bank card, and online I prefer to with through iDeal bank transfer. Unfortunately that's not supported internationally, so I have a credit card only for international online payments. I would not own a credit card otherwise.
A debit card is tied to a bank acount (or some other account) that has actual funds in it. It's same as a check. Once it's cleared, it's quite difficult to get the funds back.
A credit card is different. If a transaction is submitted for reversal within the allotted time period, the charges are simply reversed.
In the case of a fraudulent debit transaction that gets disputed, your bank has to file a claim with the other bank, and somebody (possibly other than the merchant) is taking a loss. Banks don't like that. Credit card reversals mostly result in the merchants taking the loss, and the banks will usually side with a consumer.
What relevance does your credit score have to day-to-day life in the UK?
As far as I can tell mortgages are dependent on you having OK credit, not good credit. You don't seem to get better rates dependent on your credit score.
Credit card rates are irrelevant, you shouldn't be carrying a balance.
Some people have a Pavlovian response to anything with credit score. The propaganda has worked. In the US, we have countless TV commercials about "Check your credit score!"
In the case of Paypal it's not exactly a lack of customer service, as you can call or email and you will get a response, but a specific policy to not disclose the reason you are banned.
The problem is that most terms of service include forced arbitration clauses. Even if they don't, you generally have to sue in the jurisdiction where the company is incorporated, which for the vast majority of people, is very far away.
Is Uber doing business in a state just by virtue of having customers and contractors in that state? It has offices in various places, but I assume not all states.
> Uber charged $1500 to my debut card a few months ago. There's literally nobody you can call about it.
If you're in the U.S., I would think your state's Attorney General. It's potentially either theft or fraud, I would think.
Or if your A.G. won't pursue it, go after Uber in small-claims court. Not only are you likely to recoup your lost money, but you'd cause them some pain and/or lawyer fees.
Every Friday go online and withdraw all-but-the-necessary £€$$ to your bank account (transfer wire or via card number). I do get some revenue via PayPal, and the very same day (or the next) I 'download' comes it to my bank account (connected to PayPal via card) and IMMEDIATELY is shipped to another account that has all the controls to make money (relatively) unmovable.
I perceive PayPal as my wallet. I do keep 'some' money in it but I keep the motherload away 'layers' deep.
My money flow diagram, in the back end, includes "tax", "expenses", and "vault" (alarm Scrooge McDuck) accounts.
I see PayPal as the envelope that I am given the cash in. It doesn't stay there for more than 24-48h.
Edit: someone below mentioned they do spam.. if e.g. USA authorities has alerted them about doing shady things, PayPal would also receive a gag order with it to a) freeze their $$$$ and b) gag them. If I was Niteo I would get my pencils sharpened and wake up my lawyers.
>Every Friday go online and withdraw all-but-the-necessary £€$$ to your bank account (transfer wire or via card number). I do get some revenue via PayPal, and the very same day (or the next) I 'download' comes it to my bank account (connected to PayPal via card) and IMMEDIATELY is shipped to another account that has all the controls to make money (relatively) unmovable.
PayPal does have a feature they don't advertise named Auto Sweep, which withdraws any balance in your account each day. You need to contact support to enable it.
YMMV I am ok doing from my app every other night. It takes 5mins to withdraw to my card/account. I keep a certain balance and everything over that amount comes down to safety.
It'd be better if there were a way to autosweep to a paper check or fedwire if Auto Sweep's terms doesn't specifically prohibit Paypal from generating a withdrawal that backs out the ACH deposit.
To be more specific, you should not keep your money at a 3rd party with more control over your money than necessary for longer than necessary.
Giving PayPal an interest free loan and control over you balances rather than sweeping them into a (potentially interest bearing) account controlled by you is one example of this.
Another is having a second account at a different bank that you sweep money from the first one. That second bank account should be set up to reject automated ACH withdrawals so that you can push money into it but PayPal, your payroll company, your bill payers, or even other companies that ACH payments to you cannot withdraw from your account without your permission.
Nobody disagrees that this is what you have to do in PayPal's current state. The debate is to whether you should have to do it, or whether, given that it walks and talks like a bank, PayPal should nationally and globally be treated as a bank.
IIRC, PayPal has a banking licence in Europe and as such is regulated by Luxembourg's supervisory authority. It's strange, given the nature of PayPal's services, that it hasn't yet been deemed to be a bank or the equivalent in other places as well though.
I think the argument is that with a bank they cannot arbitrarily freeze your account, you are given a reason for any freeze, and have the opportunity to fight it. However, I don't know enough about banking law to know if that's accurate.
That's not the case, a bank works in the same way. Typically a bank or financial institution will employ a set of machine learning models or rules (combined with human review) and freeze accounts on that basis.
Like PayPal, a bank also will not tell you why it has frozen your account (to avoid ripping off others in a crime ring). PayPal (like banks) give you an opportunity to fight it, but like banks they can't simply let you have the money if it is frozen.
Also, working in banking - banks and financial institutions will go out of their way to avoid false positives but do still need to remain compliant.
From what I know, a bank will report suspicious transactions to the authorities, and obey whatever the authorities tell them to do about it. They will not assume the role of the authorities for themselves.
At least, that's how I understand the banking situation in Netherland, which seems about as reasonable as you can get. American companies do seem to be much more likely to play police.
> From what I know, a bank will report suspicious transactions to the authorities, and obey whatever the authorities tell them to do about it. They will not assume the role of the authorities for themselves.
Not the case. They're obliged to freeze the account when they suspect suspicious activity, and then submit a SAR if it is proven to be suspicioue. Freezing the acct is part of the investigation, and they usually now use automated tools to do so.
They're obliged to work every alert generated and unfreeze if the activity is proved to be legitimate.
> A bank that suspected money laundering or suspicious activity would be expected to behave in exactly the same way.
How many lawyers do you think a bank will have to retain to deal with the flood of preliminary injunctions they would have to deal with if they locked accounts at will?
I (always and forever) maintain accounts with NO overdraft. Banks like overdraft. I don't.
If something bounces, then I will handle it within 24h. Again, this is the setup that covers my needs. A different organizations with different needs should have different process/controls to match their liquidity/easy-to-access-cash needs.
It stops them from freezing the account on Paypal. If you really want to insulate from the service you would set up a similar job at your bank that would immediately transfer the funds out of that account and into some other account. But honestly if you are going to this much trouble is it even worth it to use Paypal?
Just about any processor, Stripe included, stipulates they can withdraw from your account. And what if their systems are hacked, disclosing your account and routing numbers to an ill-intentioned third party?
You probably want this as a generic fail safe for any account that you disclose the account an routing number to an outside entity.
If you have someone's bank account number, you can pretty much take money out of it. By default there is no real authorization process by which the account holder is asked to allow the withdrawal. There is just the assumption that people aren't going to commit fraud, or people who commit fraud will be caught.
I'm not an expert on this, but I believe there are ways to set up business accounts where money can't be taken out in that way, at least not by the standard electronic means. You can also manage accounts in such a way as that there's no money to take out, although that does not necessarily prevent the account from going into the negative. Checking accounts can go into significant negative balances if the bank chooses to allow it.
It is more difficult than you describe it. To set up a monthly payment the bank verifies the request (e.g. if you sign such direct debit for the gym or your electricity bill). Every ebamli I ever used has a page with all these direct debit setups and alerts you when a new one is made to bring your attention to it. These also have limits. And a decent bank would scrutinize the direct debit. A gym or Vodafone will fly easier than a direct debit to VodkaPotatoLimited in Russia or China (no offense) when you live in the UK.
As to prevent the overdraft, just ask the bank to NOT have overdraft capacity on your account(s).
Isn't the max loss there rather tiny? Especially if you have overdraft off on the paypal bank account. You can disconnect the account if something happens and there are fees accruing.
Edit: I'm replying to a really low odds scenario, where:
1. You auto sweep all money out of paypal
2. You regularly empty the checking account it sends to
You have at risk maybe $1000-$2000 in the chequing + less than $100 in fees.
For something vanishingly unlikely to happen. The risk seems rather low compared to the exposure.
I mostly use stripe and have PayPal as a backup. Never had a problem with either, and if I did have a problem with one the amounts are fairly low. (Probably more of an amount risk with stripe as they take longer to sweep out the money. But I don't think they freeze as often)
There is a Tom Ferry (real estate guy but has some sound tips) also has on a video a VERY good flow diagram on how to distribute money in different buckets/accounts. Apologies but I couldn't find it on my phone.
I was "inspired" by the above and once I organized my accounts/flows and stopped using "single account for all" my life became so much simpler. And of course PayPal wallet is not a permanent parking space for £€¥$.
I always go (and suggest to others) for the "bounced payment" (and it has never happened in my life). But banks really love overdrafts. It is a major source of income. I prefer to get an angry email and throw a freebie and sort this out than having the bank ripping me off. This way I show my counterpart that "hey mistakes happen here is your money and let me buy you dinner to show you that we are good", than having to the other person getting paid and me ebfing paying 5x that dinner cost.
Overdraft is a loan. Would you get a loan with insane interest rate and fees just to get a payment go through? Not me.
My only experience with paypal was about 8 years ago.
I briefly remember signing up for it roughly 2-3 years prior to that.
