posted on October 16, 2001 11:26:18 AM new
I think it is safe to assume, based on the sheer size of Paypal's entity, that they have sufficient legal council to address any regulatory concerns facing the company.
It is also safe to assume that many of the questionable legalities that are being raised relate to the fact that Paypal's business model is unlike any that has ever been seen in the financial sector. As such, the laws that are currently in place do not specifically or sufficiently cover or address Paypal's unique business practice.
I'm of the belief that Paypal is on sufficient legal ground as they move forward towards their IPO and that any and all of the possible exposures and liabilities are currently being properly addressed. At this level of play, you get bet that they have the greatest minds available to accomplish these tasks.
posted on October 16, 2001 11:26:29 AM new
re: Paypal in a gray area
Well, I certainly am not familiar with all of the federal & various state banking laws. I do think they were, for the most part, written with B&M banking institutions in mind.
Like a lot of laws & regulations, banking regulations probably need to be upgraded to handle 21st century situations.
posted on October 16, 2001 11:58:43 AM new
computerboy, having worked with numerous start-up financial institutions including their legal counsel, you may be assuming too much and giving PayPal too much credit here. I got a feeling that banking laws and regulations were not the focus of this start-up company until very recently.
Also, PayPal has a unique business model that deserves a lot of credit but they certainly were not the first on-line financial institution. Laws and regualtions are much more dynamic than some of the responses here indicate. Their are large legal staffs at each banking agency that interpret laws and regulations and apply them to these supposed "gray" areas. The agencies are much more advanced regarding Internet banking laws than most people realize. I highly doubt PayPal contacted the Office of the Comptroller of the Currency or the Federal Reserve to receive an opinion like many other financial companies do. If they did, they would have most likely been required to state this in the IPO registration statement.
As I previoul;sy stated, they only have 2 state licenses. Were was the great legal advice then, it simply was not there since that was not the focus of the company. The focus was growth! And now unfortunately, they may have to pay for their mistakes and potentially pass them a long to us. Their registration statement says fines can be up to $1,000 a transaction I believe. Please read the entire IPO registration statement and you will definitely become aware of these serious issues.
posted on October 16, 2001 12:14:58 PM new
without accepting member deposit and i assume this is coming from member's bank account,then the size of the member account is pretty much limited to buying and selling activities and we all know they are coming from ebay.
with IPO money .paypal could merge or acquire a small bank and thus accept deposits .
as a user of their service,i am not highly confident to leave a lot of money in my paypal account.
if i have to guess what policy changes will take place at paypal after ipo,it is that as a publicly traded company,it can ill afford bad press and one way to minimise bad press is not to take on scam artists,controversial trouble makers,personal accounts which do not give them enough business.
posted on October 16, 2001 12:58:51 PM new
topprospects:
Good insight. I've reviewed the filing and there is a very sophisticated web of regulatory laws that Paypal will have to navigate. This includes State, Federal and International regulatory agencies and each will have its own separate criteria that must be met. Very tricky.
Paypal has enlisted the services of the heavy hitters in the financial sector to pull this off. With underwriters SSB, Stephens and Blair in the picture, they have the biggest guns in the business to bring the company forward. Big business does business with big business, so many new avenues will be opened for Paypal once the IPO takes place. They'll have introductions to many financial institutions and other sources of funding that they didn't have before. New business opportunites.
posted on October 16, 2001 11:58:27 PM new
wowwow85 - you are welcome - I don't mind explaining things a bit.
Also, I agree with you that it might not be as easy I as I was thinking when I posted - for example, I have my PayPal HTML at the end of my TOS, which I cut and paste in at the end of my listing(s) automatically; I don't really think about it. And really, they do have the highest marketshare which gives them a lot of momentum. Plus I like the features they offer once I get the money. To me, it is a big positive when I can use a card in my hand to access that money. Competitive payment services would generally require me to initiate an ACH deposit back to my bank account which takes time to clear.
Well, I have to admit I would like a statement from PayPal, by email - on a monthly basis. It would also be nice if they offered a paper statement via USPS for an optional fee.
