PayPal is already the king of digital money transactions on the Internet and now it is looking to broaden its market by taking on the credit card merchants in stores. In an interview with the Wall Street Journal Paypal president Scott Thompson called the initiative a “top priority” and said “The tide is coming in and we will take advantage of that,”
With its 220 million active users PayPal is now looking to remove cards and the middle man completely and create a payment gateway that powers the point-of-sale itself.
The company should make more information available in its annual conference in October.
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TAGS:
credit cards, Paypal, stores
This would be great. like check cards but without the visa middle men. For store owners this will be great as well as fees will be gone or non existent. Expect a fight from the card companies though. Hope it comes to Canada
Regrettably, Mr Thompson is delusional.
Draft Media Release re PayPal
“It is with great sadness that eBay’s Chief Headless Turkey, John Donahoe (aka “Peter Principle”—among many other derogatory terms), announces the probable demise of eBay’s most ugly daughter, PayPal. PayPal is about to be stricken by particularly virulent strains of Visa+CyberSource and Mastercard Open Platform; these afflictions are aggravated by PayPal’s insurmountable lack of direct financial institutions support and a great deal of PayPal user dissatisfaction, particularly with respect to PayPal’s grossly unfair, “all responsibility avoiding” user agreement, totally primitive risk management processes, and grossly unprofessional, usually buyer-biased, fraud-facilitating (indeed, non existent) transactions mediation, to name just a few of the “inconveniences” that PayPal merchants have to endure.
“PayPal’s health may therefore be expected to deteriorate and, if ultimately not completely incapacitated, will most likely be eventually confined to its mandatory offering on what little there will, by then, be left of the Donahoe-devastated eBay marketplaces. There is no cure for this condition, and the “eBafia Don” is particularly saddened by the inevitable presumption that it is unlikely that PayPal, will be able to continue to underpin eBay’s sagging bottom line too far into the future.”
Yes, it’s a send-up but, still, it accurately describes PayPal’s “clunky” operation. The fact is, had the developers of the original “bankcard” concept ever behaved the way PayPal behaves towards its payees, in particular, credit/debit cards may never have gotten off the ground, and we would probably still be paying for all our purchases with bits of paper and little metal discs.
It appears that there is effectively no PayPal representation at all on behalf of the payee with respect to a payer making a credit card chargeback—for whatever reason. PayPal, apparently, simply accepts the chargeback and passes it back onto the payee. PayPal’s mediation process is so “clunky” that it is effectively an open invitation to unscrupulous buyers to defraud sellers, and PayPal’s system apparently offers payees absolutely no protection against this form of potential fraud.
Indeed, all those payments processors that do not have the direct underlying support of the financial institutions ultimately involved and who actually “know” the two entities involved in any transaction, as does have the likes of Visa and Mastercard, all have the same insurmountable and, ultimately, potentially fatal deficiencies that PayPal has—no effective, non-disruptive, risk management process.
In Australia, PayPal, unlike all other payments processors, has declined to sign up to the payments processors’ “Code of Conduct”, and the clear message therefrom is “user beware”!
I accept only that from a buyer’s point of view PayPal is more convenient than paying directly by credit card, and PayPal may still have some momentum therefrom. But, from the merchant’s point of view, for the number of material reasons referred to above, PayPal is a most unprofessional, inefficient and clunky system.
When the new banks-supported online payments interfaces offered by the likes of Visa/Mastercard are refined to the point of similar convenience, I have no doubt that PayPal’s appeal to merchants will very quickly dissipate as the obvious superiority and greater professionalism of the banks-supported online systems gather their own momentum with merchants.
It’s only a matter of time …
Having said that, the banks risk assess their merchant clients before they hand out merchant accounts so that maybe not every small “merchant” (or payee) will be able to obtain one of the banks’ online payee accounts. Maybe there will always be a place for the likes of PayPal—they could become the “online merchant/payee account provider of last resort”. Can you imagine what PayPal’s level of risk management and transaction mediation will be like by then?
A detailed examination of and prognosis for PayPal, (including a further link to the “PayPal Horror Tour”) at: http://forums.auctionbytes.com/vbulletin/showthread.php?t=23309
In the meantime, for anyone seriously interested in the utter deviousness and incompetence of eBay’s executive management generally, and in particular eBay’s demonstrable criminal facilitation of the rampant shill bidding fraud being perpetrated on unsuspecting buyers by a great many unscrupulous professional sellers on nominal-start auctions, an introduction thereto (along with some Pay-Pal horror stories thrown in for good measure) can be found at
http://forums.auctionbytes.com/vbulletin/showthread.php?t=23013
Shill Bidding on eBay: Case Study #4
This latest study demonstrates eBay’s utter desperation for revenue and, very effectively, eBay’s effective aiding and abetting of this criminal activity at
http://forums.auctionbytes.com/vbulletin/showthread.php?t=23540
eBay/PayPal/Donahoe: Dead Men Walking.