I linked my paypal to my (older) bank account so I could purchase something. This account had about $100 in it - it was my old left over account from before I got married and got a joint account, etc. So I kept a tiny bit of money in it.
I had moved about 2-3 times since opening that account - I never used the account for anything, it just sat there with money in it. It was eventually forgotten about.
Anyway, long story short. Someone managed to access my paypal and request a sum of money around roughly $40. That account had about $38 in it at the time. Paypal flagged the transaction as fraudulent, stored the money 'in my paypal account' instead of sending it to the requester, and froze my account. But this overdrew my bank account by roughly $2. Needless to say, 2-3 years of late fees added up to a substantial amount of money - two separate accounts - one for about $280 that I owed the bank and another that was about $350 that i owed to their 'overdraft' company. I didn't find out about either until they were about 2-3 years old and in collections.
I realize what I'm explaining is totally my own fault for not monitoring that account and keeping it up to date, but if paypal would have either redeposited that money into my account or sent some emails, instead of freezing the assets in a holding account, I could have avoided that.
In either event, that left a bitter taste in my mouth, and i severed all ties with paypal and that old account at that point.
I had to explain this multiple times to different government and military agencies throughout my career - it still comes up on background investigations.
I do not know how it is in your jurisdiction but where I live a collector needs to inform you in timely manner of these kind of discrepancies if they want to enforce fines or overcharge fees. The means different kind of channels of communication than the regular ones (e.g. postal instead of login to the site, or at least show some effort). Note: this is only if they overcharge without you being able to do so normally, if are allowed to have a negative balance you pay regular fees and you signed a contract to do so.
I used to help run a rather large fan convention. For our first 5 years (starting in about late 2003 or so), PayPal was the only option we offered for registering online. At the time, they were really the only option for implementing online payments easily without the complexity of a full merchant stack (and it was just me doing the programming, volunteering to help them while I was still in college).
By the time we finally switched away from them, we were probably clearing $80k or so a year through them, with a very large percentage of that coming over the course of a week or so just before the event. People like to wait until the last minute. :)
We never had any issues, but we were very vigilant about transferring funds out of PayPal every few days just in case. We did finally stop using them, probably about 2009 or 2010, when stories like OP's started to become widespread.
For us, having them "hold" our funds for 6 months or cancelling our account would have bankrupted us. The hotel wants to be paid on Monday after the event. Vendors need to be paid within 30 days. Things like that would have been impossible for us to do if they decided to sit on the money or can us. We were a volunteer fan convention; we didn't have the financial cushion to withstand something like that.
Not to mention the fees were higher than a standard merchant account. We finally did switch to a merchant account through Elavon and, after I left, I think they switched to Stripe. Either way, they don't accept PayPal now because the financial risk to them that could result from PayPal freezing or canceling the funds is significant.
That is the case now, yes, but I don't recall that being the case at the time. That said, we are talking sixteen years ago.
Regardless, I would not recommend any business accept PayPal unless you are large enough to get their attention. There are far too many stories out there like OP's, of individuals, as well as small and medium sized businesses, getting absolutely hosed by some automated algorithm at PayPal and having zero recourse to even find out what happened. Customer "service" is nonexistent there. In my opinion, the only thing PayPal is good for is sending money between people.
Short of filing a lawsuit, and you probably can't even do that because they now have an arbitration agreement in their terms.
For me as a customer, having PayPal as payment option increases the propability of purchase. Especially with one-time purchases from small vendors.
Reasons: No risk of credit card info misuse (by vendor), I only need username and password and I get certainly at least some kind of receipt for accounting.
>Reasons: No risk of credit card info misuse (by vendor), I only need username and password and I get certainly at least some kind of receipt for accounting.
It's a shame virtual cards never got more traction through the CC industry. For those who aren't familiar, some banks/cards offer you a tool that let's you set an arbitrary spend and expiration date (+2-12 months usually) and then generate a credit card number (with CVC) with those attributes (Bank of America branded theirs "SafeShop" for one example). Since it's a fully backed card number it'll transparently work on any site a normal CC would, but it cannot be charged more then the small limit (so you can set it just to the checkout price of one item and it's done), it can be trivially cancelled at will (useful for fighting dark pattern subscription services), etc (some of them can bind to merchant too). It's very effective for preventing misuse from online purchases. However for whatever reason it never seems to have spread or evolved really. BoA never added it to their mobile app for example, which seems like the most logical place, but rather kept it as a little Flash tool tucked away in their website. Plenty of banks do not offer it at all, and it never got much PR. It is more work to use and while that could have been reduced through better UIs (mobile again could really help there) it would always have been somewhat more work.
Maybe options like Apple Pay/Google Pay will ultimately fill that role, since they're essentially an automated version of the above (tolkenized per-purchase card numbers). It'd be nice if the industry would work harder though on some standards for the hardware ecosystem needed.
The reason I don't use virtual credit cards is because they tend to not protect you from first party fraud, only third party fraud.
Despite what the banks claim, they usually will NOT prevent recurring payments from being honored. Even if you don't have enough money in your account. (The bank will just collect it from you)
I used to use a service called Entropay, which would actually let you pre-pay money into a disposable virtual credit card. But banks would never let you do that, because it would undermine their own system.
90% of the problems that I have had over the last ten years have not been with credit card info being stolen, but with misleading or outright fraudulent behavior by merchants, and BoA virtual credit cards have all of the exact same problems as real credit cards and will do nothing to protect you.
You will still have to always keep an eye out that 90 days later you aren't charged again for the same thing. And you are still on the hook for charges made by the merchant you paid, and it is up to you to dispute any charges through the same process as with a regular credit card.
What I want, is to give a merchant a credit card number, pre load that number with $30, have them charge it, and then be completely done with it. This especially makes sense for low stakes low cost recurring monthly payments. I should just be able to stop paying a $5/month fax service that I never use, and have them terminate my service. Banks would never let you do that. Services that used to let you do that have been mostly shut down.
I understand that I may be technically agreeing to pay each month with recurring payments, but the onus should be on the provider to stop servicing me if I cannot come up with the money. The system that we have today for recurring payments makes no sense.
I simply want to be in control of how much money gets taken from me. It is the same reason I take bills out of my wallet to pay a clerk at a store, and do not simply hand them my wallet and ask them to take the money out. I don't care if I can call the bank and dispute things with them, I want to be the one to dole out the money for the transaction.
And I haven't tested this, but apparently if some scummy vpn service you did a 30 day trial with a few months ago claims you owe them, and you miss the window to dispute it, or the bank sides with the merchant, the bank is obligated to go after your money from other accounts.
>What I want, is to give a merchant a credit card number, pre load that number with $30, have them charge it, and then be completely done with it. This especially makes sense for low stakes low cost recurring monthly payments. I should just be able to stop paying a $5/month fax service that I never use, and have them terminate my service. Banks would never let you do that. Services that used to let you do that have been mostly shut down.
Privacy.com offers this service, but you have to pay from your bank account.
Like, Privacy.com has access to your bank account and have the authority to collect? Because then it is the same problem.
All I want, is the digital equivalent of a personal check.
A one time promise to pay money. If the merchant has a dispute with me, or thinks I owe them more money, they are free to sue me.
If my utility company wants automatic recurring payments, I have to sign paperwork which makes it very clear that I am authorizing recurring bank transfers.
Still has an arbitration agreement, unfortunately.
For something small or temporary, I might overlook it. For something that has direct access to my bank account, no go. They need to accept some liability if they want that level of access to my financial life.
To be fair, Paypal has an arbitration agreement too. But, if you're using Paypal as justification for your own policies, that's not exactly a strong starting position.
Two banks accounts deep. Let Paypal, Privacy see a dummy account, and use that account to transfer money into a main account. Keep layering for more protection, questions from your bank.
I’m always surprised as to why people are concerned about card details misuse.
You are not responsible for card-not-present fraud (without 3D Secure). You can dispute any fraudulent charge with your bank, and I’d bet good money the bank has actually better customer service in that regard compared to PayPal.
As a consumer, I like PayPal because it allows me to shut off a payment stream when I want to.
A prime example was when I subscribed to NYTimes, and a few months later wanted to cancel. The only way to cancel was to make a phone call, navigate a phone tree, and wait for an agent. That was absurd, not only because I'm international and find it less convenient to call a US number... but particularly because I signed up and created the subscription online. NYT knew what they were doing by making it difficult for people to cancel.
With PayPal in between, I was able to easily just terminate the agreement. NYT could no longer suck money out of my card.
You could argue about this. It is also questionable, where the contract was made. New York City? The place where the server is based? The place where the international customer is based? What law should apply? And if a company makes it unreasonable difficult to cancel a subscription then this may be a violation of some laws already.
https://www.cnet.com/news/companies-must-let-customers-cance...
I know the point of your story was about being able to cancel, and not specifically NYT, but since others might read your anecdote and be turned off of NYT:
NYT has since upgraded to allow managing your subscription online, including upgrade/downgrade/cancellation.
I entirely agree that putting money into a PayPal account is a really bad idea, but I'll generally use one of my credit cards through PayPal if needed.
The last time I had to deal with card fraud, my bank was extremely reasonable to work with and didn't hesitate at all when disputing the charges. But the process can still be fairly annoying. Having to wait for the card to be replaced, having to move any auto billpay using that card to another, etc.
