posted on January 27, 2002 05:19:05 PM
PAYPAL PROCESSES ALL PAYMENTS VIA Electronic Payment Exchange, Inc., or EPX
For Visa transactions PAYPAL uses First Union National Bank
MasterCard, Discover and American Express transactions PAYPAL uses TheBancorp.com Bank
ON DEC 2001 Chase Merchant Services Chase Merchant Services retained approximately $12.0 million in settlement funds due to PAYPAL AND TERMINATED ITS RELATIONSHIP WITH PAYPAL!
ALL BANK TRANSACTIONS PAID WITH CHECK TO CHECK IS DONE WITH Wells Fargo AND PAYPAL IS REQUIRED TO KEEP $10 MILLION UP AS COLLATERAL.
Under the recently enacted International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, or IML Act, PAYPAL could be subject to federal civil and criminal penalties if THEY are deemed to be operating without an appropriate money transmitting license in a state where such operation is punishable as a misdemeanor or a felony under state law More than 40 states in the U.S. regulate bill payers, money transmitters, check sellers, issuers of payment instruments or similar non-bank payment businesses AND PAYPAL HAS NOT BEEN ISSUED ANY LICENSE EXCEPT IN OREGON AND W VIRGINIA.
WE ARE AWARE OF 4 STATES INCLUDING CA THAT HAS MADE THE POSITION THAT PAYPAL IS ACTING LIKE A BANK WITHOUT A LICENSE THE STATES ARE CA LA ID AND NY. NO RESOLUTIONS HAVE BEEN REACHED.
posted on January 28, 2002 06:37:18 AM
I just love the pure, objective, unfiltered information we get from people whose motives are not revealed. With Paypal's IPO about to happen, some dirty tricks will surface in an attempt by competitors to undermine it.
The relative anonyminity of these boards is one of the prime targets of disinformation and partial truths.
posted on January 28, 2002 07:24:05 AMWith Paypal's IPO about to happen, some dirty tricks will surface
Yup.
Didn't PayPal add acceptance of American Express and Discover Card after the dates on this 'breaking news'?
[ edited by uaru on Jan 28, 2002 07:25 AM ]
posted on January 28, 2002 08:11:21 AM
Snoopnetdog joins on Jan 27 and immediately posts degrading info on Paypal??? Interesting. I also question his motives especially right before the IPO. What your sources for this information?
posted on January 28, 2002 08:28:42 AM
SCOOPNETDOG ,like the name implies,scoop up all the dirt on the net and reports it.
that 12 millions dollars retained by chase after terminating relationship with paypal,is that for chargebacks filed but not processed??
posted on January 28, 2002 02:25:00 PM
http://www.sec.gov/cgi-bin/formlynx.pl.b?page=results&cik=0001103415 ALL THIS INFO WAS EXTRACTED FROM PUBLIC PAPERS FILED BY PAYPAL THEMSELVES. NO HYPE JUST REVEALING TO THE AVERAGE CONSUMER WHO DOESNT HAVE ACCESS TO THIS DATA. TAKE IT FOR WHAT ITS WORTH.
posted on January 28, 2002 07:21:23 PM
"ALL THIS INFO WAS EXTRACTED FROM PUBLIC PAPERS FILED BY PAYPAL THEMSELVES. NO HYPE JUST REVEALING TO THE AVERAGE CONSUMER WHO DOESNT HAVE ACCESS TO THIS DATA. TAKE IT FOR WHAT ITS WORTH."
What a bunch of B.S. The link you provided only shows Paypal contact information.
posted on January 28, 2002 08:47:38 PM
I looked at some of the SEC filings under the original posters links, and they are indeed real. You do need to drill down one or two levels to get to the information, but it is not true that only "Company Contact Information" is available.
"Our status under state, federal and international financial services regulation is unclear. Violation of any present or future regulation could expose us to substantial liability, force us to change our business practices or force us to cease offering our current product."
Other gems include: "Our ability to manage and account accurately for customer funds requires a high level of internal controls. We have neither an established operating history nor proven management experience in maintaining, over a long term, these internal controls."
