posted on October 27, 2000 09:40:41 AM new
I have been reading here about how awful paypal is, but I wonder. Isn't it just possible WE have caused some of these problems? Not all of them, but some?
Think about this. Anyone who thought about getting a merchant account to allow them to accept credit cards two years ago saw that it cost a fortune, and that on top of that cost, the credit card company was going to get a percentage of any sale the merchant made.
Then, along came Paypal. They said "FREE" and we jumped on it. They knew they had a good idea and thought they could make money with banner ads and the interest on the money we left in our accounts between transactions.They gave us referral bonuses which brought in more people. Things were looking good BUT did we leave our money where they could get the interest? No, and in chat rooms everywhere one could read how Paypal was ripping people off by getting interest on money that was ours not theirs. Suggested solution? Take your money out or spend it. Don't leave it for these "crooks" to use.
Where do you suppose the referral bonuses were coming from? Cyberspace?
How did these complaining people think the credit card companies were getting paid their merchant fees? Did they really think the credit card companies were letting Paypal access them for free? good luck!!
And so now we have the present situation. A situation I think we helped to create. A situation that perhaps will sink Paypal, or maybe just settle down into a fairer, more reasonable proposition. GIVE THEM A CHANCE, BOYS. WE DID HELP TO MAKE THIS MESS.
[ edited by grumteach on Oct 27, 2000 09:43 AM ]
posted on October 27, 2000 10:37:55 AM new
WE did not make this mess. WE did not misuse their service. WE did not say it was going to be free and then start charging. WE have not held people's money for no reason. WE have not provided horrible Customer Service.
So I don't know who this WE is who you are referring to (the WE that caused this), but it must be a different definition of WE then I know.
By the definition I understand, we would mean the people who have used the system, and the only way we could have caused this would be by misusing the service. We have used the service as described and advertised and thye service has changed on us. So the only way WE caused the problem would be if WE were Paypal.
When you go into business, you must have a Business Model. This defines where you are going to make money, where you are going to spend money, and how you are going to make profits. When PayPal was advertising "Free", they were also giving out the referral bonuses. If they did not know where the money would come from to cover their costs, that is their issue and their lack of a business model. What really caused the problem was that their management started without one and is screwing us on the road to find one.
[ edited by joemama13 on Oct 27, 2000 10:41 AM ]
posted on October 27, 2000 11:28:01 AM new
You are right, Joe. Perhaps they did not have a proper business model. Perhaps they did not think through where they were going to get the money. And perhaps YOU should not be included in the WE I used.
Let me ask you some questions:
Did you use their service? My answer to this one is YES I DID.
Did you ask yourself where they were getting the money to offer this new service? For me, the answer to this question is NO, I DID NOT. I only started thinking about it when they started having problems.
Did you take your money and put it in your own account where Paypal would not be able to get interest from it? My answer to this one is, YES, I DID, without thinking about the consequences.
If my letter sounded as if I was attacking anyone, I wasn't. I was just doing some hindsight thinking out loud. Perhaps Paypal made some mistakes, but in my opinion so did I. I expected to get something for nothing without thinking about the whole picture.
I consider myself just a small bit responsible for this problem. I loved getting a payment for an auction and then using that money to pay for something I bought at another auction. I loved only putting my credit card number in one place, instead of all over the web. I loved the convenience and did not consider the cost. Forgive me, perhaps your story is different. If it is, then you are not part of my WE.
posted on October 27, 2000 11:53:38 AM new
I disagree with your logic and your argument, but we can agree to disagree. Which one of us do the rest of you agree with?
posted on October 27, 2000 12:42:48 PM new
I agree with joemama. If PayPal did not require users to leave money (how much?) in their accounts for any specified time period (how long?), then users had no obligation to do so.
posted on October 27, 2000 12:46:10 PM new
"Did you use their service?" Yes.
"Did you ask yourself where they were getting the money to offer this new service?"
Yes. Seriously, in fact. And it was the first thing that made me feel uneasy about the whole thing...it was too good to be true!
"Did you take your money and put it in your own account where Paypal would not be able to get interest from it?"
Usually, but not always. Why shouldn't I?
I never saw it as my duty to underwrite another business at MY expense! The fact that Paypal didn't seem to have a workable business plan is NOT my fault, nor should it be my problem.
It is my obligation to pay for services rendered AS BILLED; not to make donations to keep a (presumably) for-profit business afloat. Paypal is NOT a charity; it's not even a co-op.
I don't mean to be cold-hearted here, but that's the way business works. If I can't sell something on eBay for a profit (or even a break-even price), eBay doesn't come rushing to my aid saying, "Gosh, we're sorry you didn't make any money on this item. We'll refund your fees, and maybe give you a few bucks on the side. Will that make you feel better?" I hardly expect them to do that! Why should Paypal expect me to give them "a little extra"?
posted on October 27, 2000 05:32:36 PM new
What is happening at PayPal (the new fees, etc.) is not an accident. It is not a change of plans. It is not something that was developed when Plan "A" didn't work. It was Plan A
Let's take a look at it closely. You got a guy that just cashed in on $305 million on the sale of his previous venture to Compaq, and his friend from across the hall. (literally) Both have enough experience in business and with the internet to know that you can't pay everybody's merchant fees and make money on the float. The numbers just don't work. If they received 25% interest on the money each month they would still go in the hole. It was not a lack of a business plan. It was a well thought out strategy, that got a little messy.
So what exactly was "Plan A" ?