With very few exceptions, if the merchant isn't using a decent external payment platform, you might as well be posting your credit card information on Hacker News. I'd much rather run my card information through PayPal if that is the only option other than entering card information on the merchants dodgy website.
Most banks can be decent to deal with, and one can certainly take steps to mitigate the impact of it when it does happen (Like not using your debt card for purchases, ever. Using a different credit card for bill payments vs online purchases vs offline purchases, etc.) But I can understand why people would prefer to avoid card fraud when they have the option to do so.
Non-US credit or debit card owners are not in that good position wrt. disputes and getting their money back. Most of them charge for disabling the card and sending a new one. Dispute last for months, and are not automatically protecting the customer.
This is the first time I hear about this for UK. The chargeback rules are set by the network , i.e. MasterCard, Visa (sure Amex as well but they are both issuer , acquirer and network so that’s perhaps an unfair example). Is there a different rule set for MC USA vs MC rest of the world?
I worked for a fraud detection company in the UK that existed precisely because chargebacks work so well, here. So this is definitely news to me.
Yes, there is a world beyond US and UK. Customer support in, say, France is next to nonexistent compared to US and UK standards. Not to mention non-Western countries (where Visa and MasterCard still work, but the quality of service differs dramatically). I am Russian living in Switzerland, who speaks English and shops at Amazon/US. It creates all sorts of fun.
Laws in each country are different. In the US that is not just a network rule it is a law. In many other countries they are just rules that can change at any time. Check with your local country's laws as each are different. I would expect that the network's rules are in large part the intersection of the laws in every country they operate in - one set of rules is easier to track than trying to figure out which countries laws might be in effect (with disastrous consequences if they get it wrong).
Don't get me wrong, sometimes the networks rules are stronger than the laws for other reasons. Last I checked in the US the customer was legally out $50 in case of fraud, but all networks reduced it to zero figuring if they were already out potentially a large sum of money they may as well eat the last $50 too for goodwill reasons.
Sad to hear that about Non-US card owners. In the US, I've had just the opposite experience. E.g., with AmEx, I had suspicious charges and before I even finished the description the agent interrupted me and said the charge and my card were both already cancelled and new card w/new numbers was already on the way via FedEx.
I'm not quite sure what pattern the agent recognized, but she sure didn't like it and they weren't going to put up with it for a second. I'm not sure why it wouldn't be in their interest to be this vigilant globally...
There are huge culture differences in different parts of the world, and no such thing as "global companies" -- local offices are staffed with locals. US customer support is probably the best in the world, only Japan could be a valid contender here. The rest of us have to suffer.
Interesting, and perhaps not surprising since a college acquaintance once told me (quite some years ago) that AmEx would only cancel your card in one country at a time. Seems he'd had some trouble in Europe (parents shut off funds or something), and while making his way home before eventually getting it sorted out, discovered that little tidbit.
"I’m always surprised as to why people are concerned about card details misuse. You are not responsible for card-not-present fraud (without 3D Secure). "
I am not surprised. You have obviously never stood in Ethiopia or wherever and have gotten a call from your bank: " This is the fraud department, unfortunately we have to block your card but we send you a new one".
Trick question: How many CC do you carry at a given time?
Hint: based from experience it should be at LEAST 3.
I am using a non-shit bank which will leave Apple Pay active while the physical card is replaced, or decline card-non-present transactions while leaving the card active for in-person transactions.
If the bank is bad it’s one thing but then the solution is to choose a better bank, not hack around the problem with a (shady) middleman like PayPal.
Not sure if it would have helped in your case, but when I was going to China for 2 months, I called the bank beforehand and let them know that I'll be in China, and asked to ensure the card would work there.
Because then you have to go through the hassle of doing all of the paperwork, talking to the bank and getting a new credit card number (which means updating all your services that used the old number).
There are debit and prepaid cards, that can be used online, but disputing fraudulent charges is next to impossible. There are non-US banks, where disputing fraud is extremely difficult and takes months, during which your funds remain blocked. There are many cases where a card wouldn't work because it is from a different country, but PayPal works.
International consumer finance is a mess. Not everybody who shops on the Internet is a US citizen with a credit card account in a first-rate bank. There are other options.
It's just a pain when it happens and you have to notice and catch it to begin with. Last time I had my debit card skimmed I had a lot of subscriptions lapse and fail to charge because the old card had been cancelled but I hadn't gotten the new card yet to switch to.
I got all the money they'd charged back but it was still a stressful time because I didn't have any other card at the time.
I agree with you for US customers (and probably most of Western Europe), but situation in many countries in the rest of the world is different. Those consumers may not all be SOL in case of such fraud, but the recovery, if available, is much more involved than a single call / web action it takes in the US. My 2c.
Lots of people (especially in Europe) only have debit cards and no credit cards. And those often have worse consumer protection or in the best case you're still out your money for a long time during the dispute.
How is it different from PayPal though? In either case you have to wait for the dispute to clear in your favour before being able to get your money back.
Until they arbitrarily ban your consumer account too, they just 'permanently limited' an old account I used on occasion to buy things on ebay without any problems that I haven't touched in a few months. No 3rd party access that I can tell so hilariously banned at random.
For me as a consumer if Paypal is the only option you will probably have lost me as a customer. I hate navigating through their mess of an UI and I also hate how they do not respect that I want 3D Secure on all credit card transactions (but this is more the fault of my bank which should deny their transactions).
Conversely, for me as a customer, if a vendor offers no option but PayPal then I refuse to do business there. Ethical considerations aside, I choose not to tie myself to yet another online service just to provide a layer of abstraction over the credit cards and bank accounts I already have.
As a business, PayPal can be helpful that way too. But the point is, it shouldn't be the ONLY processor. Credit card input, via another processor, should always be an option.
This is BS. It matters very much to me as a customer of a financial services provider what sort of company I am keeping.
For example, I don't want my bank to provide services to organised crime because I both feel that would be morally wrong and I think it'd open the bank's staff to influences that aren't in the best interests of other customers.
Also, your argument isn't with PayPal; it's with the entire FS industry.
Organized crime is illegal and content farms are not, so this is a terrible example.
A better example might be highly religious community not wanting their bank to do business with companies focused on the gay and lesbian community.
This is a good example because: it is not illegal for a company to cater to the gay and lesbian community, it is not illegal to discriminate against gay and lesbian people in many states, and there are communities that would dislike this sort of company.
Your example is irrelevant as that’s a civil rights issue.
Either way, I gave the example of organised crime not in an attempt for people to take it as a literal suggestion of equivalence but to argue against the idea that a financial institution has no place being choosey about its customers.
It's not being choosey to not support organized crime, because it's illegal; the choice has been made through the law. It IS choosey to chose not to support an organization that's doing something legal that you don't like.
Founder here. We're not processing SaaS through PayPal, as mentioned in the post:
> The most interesting thing is that we’ve moved away from PayPal in the last two years and have only been receiving some minor payments and paying for a few online services.
We've stopped using PayPal for our SaaS business a few years ago.
Lots of people would simply think "It won't happen to me" and move on. But this is just another example that if it can happen to people using Paypal for years, it can happen to you too. It's better to offer other payment channels to customers so you can diversify. And if possible, move away from Paypal entirely.
You got banned for running a file sharing site, I’m afraid. PayPal’s terms require all file sharing sites to seek explicit approval before using the service, no exceptions.
I mean... its not even hidden in fine print or written in legalese or anything, they are pretty clear about "Activities Requiring Approval" in readable plain language.
When we created an account, there was no such clause. We discovered that it was added later. When they pointed it out that it violates their policy, I found it surprising. At the very minimum, they should have allowed us to get permission and if denied, then at least return us 30% of our revenue at that time which was in the account. They did neither. They shut down the account and did not even answer back to our emails. I would never trust Paypal again after that bad experience.
Even though I absolutely agree that you shouldn't put all your eggs in one basket, it is ultimately the market that could drive you towards a dependency situation.
I have had a couple of customers for which I set up both PP and another PSP (such as stripe). Then it turned out that about 90% of their transactions came from PP.
So even if I set up 10 different PSPs for them, if PP bans them, they will still be out of business.
That doesn't necessarily follow. It shows that users prefer PayPal, but not that they wouldn't use alternatives if PayPal's not available. If they really want to know the answer, they could do an A/B test with missing PayPal and see how many people drop out without it.
Also, was PP the default/first payment option by any chance?
>If they really want to know the answer, they could do an A/B test with missing PayPal and see how many people drop out without it.
I've done these tests, repeatedly; removing the PayPal payments option consistently leads to a statistically significant increase in cart abandonment. Some customers strongly prefer PayPal (especially on unfamiliar sites) and some don't have a credit card.
If your customers are from Europe, it's not some, but most customers that don't have a credit card. Credit cards are uncommon here (probably hard to imagine if you are from USA).
Online payments are a fragmented mess in Europe. Most countries have their own preferred online payment method (like iDEAL or bancontact), Paypal is basically the only reliable method that works everywhere.
... But they have a debit card that work on the internet (and probably with mandatory 3D secure to boot). 90% of users in France are like that.