When they were X.com, which was actually (in some ways) a bank (because they offered services provided by a "host" bank) - I would receive a monthly email reminder telling me that the month's statement was online and I should go check it.
posted on October 17, 2001 06:40:05 AM new
grantje,
paypal inserts its logo on your ebay item page every day,and sends out payment reminder after auction ends to your buyer.
there is no need to cut and paste,not on ebay,may be other auctions.
most online buyers know paypal,there is really no need to show the logo .
yes,i like their debit card also and i am using it to offset the fees they charged on my sales.
but once it becomes a publicly traded company ,paypal will get more visibility on how well it is doing-aka how much money are they losing and when will they turn profitable.
the math just does not add up,even if all these personal accounts convert to business accounts,there is just not enough revenue to pay its bills.
if it wants to extend to cultivate a citibank style relationship with its accounts,then they will run into state regulatory limits.
i sell on ebay,these days items which sell are prints and cards for under 10.00
bad news for me ,ebay and paypal
posted on October 19, 2001 08:39:33 PM new
Well, I understand what you're saying, but I am primarily selling on Yahoo at this time, and the daily auto-insert that PayPal offers never seemed to kick in. I would always end up manually going to paypal.com and checking off the auctions I wanted a logo put on for the "manual" auto insertion.
It may work now, I don't know. I decided it would look a bit nicer to just put the logo itself in my auction listings without the "XXXX seller added this text..." as well as the line of advertising PayPal adds to its auto insertion. And by having it in the TOS I am assured it always appears to every buyer and is on the listing right away.
I don't desire to have PayPal email my winning bidders right away; I prefer to make the email contact myself. I find that at Yahoo, bidders tend to be newer and (IMO) would most likely be confused by PayPal's email, and might think they couldn't use another form of payment (I also take PayDirect but don't advertise it because I like being PayPal Preferred, and MO/Cashiers Check).
I am also selling low dollar items (under 5, some under 15) and find myself in a quandary - I like the seller protection offered by PayPal so I am very hesitant to switch to anything else, and it seems that not offering any online payment option would be a turn off to potential bidders (plus, I know they have a CC anyway if they are on Yahoo). (BTW, I only like to offer PayDirect to those with a nice amount of positive feedback, to avoid chargebacks.)
I have also found that I can nearly eliminate the net fees PayPal charges because I transfer money from my bank account to spend with the debit card. I don't transfer money for *every* little expense, but I have been doing it for large online purchases and also I make sure there's enough in there so I can use the debit card at USPS.
Yahoo ID: grantje
posted on October 24, 2001 08:00:41 PM new
How do you think checkout will affect the IPO? I think that checkout will definitely hurt the growth of PayPal. I especially think new auction users who are not familiar with its product will be more likely to use checkout and thus use a competitor's product - Billpoint or should we say ebay Online Payments by Billpoint.
posted on October 24, 2001 08:43:59 PM new
i just listed some items-it looks like if you want to use the buy it now feature,you have to enter shipping and insurance in the check out area which is billpoint.
so where is paypal then?
unless you leave out shipping and email the bidder afterwards.
it looks like ebay wants to be like amxn which has one click for cc payment.
so what is going to happen to paypal??
unless paypal revised its email format ???
posted on October 24, 2001 10:33:19 PM new
Topprospects, one matter I have followed with great interest is PayPal and the Electronic Fund Transfer Act. At one time PayPal existed in a grey area, but once they rolled out their MasterCard debit card they had rigid guidelines such as completing EFTA dispute investigations within 10 business days (or giving a contingent credit and getting 45 days).
As one thread in the PayPal section shows, the company seems woefully unable to work within rigid regulatory deadlines after years of having none. Much to my dismay, PayPal recently added a feature where any customer can make MasterCard debit charges from their account. Does anyone think PayPal can handle the amount of EFTA investigations this will produce? Not me.
Also, PayPal's language in their IPO that they "assume" they are subject to EFTA is disconcerting. Obviously, MasterCard would require them to comply as a condition of having the debit card.
posted on October 25, 2001 07:29:21 PM new
I agree with you regarding the EFTA. It is sometimes even difficult for some large banks which are very familiar with the regulations. At a multinational bank, I once found a pattern and practice of violations which entitled customers to reimbursements. Needless to say this was very serious to the federal government and definitely costly from a monetary fine standpoint for the bank, not to mention the bad customer PR. Of course they are subject to the rules and it's amazing that they state we assume we are subject to these rules. If I was the CEO, I certainly would not be using that type of language in my registration statement.
When they eventually are examined by the federal government or State of California, I would love to read the report. I highly doubt PayPal has a compliance officer or a compliance program for any regulations.