Jump start the customer base by paying people to join and swearing that it is free forever. They knew from day one that they would charge fees, but first they had to suck in millions of users. The big payday comes with the IPO. The problem is, they have no revenue stream. So they add fees, force people to upgrade, and create an artificial boom in income and profit just before the IPO. They all make millions on the stock, the whole place goes down the tubes, (because people will figure out that they can get there own merchant accounts for about the same amount) but it doesn't matter at that point, because they hit the jackpot.
What you are witnessing is a classic example of Securities Fraud. To artificially distort the income and profit potential of a company for personal gain from the sale of the stock.
posted on October 27, 2000 06:45:59 PM newWhat you are witnessing is a classic example of Securities Fraud. To artificially distort the income and profit potential of a company for personal gain from the sale of the stock.
Indeed, the goal may well have been profit via stock sales rather than profit "the old fashioned way".
However, I'm not sure it qualifies as "classic securities fraud". This CEO and a few others made a lot of money (success!) in a game where the rules stated "get a lot of customers for a web site, supply a plausible idea for eventually making money, and sell out".
Somewhere around 9 months ago the bottom fell out of that game. Now PayPal finds itself in a different game, where the idea has to be a lot more than plausible. PayPal would have liked to IPO last Mar or so, at their peak, but that was a bad time for dot com IPO's. So they waited.
The waiting went bad in two ways:
1. PayPal was and is burning money at a furious clip.
2. The market is becoming more sophisticated. The prospects have to be far more apparent than they were a year ago, and PayPal has yet to suggest a business model which will make money. Remember, they have to charge sellers about 4%-4.5% to make money on a credit card charging operation. They'd be trying that today, but BillPoint came along and gummed up the works; it would be suicidal for PayPal to attempt to charge more than BillPoint.
Thus, PayPal find themselves in a bleak position, IPO wise, and it's getting worse.
posted on October 27, 2000 07:57:13 PM new
OK people you win. I never was Miss Brilliant as far as the stock market is concerned. If you are right about their plans then maybe I should stop feeling just a bit guilty about my own part in this. UNCLE, UNCLE. I only wanted to be fair.
posted on November 7, 2000 09:55:25 AM new
I tend to agree with what most people have said here EXCEPT
I do recall originally reading (way back when paypal first started or at least way back when I first joined) that paypal was going to make their money partially on the "float".
I also saw as you, grumteach, did the chat rooms and the indignation of people who were perfectly willing (like ME) to use the site for free but not willing to leave their money to be used as "float". Sort of a want to have your cake and eat it too, huh.
I THINK I WILL HAVE TO JOIN YOU, GRUMTEACH. IN SO MUCH AS I, AND MY FELLOW USERS DID NOT LEAVE THE FLOAT FOR PAYPAL TO USE, WE ARE GUILTY.
But that is ALL we are guilty of. The rest of the troubles were caused by paypal's own management.
posted on November 7, 2000 03:43:54 PM newbut not willing to leave their money to be used as "float".
That was always a load of bunk. The average float latency would need to be about 6 months to cover the expenses of acquiring the float in the first place. No one smart enough to sell on eBay is likely to leave much money laying around for 6 months collecting no interest.
Secondly, PayPal went on a campaign to make sure that no one would leave much float. From day one we started being hit by stories of PayPal "freezing" float, and generally being a completely unreliable substitute for a bank business account.
If there's a sure fire way to make people scared of you as a business partner, it's by claiming total control of money held in trust.
posted on November 8, 2000 03:07:04 PM new
" from almost day one we heard about paypal freexing float" etc.
Questionl. Were you really in on paypal from day one? I know I was not. I can't say how the first year went because it was just at the start of the second year that I joined. Everyone I talked to at the time loved it. People were starting to ask me if I accepted it on my auctions and others were asking if I would like to pay for things I bid on in that manner. Sounded like a great idea at the time. But as I said, even though it had been going for a year I heard nothing about float being frozen.
posted on November 8, 2000 07:37:01 PM new
I joined Paypal just this past May. Right before all the "changes". I did allow some of the funds to "float" for a few days. I still do on occasion. However, the true float that Paypal is making money on is not only the time period that we leave the money in our accounts. But also the time period that it takes to transfer the money. Back in May, it used to take only 3 days for the funds to arrive in my account. Now it takes the full 5 days. In reality, it only takes 2 days. One for the transfer from their bank, then that evening the clearinghouse transfers the money from that bank to the receiving bank, then the next day to arrive at the new bank. So the float that many are not seeing is the float time that they are taking to transfer the money. Until it reaches the clearing house and our bank, the money is still in Paypals account. Now when you multiply the float money from the millions of transfers a day. That's plenty of money to cover the fees charged by the credit cards!
What happened is that Paypal needed to pay for the added costs of the programmers to set-up all the new features that they are now offering. And now, the fees are covering the maintenance costs of those added features. A shopping cart program does not come cheap. Neither does the cost of offering international payment services! These costs for these value added features have to come from somewhere. And the last I checked, programmers make a great living. My problem with all this is that I already pay for these value added features through other companies that I feel I can trust. If paypal wants to add these features, then the features themselves should charge for the service. Those of us who already have these features, should not need to pay for the service for others to use them. We all should only pay for the services we receive.
Enough said on this subject. I have left Paypal behind a month ago. I only use them when a customer insists. I have found other services which provide a far greater level of service and security. I will let others pay for the services I have no use for.