Paypal is because it's safe. I don't give that website I don't know anything, I give paypal a send order. Vastly different; I know paypal, I know they don't screw with the buyer in case an issue happen, and I know they're a bank here and can't drain my funds.
I hate them when I'm the seller, but my personnal experience with them as a buyer makes it clear as day why I need to deal with them.
This is not a great approximation. In the UK you can assume almost every person has a payment card that works on the internet (debit and/or credit). In Poland on the other hand, the number of systems gets silly (https://m.lot.com/us/en/payment-methods-on-lotcom)
In Poland you can assume almost everyone has a debit card that works on-line.
WRT. your number of paying systems, note that there's exactly one Polish payment system there - DotPay. Every other system there is to support other countries (not surprising, given that you've picked up the site of the national airline).
There are outliers with a strong preference for cash, despite either owning a card and/or having almost no restrictions on acquiring one e.g. Switzerland is neither an EU nor EEA member, but is part of the single market; the Swiss seem to prefer cash over cards primarily for privacy reasons.
Credit / Debit cards are the same thing online. We, as is USA people, use the terms interchangeable often. I'm going to guess that most EU people have some form of banking card. So we will continue to assume that people have a form of payment other than cash.
No, they are not. With a credit card you can pay by entering the card number, expiry date and CVC. With debit card you can't do that. The payment must go through your bank. It's a completely different payment flow.
It depends on the debit card. I have both Visa Electron and Maestro, and they have 16 digits, CVV number and they behave like a credit card with 3D Secure when doing online purchases, while taking the money from the account right away.
There's also multifunction credit and debit cards (Mastercard and Maestro, or the Visa equivalent). They are branded like credit cards with a tiny Maestro logo on their backside, so I had to explain and ask the cashier in a grocery store in Amsterdam to try it as it would magically work as a debit card.
No idea what you are talking about. I have a VISA debit card and I pay the same way that I pay with my credit card. It is not a different payment flow on my end.
Not only do both have completely different payment processing workflows, but there's another key takeaway:
With a credit card the money going out is the issuer's. If you have a compliant or need to handle a charge, it's not your neck on the line.
With debit? Once the cash is pulled it's pulled. Yes they have protections as well, but while you're fighting with your bank to get your money back it's gone.
Sure. But it still doesn't necessarily mean "PP bans them, they will still be out of business". It may. But I disagree with the jumping to conclusions unless it's been tested (and it doesn't sound like OP did)
Personal anecdote: I often will prefer PP as a consumer out of laziness. Its quick and easy and most sites support it, but if PP isn't an option, then I'll happily use a different method.
Then if you're an indie musician on Bandcamp they give you no option but to use PayPal however if you're not on Bandcamp nobody is going to buy your music directly from your website anymore and for underground acts Bandcamp is better than Spotify but the whole forced use of PayPal there meant for a decade I couldn't use Bandcamp until I got a new PayPal account after they killed the account I had had for 15 years.
Most indie acts here sign up with a tiny indie record label who handles the profiles on bandcamp for them and deals with paypal bs. People will still buy vinyl and merch from your own site.
I thought a dog whistle in current popular use was a headline or sentence meant to imply something hidden, usually racist/sexist/other-ist. Like the phrase 'those people' or something like that.
How is this headline implying anything other than what it says, or is my interpretation of that phrase wrong?
A real "dog whistle" is used to get the attention of the dogs and tell them to do something.
A dog whistle headline would therefore be attempting to round up a bunch of people to fight their fight for them.
And had they been doing good, wholesome things at their company instead of creating spam tools, it probably would have worked. Unfortunately for them, people are starting to learn to dig a little deeper before getting out the pitchforks.
A real dog whistle is heard by dogs but not people so the phrase is about things addressing a specific subset of the audience in some un-obvious and underhanded way. This headline doesn't - simply misrepresenting yourself by omission or trying to enlist a paypal ragemob to your cause is not a 'dog whistle'.
As ar as I know PayPal in Europe is a bank with a Luxembourg banking license.
I'm wondering if they could pull the same shitty here. Considering that any bank, which freezes your account, doesn't provide you with any reason and actually refuses to talk to you may draw quite some ire from their respecive regulator.
Which is exactly what banks do if they decide someone is on the terrorism blacklist, or you are "risky" - often on absurdly weak grounds. Mistaken identity or not, guilty or not, it seems to leave the customers with no options. Freezing funds only seems to happen with terrorism related closures, but it does happen, and the bank is judge, jury and executioner.
Not quite the same thing. From the article you link to :
You’ve been a loyal customer for years, but then a letter arrives saying your bank has decided it will shut your accounts, and you will have to take your business elsewhere. No reason is given and the decision is final.
So, yeah; a bank can get rid of you for any and no reason at all. But they can't just keep your money and stop talking to you.
That's nothing really new. Ask any American citizen trying to open an account abroad. They may be having an unusual hard time thanks to FATCA.[1]
Banks only do this because the Bank Secrecy Act/USA PATRIOT Act makes it exceedingly risky for them not to. In addition to the bank's regulatory risk there's also potential personal liability for the individual serving as Anti-Money Laundering Officer. That strongly incentivizes an AML program that's overly cautious.
It might seem like the bank is "judge, jury, and executioner" but that's really not the case. In addition to freezing your funds the bank has to alert the federal government of the account. The government then decides whether to move forward and try to seize the funds or whether the bank can release them to the account owner.
I dislike PayPal as much as the next guy, but I don't get this:
> PayPal will also stop letting you refund the percent they take out so you will be holding the bag when you refund a customer.
When I refund a customer, I wouldn't expect the power company to refund the electricity spent serving that customer, and I wouldn't expect UPS/FedEx to refund the delivery of that customer's package. Why should PayPal refund the costs of the customer's transaction ?
It's common practice within the payment industry. When a refund is issued for a credit card transaction, the interchange fees are (or at least, should be) refunded to the merchant.
This will be particularly true for a large payment processor like PayPal, since they will have a lot of negotiating power when it comes to the transaction/interchange fees they pay.
Also PayPal is not alone in this practice. Many credit card processors when using bundled and fixed fee pricing also don't return transaction fees when you issue a refund. For example Stripe.
A good reason to get interchange plus pricing from your CC processor.
I've had so many bad experiences with PayPal. (One of them was having the money in a checkout-through-Paypal transaction frozen for no reason. They insisted that they would keep my money and not pass it on to the vendor if I didn't set things straight by sending them a FAX; no other mode of communication accepted).
Even as a consumer I now no longer transact business through PayPal if it is at all avoidable. If I want to buy something from an online vendor that only offers PayPal, I will go to great lengths to find another vendor that offers a payment mechanism other than PayPal.
Others have said it, but it bears repeating.
If you build on someone else's platform for free, or cheaply, you are the product not the customer. At best, you are both product and a minor customer.
Paypal has a history of doing this sort of thing. I've seen articles about it with Google services as well.
This is one of the many reasons why I suggest using open standards. You could accept bitcoin or eth for payment, but that is possibly too impractical for some customer bases. There are alternative payment gateways to Paypal, but many of them have allegedly done similar things, including Stripe.
Here is an article with advice on selecting a payment gateway for your startup, from the folks at Chargify.
Given the amount of horror stories about PayPal, "it won't happen to me" seems like an incredibly risky stance. Of course there are many, many people using PayPal without issue, but these stories show that it can happen to anyone at any time for no reason, no matter how long they've been happily using PP.
Most of the real horror stories about PayPal are about companies that are doing something that PayPal wouldn't want to be associated with, such as Spam, Porn, or filesharing. some of the stuff is already in their ToS, but quite a few of the stories came from before they had it explicitly in their ToS.
So I'm not surprised that people continue to think "It won't happen to me" if they don't think they're doing anything "wrong".
"Most" horror stories, sure, but not all. I've heard more than enough where the cause seems to be that somebody did a chargeback or other things that were out of control of the company in question. There was one particular case a few years ago, where a sudden burst in volume seems to have triggered it.
Bottom line is, its a huge risk. I wouldn't want to base my business on such a significant risk and at least have a fallback in place.
Only after having a law firm, who we knew through an advisor contact, send PayPal’s legal department a letter did they release our PayPal balance funds back to us.
We were banned without explanation after being a customer for 8+ years and had our PayPal balance (not yet transferred to a bank) frozen.
We left a high balance with PayPal because at the time the interest rate they provided was high.
No explanation was given at any point and the whole process took about 3 months to get our own funds back that we needed to operate the business.
That's an interesting take on the ol' Ponzi scheme. Take in money, then ban people for violating terms of service. Pay out only the very few who would be truly a problem.
Given that there is pile on of negative comments about Paypal already I figured it be nice to share that I have never had a single issue with PayPal in about 15-20 years or so.
Neither on my private account nor business accounts.
Not even with the paypal account for my burning man camp.
Having worked at PayPal in the past (and then Braintree), both companies are a total mess internally. Basically nobody knows exactly how the system works, and every new "feature" is just a hack upon the existing system.
In many ways, I'm surprised either company still functions without massive blackouts all the time. That's quite the testament to the founders' code, I guess.
I would guess that a clientele with spammers and black hat SEO's could have something to do with it. Paypal network graphs probably think they're top of some scheme.
I can't imagine anyone is surprised by this. I've been hearing horror stories about PayPal since the mid 2000s. They're a garbage company, and the only reason people don't use something else is because they're a veritable monopoly.
I lost trust in Paypal after one of the most credible, respectable organizations I knew was on the verge of going out-of-business. A lot of people made donations, myself included. Paypal froze and wouldn't release those donations.
I would absolutely never, ever, ever run a business which relied on Paypal.
As a shopper, it works okay, though. I got scammed once, and Paypal did nothing, but the risk isn't very high. It was probably twenty bucks or something, but if it were more, I could raise it with my credit card company.
I stopped using PayPal after they froze 600k on the Minecraft devs account nearly putting company out of business - you can't imagine the worse advertisement for your service
This is a known risk with PayPal... so many similar stories.
However, it's also a risk with Google and Facebook. I'm not sure if Apple and Microsoft are as bad.
One must assume that some automated systems are involved in these terminations because no reasonable human would slam the door and refuse any attempts of discussion or reconciliation.
Short of getting some significant press (here on HN where there are staff from each of these companies), one's chances of getting a termination resolved reasonably is practically nil.
The problem I see is that these companies have become so large and have acquired such relative monopoly positions that they can afford to lose/screw some customers because it's cheaper expense-wise than managing human staff to resolve these issues. That's not reasonable.
PayPal has much less of a monopoly position than Google, Facebook, and Apple do (because of the two app stores and the center-of-all-social). We know better than the use or depend on PayPal, but we have no choice but to depend on Google (Android) and Apple.
I really was hoping that React Native and other webbish technologies would kill the mobile "app" system and return the power to the people who actually create things. So far it doesn't seem to be working that way.
I knew someone who worked as CS rep in 2014 at PayPal, in Ireland. He told me that if people make too many claims, they'd just close the account.
In my nearly 20 years of usage of PayPal, I've a 100% success rate on all of my claims (a few, I suppose about 4 or so). I guess my buy:claim ratio is in good standing.
We use PayPal as “another” way to pay and withdraw money either weekly or when it reaches a very low set amount. It’s kind of a hassle, but if this happens at least we don’t have to worry about money we already earned.
In general, PayPal has been losing a lot of traction over the years, and is one of the reasons eBay spun them out a while back. Lack of “decent” support and a week to reply to a critical email just isn’t acceptable in 2019 + the UI really isn’t that user friendly when you look at Square Cash or Apple Pay in iMessage.
I won’t be surprised if they don’t exist within the next five years. Sure, they’re still integrated into a lot of things, but one competition becoming much bigger can change all of that quickly.
PayPal suspended my account once when I paid $5 to the NoScript guy. I called, they wouldn't tell me why they suspended my account because "that would allow people to get around the rules", and they gave me zero warning in email or anything. Next time I went to use the account, it was frozen.
I don't remember how/why/when it was unsuspended, or maybe I just opened a new one.
Not telling people what rules they supposedly broke is unreasonable, even if it lets bad guys figure out how to get around them.
I lost complete trust in PayPal after my account was compromised AFTER i set up two-factor authentication (annoying to this day, they still do not support U2F. I got them to credit me some of the money back, but after cancelling my cards, they refuse to close my account unless I add a new funding source so they can send the money to me. They are too stupid to give me a deadlock letter I can take to the ombudsman. I am left out of pocket because I have no way to get my money back.
> The most interesting thing is that we’ve moved away from PayPal in the last two years and have only been receiving some minor payments and paying for a few online services.
Albeit it would be really, really nice to do so, there is absolutely no incentive for a payment provider to have someone look into a case like this when the salary of that person (for the time spent on the case) exceeds the revenue made with the customer.
> We were lucky that we have moved away from PayPal for actual business revenue
Maybe that’s the real reason for the ban? PayPal might not like people not being completely reliant on PayPal, so PayPal might tend to ban those who don’t use PayPal for everything, hoping to make all potential non-PayPal users go out of business before they become large enough to be visible? Of course, this is all paranoid speculations.
What the hell? “You can’t remove your credit card or bank information from PayPal”. So even after they closed your account they still want access to your account?
I haven’t thought about PayPal in years, but I had forgotten about this. When I did use it, I had a separate bank account, immediately transferred from money from Paypsl to the account and then transferred the money from the linked account to another account.
And that's why we need financial alternatives. Alternatives where third-parties can't unilaterally decide to freeze your account, disrupting your professional and personal financial flows. Cryptocurrencies solve this specific problem, because users are in control of the cryptographic keys therefore they authorize themselves the transactions without a third party having to be involved.
I'm not sure if that's what PayPal does, but whenever I saw fraud policies in companies, they never provided specific rules violated and for a good reason. If you know the exact rule you're breaking, you know what else to change for your scam to work. Pretty much the same reason you get "authentication failed" rather than "your password's 2nd letter didn't match".
But the problem here is that paypal doesn't tell you if you're business is "ban-able" ahead of time. They have a list, and terms of services, but even if you followed them to the letter, they can still ban you, and not provide a reason.
This isn't a good foundation for a business to depend on, so i would completely avoid having paypal as the only option.
This same thing happened to my personal Paypal account out of no where one morning. I hadn't used it in over a month. My mother's personal Paypal account (lives in a different state) was also banned at the exact same time. She hadn't used it in months. We still have no idea what triggered it.
I was banned from PayPal after 11 years - because my account was initially registered when I was under 18, which is a breach of ToS. They explicitly forbid me to register again. It really came out of the blue from nowhere.
Luckily for me I don't rely on PayPal so I put it in the "good riddance" category.
The internet is literally saturated with Paypal horror stories. Why do we still see so many tears so often? How many bad reviews does a business like Paypal has to have before people start learning from the mistakes of others and not trust them with their business?
LPT: Always withdraw your money from PayPal. If PayPal refunds your customer and your balance goes to negative, no worries because the collection PayPal sends you to is not connected to your social.
Paypal doesn't satisfy the Japanese regulation by money transfer law(資金決済法) which protect users from malicious money transfer service and alike. That tells something about their moral.
Does PayPal still require you to arbitrate in California? This is why auto-sweep is so useful. At most, they can only have 3 business days of your money.
I'm having security issues with PayPal payments(customers making fake chargeback in an attempt to get things for free). Stripe seems like a better choice and I plan to switch, but PayPal is well known and trusted by buyers.
i've always assumed paypal was software and hence why they were so profitable -- those decisions, appeal processes, everything is all automated. you're sending emails complaining to... the email server.
actually thats a growing business (bots to handle your customer service) which simply programmatically enforce a contract. it's terrifying.
My question to the op is: Where were you for the few years of posts when other people wrote the same thing, yet you stuck with PayPal?
It feels like people don’t want to actively move their payments processor and no amount of blog warnings are going to change that. The one thing I will say is that the growing amount of responses of teams that have similar experiences should be worrying to PayPal.
PayPal spends a lot of money on lawyers to make sure that no state or country considers them a bank. The reason is so they can avoid banking regulations.
If they were subject to regulations, they wouldn’t be able to freeze your account without warning, nor hold your money for 180 days.
As they say internally: “we don’t make money by letting people have it back”.
So from what I can gather, niteo is a SAAS. For Paypal to ban them in what is a pretty non controversial business, they must have commited one of the following offenses:
1)Breach this user agreement, the PayPal Acceptable Use Policy, the Commercial Entity Agreements (if they apply to you), the PayPal Cash and PayPal Cash Plus Account Terms and Conditions (if it applies to you), or any other agreement between you and PayPal;
2)Violate any law, statute, ordinance, or regulation (for example, those governing financial services, consumer protections, unfair competition, anti-discrimination or false advertising);
3)Infringe PayPal's or any third party's copyright, patent, trademark, trade secret or other intellectual property rights, or rights of publicity or privacy;
4)Sell counterfeit goods;
5)Act in a manner that is defamatory, trade libelous, threatening or harassing;
6)Provide false, inaccurate or misleading information;
7)Send or receive what we reasonably believe to be potentially fraudulent funds;
8)Refuse to cooperate in an investigation or provide confirmation of your identity or any information you provide to us;
9)Attempt to double dip during the course of a dispute by receiving or attempting to receive funds from both PayPal and the seller, bank or card issuer for the same transaction;
10)Control an account that is linked to another account that has engaged in any of these restricted activities;
11)Conduct your business or use the PayPal services in a manner that results in or may result in;
-complaints;
-requests by buyers (either filed with us or card issuers) to invalidate payments made to you;
-fees, fines, penalties or other liability or losses to PayPal, other PayPal customers, third parties or you;
12)Use your PayPal account or the PayPal services in a manner that PayPal, Visa, MasterCard, American Express, Discover or any other electronic funds transfer network reasonably believes to be an abuse of the card system or a violation of card association or network rules;
13)Allow your PayPal account to have a negative balance;
14) Provide yourself a cash advance from your credit card (or help others to do so);
15)Access the PayPal services from a country that is not included on PayPal's permitted countries list;
16)Take any action that imposes an unreasonable or disproportionately large load on our websites, software, systems (including any networks and servers used to provide any of the PayPal services) operated by us or on our behalf or the PayPal services;
17)Facilitate any viruses, trojan horses, malware, worms or other computer programming routines that attempts to or may damage, disrupt, corrupt, misuse, detrimentally interfere with, surreptitiously intercept or expropriate, or gain unauthorized access to any system, data, information or PayPal services;
Use an anonymizing proxy; use any robot, spider, other automatic device, or manual process to monitor or copy our websites without our prior written permission; or use any device, software or routine to bypass our robot exclusion headers;
18)Interfere or disrupt or attempt to interfere with or disrupt our websites, software, systems (including any networks and servers used to provide any of the PayPal services) operated by us or on our behalf, any of the PayPal services or other users’ use of any of the PayPal services;
19)Take any action that may cause us to lose any of the services from our Internet service providers, payment processors, or other suppliers or service providers;
20)Use the PayPal services to test credit card behaviors;
21)Circumvent any PayPal policy or determinations about your PayPal account such as temporary or indefinite suspensions or other account holds, limitations or restrictions, including, but not limited to, engaging in the following actions: attempting to open new or additional PayPal account(s) when an account has a negative balance or has been restricted, suspended or otherwise limited; opening new or additional PayPal accounts using information that is not your own (e.g. name, address, email address, etc.); or using someone else’s PayPal account; or
Harass and/or threaten our employees, agents, or other users.
These terms run the gamut from being bad with money (negative balance) to criminal. That is a wide swath of terms to action against you or your business, and leave plenty of room for arbitrary ban hammers to be wielded. I can agree that there are way better and safer ways to accept payments these days, and it seems PayPal hangs on with name recognition, and not by merit of it being the best choice.
Their company is an Eastern European 'SaaS' company whose main product automates blog network deployments so marketers can run campaigns that spam Google's ranking algorithm. SMH. You got banned because you're a spamware company.
Founder here. We're not processing our "spamware" through PayPal, as mentioned in the post:
> The most interesting thing is that we’ve moved away from PayPal in the last two years and have only been receiving some minor payments and paying for a few online services.
We've stopped using PayPal for our SaaS business a few years ago.
> 5)Act in a manner that is defamatory, trade libelous, threatening or harassing;
Does that include criticism? Companies that try to ban criticism against them are irredeemably toxic.
In general, I'd like a payment provider to just be neutral infrastructure. With cash, I can just pay someone, and then they'll have the money, and nobody can freeze or ban that. Although if it's crime involved in some way, of course the police can still act against us. Similarly, if I've got a bank account and the other person has a bank account, we can transfer money. The bank may check for potential fraud, and if they think they detect it, I'd expect them to inform the police, rather than revoke my bank account without warning and on no real evidence.
PayPal wants way too much control over what we do with our money or even in our life outside of our financial transactions. That's not acceptable.
A few of these points are entirely reasonable, but others are not, or are things they should report to the police, rather than act on their own.
This is a great example why need ctyptocurrencies so we could just pay without relying on any 3rd party. People who run around yelling ctyptocurrencies are for drugs only should think about this.
My wife got kicked off PayPal in 2005 because of a password problem. Maybe she could have reactivated it by sending a fax, she never did. Since then she asks me to buy stuff on ebay.
HN is traditionally anti crypto, but just want to point out that literally no one in this world can stop you accepting Bitcoin payments. That's the true power of decentralization.
As a consumer, I would only pay with Bitcoin if it was something that I really really wanted. Usually there are competitors that will accept credit cards, so I would prefer them. Bitcoin offers nothing to me that I value.
One potential benefit (which merchants so far don't show you) is that cryptos is free for the merchants to accept. Credit cards can take a massive chunk out of your profit and they're open to charge back fraud.
Cryptocurrencies remove those fees and the risk for charge back fraud, so the merchant earns more when you pay them with cryptos. To incentivize this they could charge you less than if you paid with a credit card.
According to [1] right now, if you want your bitcoin transaction to have a good chance of being in the next block, the fee is 18,450 satoshis, i.e. $1.11
LOL, "broken".
However, unlike you I am not trying to advertize any cryptocurrency here. Only wanted to talk about decentralized solutions. And bcash is exactly an example of a NOT decentralized cryptocurrency.
Anyway, I don't want to argue with you. Have fun with your s*coin.
> Presumably, displaying a bitcoin address isn't illegal, and you are not in control of who sends you coins.
Both parts of your statement are naive and wrong.
Soliciting payment in any currency other than the national currency is illegal. No one is going to be fooled by claims of "oh I just put our corporate bitcoin address up for...uh...personal aesthetics; we weren't actually suggesting customers can pay us that way".
In any case, where is the documentation for the annual audit? When the tax department looks at the corporate bank statements, what do you think they'll see?
I own a company here, we are required by law to hire an external auditing agency. Do you think the auditing agency is going to, what?, just lie to the government for me when it is obvious to them I'm accepting payments in bitcoin since there is no documentation for local currency payments?
The tax departments come to our office every year and goes over the books. They are looking for tax evasion, money laundering, and so on. But it would be pretty trivial to spot if someone is getting paid in Bitcoin.
I'm trying to imagine how you think the conversation would go when they audit the company Bitcoin account, "Oh, gee, some bitcoin got transferred to the company account. Dunno how THAT happened! Ha ha. Guess it was just a DONATION! We were definitely NOT breaking the law! Don't look at our invoicing system that shows we marked that as a payment received for order #81351."
Just like nobody can _stop_ you from murdering another person or demanding a bribe or any number of terrible things.
I don't understand the point of your vehement sophistry. Everyone understands how societies work. There are laws. People get punished after the fact for transgressing them. Cryptocurrency is not somehow magically exempt from that reality.
The person you replied to said that cryptocurrencies are illegal where they are. You said nobody can stop you from accepting cryptocurrencies. Just like nobody can stop you from doing any other illegal thing, like not paying your taxes or taking drugs. Sure, you can do these things and you may even get away with it, but if you get caught, you get fines or jail time or whatnot. If cryptocurrencies are illegal where the person you responded to is, sure they technically can accept cryptocurrencies, but if they get caught, its no different than getting caught doing any other illegal activity. You might say "well, its hard to get caught!" but you could say the same thing about laundering money, evading taxes or buying drugs, yet people get caught doing these things all the time.
"Crypto" should not be exclusive to mean "cryptography" however it is undesirable to reuse a shortening within the same field. Which is true in this example given "cryptocurrency" relies on "cryptography". Whoever came up with the term "crypto" for "cryptocurrency" did not think it through enough. Especially on any technical website, the usage of the newer and less relevant [1] shortening is unnecessary. TL;DR simply use the term cryptocurrency if you're discussing cryptocurrency.
[1] Yes, since cryptocurrency depends on strong cryptography. If the latter is broken, cryptocurrency is also, but so it the entire Internet.
I agree that they it shouldn't be used if it's possible to mix them up (crypto shouldn't be used to mean cryptography either if it's possible to mix it up with cryptocurrencies). This was not such an instance.
The English language is ever changing, we re-purpose and come up with new words all the time. In daily use "cryptocurrencies" is long to type and say, so when the context is clear it's easier to just use "crypto".
Note: I actually try to use "cryptocurrencies" too.
> (crypto shouldn't be used to mean cryptography either if it's possible to mix it up with cryptocurrencies)
> The English language is ever changing, we re-purpose and come up with new words all the time.
Except that my argument isn't that the old meaning is older (ie. no appeal to tradition, nor is appeal to novelty valid); it is that the older meaning is:
1) Far more important than the new one, and
2) Far broader, widely available and adopted (NOT a niche)
3) Is a dependency for the new one.
Those are 3 very good reasons why using crypto for cryptocurrency doesn't make sense, except perhaps if you're talking within the circles of that niche (hint: not here).
> In daily use "cryptocurrencies" is long to type and say, so when the context is clear it's easier to just use "crypto".
Use an autocomplete to make 'crypto' change to 'cryptocurrency'.
It is obvious to you. However the practice of using that abbreviation for that term is widespread, and is used wrongly and is being confusing all too often.
Browsers? Not necessarily browsers. iOS and macOS have native support for that. Not sure about other OSes but hey it isn't me who's too lazy to type what they mean.
An opinionated commenter? An? You're assuming I'm alone in this. The amount of upvotes on that comment alone suggests otherwise.
I still need to pay for food and rent/mortgage between now and then though. No point in comparing BTC acceptability in 10 years time if I can’t support myself until that point in time.
Edit: For me converting BTC in funds I can use to buy food (not just for myself but also my kitty), pay my bills (rent, electricity, gas, water, internet, mobile, AWS) is a pain in the ass.
Sure there are online stores they will accept bitcoin, but not my local supermarket, sure some isp’s will accept butcoin but then I’m limiting my options of who I can use.
With PayPal (yes I hate them just as much as everyone else) I can get an invoice paid and have the funds in my bank account seconds later.
I like the idea of a decentralised Payment process. But atm it’s not for me for a number of reasons not just acceptability.
Never said you should give up anything. Only that things take time. In 2009 you couldn't buy anything with cryptocurrencies. Today you not only can buy many things but in many countries (and regimes!) cryptocurrencies are the only way to preserve a little of what's left from previous wealth. Think Venezuela.
Yeah, I'm probably one of the people that you are describing.
Crypto-money does not work. I would love if it worked, I also would love if somebody learned how to reverse entropy growth or got time travel working in some way. Yet, none of those work. (And yes, crypto-money isn't on the same level of those two, maybe some day somebody will manage to make it work, if so, great!)
Be sure that your label of "anti crypto" is much more a tag over you than the large HN crowd.
I'm not saying paypal is blameless (especially since their customer service is broken and proving yourself innocent is difficult) but their behavior is driven by government regulation against fraud and shady businesses.
It's easy to say use decentralized solutions, like Bitcoin but then customers are more susceptible to fraud(no chargebacks for example)
Don't rely on PayPal. They're less professional than a kid selling juice next to the road.
There are no grace periods with PayPal to give you time to move to another service.
There is never more than a generic reason and stonewalling when they terminate you.
And yes, their decision is always final.
They'll happily terminate your only source of income on a friday afternoon, freeze your funds, then laugh at you as you scramble to get an alternative up and running.
Perhaps their decision to close your account is always final, but don't lose all hope after having your funds frozen. I had 25-100k frozen (can't remember how much), and picked up the phone and called them and it was unfrozen within 48 hours.
Paypal is god-awful though and should be used as little as possible.
Right, if someone says alright, put your money in this box. But then they take the box and close it and say no, you can't open it, Sorry. What does that sound more like? Frozen, or stolen?
The already have the money. The notion that it's somehow "in your account" is just PayPal fiction - especially if they deny you access to "your account" indefinitely.
(Supposedly they don't operate fractional reserve, which means that Peter Thiel pinky-promises not to touch the principle. But it's still in PayPal commercial investment vehicles, earning away.)
But with PayPal, that’s not the case. Your “money” in your account at PayPal is just a number in a table. The actual money, however, is in PayPal’s bank account where it is earning PayPal interest and investment opportunities.
To be fair, anything other than M0 (physical cash) is just a number in a table. Banking regulations that ensure ease of access are the only reason other "numbers in tables" are considered part of the money supply.
The "money" in your Paypal account isn't "your cash". As you say, Paypal isn't a bank. Your Paypal balance is Paypal's cash, which it allows you to use for purchasing things with Paypal, or to transfer to your own bank account. But in the meantime, it's Paypal's money, which Paypal keeps in its own bank or investment vehicle, earning interest for Paypal.
It was a bad analogy. A better one would be, you send a friend to pick up some money for you, and when the friend returns, they suddenly refuse to give you the money.
PayPal has no obligation to keep your money in a secure trust, so essentially your balance is just a recorded number. The actual money is being invested. They keep a small pool of money in reserve and in easily liquifiable investments to cover withdrawals of course.
PayPay calls it "frozen" because that is the term that actual regulated banks use when they temporarily deny access to an account because of a government order or a fraud investigation.
It is to PayPal's benefit to use terminology that makes them look like a bank.
There are lots of horror stories about Paypal, but there is an obvious problem, nobody is going out of their way to write a blog post about how Paypal always worked for them. You can find pretty much the same horror stories about any Bank or credit card company.
No, you cannot. Federal law sets out how all banking must be done. There is always reciprocity. Since PayPal isn't regulated as a bank there is no directly applicable federal law. Instead, it's regulated on a state-by-state basis and the majority of the time you'd be hard pressed to figure out exactly who within your state you would have to file a complaint with. PayPal wants it both ways. It wants to act like a bank when it's good for them, but avoid all of the regulations. It's the worst of both worlds for the customer.
Anecdotally speaking, I know multiple people that have had funds frozen by PayPal after months or years of use. I know exactly nobody that has had a bank account frozen.
I don't really believe this myself, but HN just loves it if you defend corporations doing evil shit. They are all gullible fools on here and I just had some fun manipulating them.
I too, wish governments would get their shit together and regulate them. The corrupt governments (especially US) of today wouldn't even regulate regular banks, quite the opposite.
Yes, you can. Not all of these may be great examples, but the fact that this many were on the first page of a google search makes it pretty clear that this issue isn't isolated to paypal
Notice how almost all of those cite "suspected fraud"? The bank will always be paranoid about fraud and if you do anything to freak them out, you're done. They're worse than cats when it comes to flipping out and skittering away. In the cases where resolutions are cited the customer receives their money back. This is due to federal laws regarding banking.
Contrast this with PayPal who needs no reason to freeze your funds and will hold them as long as they damn well please please federal banking law (for the most part) does not apply to them.
This even though they're regulated as a bank nearly everywhere else in the world. But then again this is the US and when do we ever do anything that makes sense?
I used to sell some automotive accessories on eBay. Approx 20-30 items a month. Every time I had to call or email Paypal's customer service, I had a good experience. Much, MUCH better than dealing with eBay's. Even though the complaint review process didn't always go my way, it seemed thorough and fair.
> You can find pretty much the same horror stories about any Bank or credit card company.
I don't know if you can in the US, but not in my country. A bank working like paypal would be in trouble, and quickly. Closing accounts without prior notice? Deciding unilaterally to freeze assets? A bank can't do that unless ordered by a judge. If they would, they'll be on the receiving end of a court order and will get a call from the regulator's office that they really don't like to hear from.
Paypal is shady, and there's a reason they run their operation from Luxembourg, one of the top places to do shady financial business in Europe.
I don't know the exact law in the US, but it is similar.
A bank can freeze your account for suspected fraud, but they will try everything they can to contact you soon after to verify. They know that regulators will come after them if they don't have good customer service around this (plus good customer service can turn this into a customer loyalty win - customers like knowing their bank is watching out for them as long as there is only minor inconvenience).
Bank failure is sometimes a thing though. If the bank fails they probably don't have enough money to give everybody theirs back. You are insured for some amount ($250,000 last I checked) so the average person doesn't need to worry, but if you have more than that in your account you are out of luck. This would be once case where you can't access your money for a few weeks. You should have an emergency account with a second bank just in case - but this is a rare problem. This problem applies to all countries in some way, though the exact way it goes down can change.
I think every other case would be ordered by a judge. Real banks are regulated carefully. People have learned over the years of banking that they can be trouble if they are badly run and taken steps.
> I don't know if you can in the US, but not in my country. A bank working like paypal would be in trouble, and quickly. Closing accounts without prior notice? Deciding unilaterally to freeze assets? A bank can't do that unless ordered by a judge.
A bank would absolutely be expected to freeze an account if it suspected illegal activity as part of its AML obligations - filing a SAR would come later.
A judge wouldn't be involved until later on in the process to avoid tipping a potential criminal off and allowing them to move the money.
Neither should accounts like this necessarily be taken at face value - trying to apply social pressure through forums and social media is standard social engineering.
> A bank would absolutely be expected to freeze an account if it suspected illegal activity as part of its AML obligations - filing a SAR would come later.
And this would take months, and the bank wouldn't be able to respond to inquiries?
> Neither should accounts like this necessarily be taken at face value - trying to apply social pressure through forums and social media is standard social engineering.
Certainly. I tend to lean towards believing them because I've witnessed a similar case with PayPal that nearly ruined the company of a friend. It got resolved after all, but it took around eight months, lawyers and our local equivalent of a DA to get involved before PP realized they might not want to pursue it any further and released the assets. That doesn't mean that everyone of these stories is accurate, of course, but it indicates to me that not all is well in the PP HQ.
> And this would take months, and the bank wouldn't be able to respond to inquiries?
Yes. Legally they're not allowed to give any more information other than that the account has been frozen. Money launderers would be quite relaxed if they knew they just had to wait six months and they could take the money out.
> "Being concerned in arrangements which the defendant knows or suspects will facilitate money laundering is also an offence. To put it crudely, if Dave suspects that the money in John's account might be dirty then the Bank cannot allow John to move or access the money and he must file a report to the NCA." [2]
Early in LWN's history our credit card acquirer decided that our transactions were "suspicious". They not only cut us off...they reached into our bank account and pulled back $30,000 from there. That was a lot of money to us back then, and very nearly killed the entire operation.
Ironically, the thing that saved us was that the PayPal revenue stream still worked just fine.
This is the biggest reason I don't suggest Paypal to anyone. The fact that you can lose $5k+ because of someone on their end with no fraud issues and legitimate sales (which they can easily verify) is theft.
Don't rely on any single point of failure. Don't kid yourself. No payment processor is your friend, and if you think that, you're a fool. Have multiple payment processors, and be prepared for bad things happening. The reasoning isn't as simple as PayPal or Stripe are out to get you. Rather, there are many banks and many laws, both in your home country and internationally that can affect your business. And in the end, they won't risk their business for you, no matter how fair or unfair it is.
Does that mean they aren't allowed to send and receive payments? Why is a middleman service in the business of determining that they shouldn't be allowed to send and receive money? Was Niteo misusing their service?
"Don't rely on PayPal. They're less professional than a kid selling juice next to the road."
I am constantly surprised that in this age businesses are still surprised by PayPal shenanigans. I remember coming to the same conclusion almost 18 years ago.
Also if you own a physical store, always make sure to accept cash also. Don't rely to card providers which also collect huge amount of data and have their own terms. Centralization and reliance on single entities are not good...
Agree with this 100%. It's nice for consumers who want to screw merchants (sure, I assume there are some legitimate charge backs as well), but for merchants it's hell on earth unless your business is a bit a of hobby thing and you don't care if you lose whatever is in PP + PP access itself overnight without any reason.
Bank wire transfers? That is how contractors are typically paid. I have never heard of anyone paid any other way here in Europe, and as a contractor myself wire transfers is the only form of payment I can accept. I guess in North America checks would work too.
In fiction the concept of a big nightmare where some capricious AI making arbitrary decisions and imposing them on humans with no recourse or option to reason would now seem unnecessary.
Google, paypal, plenty of other companies are lead by humans who are willing to just do that to other humans as a matter of doing business.
Theres at least third party options that leverage paypal indirectly (and other services) 2checkout comes tk mind which is what I suggest if you like having the option of PayPal. I havent touched 2checkout in ages so no idea its state.
Also like they say... Dont put ALL your eggs into one basket!
Stripes, wants you them to be the center point of your relation with your customers.
We prefer no-big names, no information collection about my customers, almost a white-label payment processor that we could sub-contract.
We still have some time, and are searching for the right company as billing and payment processor. But we naturally eliminate companies that are VC funded and, or located in high-cost areas (so that eliminates most of the CA/NY/LDN places).
paypal has no business in regulating what software their customers are allowed or not allowed to sell. Even if it's spam creation software. If it's not illegal to sell, it should not be blocked by paypal. If the software is spam and is bad for society, let society introduce a law to ban the software, the same way you can't sell drugs using paypal.
This moral policing by businesses is bad for society - and lets businesses dictate more than they ought to be able to.
Literally 100% of payment processors heavily "regulate" what their customers sell/do and who is profitable to do business with and what clients are profitable to associate with.
For example, if an industry has a humongous chargeback and fraud rate, then they become unprofitable and get dropped. This is why American Express stopped allowing porn (there was news articles about it at the time and they went on record saying massive amounts of chargebacks and fraud from porn sites were solely the reasons). American Express and Visa also don't allow you to use you to use your credit card to pay your mortgage (Mastercard does). I don't know the reasons why, but I'm sure it's not arbitrary.
They also have to conform to laws and regulations. This is an offshore company, PayPal is based in the United States. I don't know if its legal to sell this sort of spamware-as-a-service in the United States, but I think there might be AT LEAST copyright issues content harvesting that they appear to be doing (based on other comments).
It's not just that: these are businesses, not the government. A lot of free-speech advocates and libertarian thinkers seem to think somehow that private businesses somehow have a responsibility to uphold free speech, and they simply don't. It's the government that can't restrict you from free speech (in the USA); but companies don't have to put up with it on their property or when using their service.
Many people believe that businesses and corporations have a responsibility to uphold and respect free speech as a societal virtue moreso than as a constitutional right. This isn't a crazy position given the power many companies wield over the workings of society.
Social pressure on businesses has always been a big part of capitalist societies and this pressure comes in many forms. Ultimately societies of people are far more than a sum of their economic system. Economic systems shouldn't be what defines the morality of the people in society, that comes through community, culture, media, etc in addition to the judicial systems and governments (which all capitalist economies operate within).
Who are these "many people"? Libertarians? They're a tiny, tiny minority.
There's a simple saying about free speech: I'll respect your right to free speech, but I'm not going to provide a podium for you. If you want to speak freely, you can go to any street corner and do so, but don't expect my company to provide a platform for you if I don't agree with your views.
I disagree. Freedom of association is an important right. Generally companies (and individuals!) should be free to choose who they do business with. We should only limit that freedom when there's some significant social harm. (E.g., we don't let businesses discriminate by race.)
I also think it's ridiculous to suggest that we should drastically increase the number of laws so that everything bad is explicitly illegal. Drugs are a great example. Can they cause a lot of harm? Sure. But the war on drugs has caused immense harm as well. Decriminalization and regulation are the right approach. But if that happens it still doesn't mean that PayPal (or anybody) should be required to participate in the drug business.
>Freedom of association is an important right. Generally companies (and individuals!) should be free to choose who they do business with.
They are, but we are free to be mad at them when they do this in assine ways, as we are free to also decide not to associate with businesses that excessively invoke their freedom of association, for either reliability reasons (businesses that cut ties over ever changing reasons are not a reliable company to do business with) , or ideological ones (we don't like why they are invoking the right).
> paypal has no business in regulating what software their customers are allowed or not allowed to sell.
PayPal is a private company. They do have business in regulating what types of customers they'd like to serve, and they are well-within their rights to create and enforce their own terms of use.
Certain types of customers (scammers, spammers, etc) are a greater liability and can end up causing more issues (and less revenue) than they are worth, so it makes perfect sense for PayPal to choose not to do business with them.
> paypal has no business in regulating what software their customers are allowed or not allowed to sell
This is industry-wide policy and is mandated by the brand (Visa/Mastercard/etc.) Sometimes a brand will enforce a payment processor to suspend a merchant account because of violations. In case of a payment facilitator (like PayPal), failing to comply would result in suspension of payment processor's master account.
Even Stripe (which I believe is a PSP) prohibits some business from using their platform[1] (although Stripe is willing convince brand/acquirer on behalf of a merchant if they have compelling reasons).
PayPal is a private albeit very large entity and they’re within their rights to ban you for looking funny. If that’s harmful to the society, let society introduce a law that prevents them from doing that, like how there’s a ton of regulation around actual banks.
In your opinion, but from the business's point-of-view, if they're enabling a shady business (like a spammer), then people will publicly complain about how that company is aiding and abetting bad actors. It's just like how Twitter gets blamed for neo-Nazis using it to spew their garbage.
Companies aren't the government, and are allowed to choose who they want to do business with. They don't have a responsibility to uphold free speech, and only have to make sure they don't discriminate based on protected class (race, sex, etc.). Otherwise, if they don't want to be known as "the company that helps neo-Nazis accept payments" or something like that, they're free to not do business with them.
It's very hard to evaluate what's actually going on here. This "post" could perfectly fit in a tweet. No details whatsoever, no details about wether they tried to reach to paypal support and if they got any replies. I'm surprised this isn't flagged.
Did we read the same article? "After calling their support twice, explaining the situation and asking for a reason, we have received nothing but “the decision is final, and we will not provide more information”."
in european you can report them if they won't give a good reason, for canceling your contract.
You can even complain at your national bank authority. https://eba.europa.eu/consumer-corner/how-to-complain
since they are a official bank in europe they would need to give correct info.
Did we read the same article? Because the on I read said:
> After calling their support twice, explaining the situation and asking for a reason, we have received nothing but “the decision is final, and we will not provide more information”.
They have no idea why they've been terminated and PayPal won't tell them. From the article:
> We never thought this would happen and have absolutely no clue what they’re referring [to]. We have reviewed the user agreement multiple times and there is absolutely nothing there that we’ve engaged in.
Is there any law or regulation that requires institutions that handle money handling services to be transparent in cases like this or with any right to recourse? (In any country)
What happens if a multinational organisation based in one country has that right but doesn’t in another - but it’s a single PayPal account - could they get reinstated that way?
In the US, yes, if the organization is legally considered a bank. I believe that PayPal is not considered a bank, but I'm not sure on the specifics as to why.
PayPal badly needs to be hit with an anti-trust suit. This behaviour is clearly harming end-users, and there are no alternative choices that won't result in a huge hit to turnover.
Yes, I too want banks and payment providers to act like moral authority for all their clients and freeze funds and close accounts with no explanation or recourse whenever an entity does something I don't like. This will totally make things better and not be relentlessly abused after the practice is normalized. Who needs a stable society anyway.
Legal marijuana shops are still mostly cash only specifically because they can’t bank, due to weed being federally illegal. Bank monitoring is in place to battle illegal activity, fraud and laundering. If you are doing something reprehensible, a payment company can be seen as endorsing that behavior by your association with that bank. I mean, you have a spam network here that was proudly displaying PayPal’s logo on it.
I agree that it’s not right for payment processors or banks (PayPal is, unofficially, kind of both) to pass judgement on what their users spend money on... but I also agree that it is not out of line for a payments company to stop offering their services to businesses designed to spam, defraud, mislead or abuse people. Gambling websites are also known to trigger these detections when you try and deposit on to shady accounts.
>Legal marijuana shops are still mostly cash only specifically because they can’t bank, due to weed being federally illegal.
There is a world of difference between closing accounts that are used to pay for activities that are illegal and closing accounts because the client does something you don't like, especially if the service provider can't even point out which part of their TOS was violated.
>businesses designed to spam, defraud, mislead or abuse people
If you don't draw any distinctions between "defraud" (illegal and well-defined activity) and "mislead" (can be applied to almost anything), there is literally nothing to discuss here. You don't draw any objectively defined lines between what should and should not be bannable and your stance boils down to "I like when PayPal bans someone I don't like".
Where exactly in my post I asked for government restricting free association? It sounds like you just wanted to post this particular talking point and couldn't find a place with more relevance.
What do I want?
I want large payment service providers to have clear and universally enforced rules that pertain only to services they provide, stick to those rules when deciding whom to ban, provide exact reasons for their decision and have a process of redress. It's pretty obvious that PayPal fails at this, miserably, even if you can point out some individual cases where they might be "in the right".
I also want posters who act like corporate cheerleaders here to provide independently observable criteria for whatever bans they "approve". Increasingly often I see astounding hypocrisy when the same person cheers for banning of one organization and against banning another, even though both are banned for the exact same behavior.
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