"We depend on online auction transactions for a significant percentage of our payment volume. We generate a significant portion of our business on eBay, which has established a competing payment system. If our ability to process payments for online auctions, particularly eBay, is impaired, our financial results and growth prospects would be affected significantly and negatively.
For the nine months ended September 30, 2001, our customers identified to us approximately 68.3% of the dollar volume of all payments made through the PayPal system as settlements from purchases made at online auction websites, particularly eBay. We rely on these transactions for a substantial portion of our customer base and our payment volume. We do not have any contractual relationship with eBay, and eBay owns a majority stake in a competing payment service, eBay Payments, formerly known as Billpoint. eBay could choose to restrict or prohibit its sellers from advertising PayPal for payments or compel sellers to use eBay Payments on eBay's site. Whether or not eBay imposes such restrictions, we expect eBay to continue to develop and promote its own payment service and to integrate that service tightly into its site in order to foster the use of its payment service. If our ability to process payments for purchases made on online auction websites, particularly eBay, became impaired, or if these online auction sites took additional steps to integrate their payment services, our business would suffer. "
And yet another: " We believe the licensing requirements of the Office of the Comptroller of the Currency, the Federal Reserve Board or other federal or state agencies that regulate or monitor banks or other types of providers of electronic commerce services do not apply to us. One or more states may conclude that, under its or their statutes, we are engaged in an unauthorized banking business. In that event, we might be subject to monetary penalties and adverse publicity and might be required to cease doing business with residents of those states. A number of states have enacted legislation regulating check sellers, money transmitters or service providers to banks, and we have applied for, or are in the process of applying for, licenses under this legislation in particular jurisdictions. To date, we have obtained licenses in two states. As a licensed money transmitter, we are subject to bonding requirements, restrictions on our investment of customer funds, reporting requirements and inspection by state regulatory agencies. If our pending applications were denied, or if we were found to be subject to and in violation of any banking or money services laws or regulations, we also could be subject to liability or forced to cease doing business with residents of certain states or to change our business practices. Even if we are not forced to change our business practices, we could be required to obtain licenses or regulatory approvals that could impose a substantial cost on us."
posted on January 28, 2002 10:09:06 PM
Ok thanks, I didn't realize the extra clicking I had to do. Having read dozens of prospectuses of many companies I realize how negative in tone they sound. All that legal jumble is real, and always a concern, but companies retain lawyers to help them through.
Paypal is taking action to obain licences where needed. They may have been granted permission to keep operating as long as their application is pending. As long as Paypal operates ethically I see no problem ahead in obtaining these licences.
posted on January 29, 2002 07:26:11 AM
BUT- if Paypal is forced to operate on the same regulatory playing field as Banks, Paypal will have the same cost structure.
This ultimately means Paypal will increase fees. By the time it is over with, we would be just as well off at C2it, or another payment system.
posted on January 29, 2002 07:37:06 AM
i will be very interest to see what happens. if paypal store your money then yes they surely have to have a license to do so in each state. also once they become regulated they will have to increase their fees. i cannot even understand why they could possibly be losing millions currently and their fee structure keeps on rising and rising!
posted on January 29, 2002 07:42:24 AM
"...We believe the licensing requirements of the Office of the Comptroller of the Currency, the Federal Reserve Board or other federal or state agencies that regulate or monitor banks or other types of providers of electronic commerce services do not apply to us..."
Call me a babe in the woods, but one of the very first things you'd think you'd have to address if you were starting a company like PayPal would be complying with regulatory and licensing requirements in all states. They're starting this process NOW?
Wow. I take back everything I said. I had no idea they were operating so close to the edge of the cliff.
posted on January 29, 2002 08:36:21 AM
Those familiar with IPO filings know that these risk disclosures must be present in the prospectus in order to comply with SEC regulation. The info provided that you are linking to are boilerplate disclosures and they should not cause alarm.
The information Paypal provided was required and had to be presented without bias. The risks the company listed are real, along with the many assets and upsides the company has that it can take advantage of. With 10 million users, strong market penetration and the big "Wall Street Boys" now involved with the company, my guess is that Paypal is on its way to becoming a financial transaction powerhouse.
The uncertainty that exists with Paypal is justifiable. They created a new found niche in financial payment processing and current federal, State and Country laws do not yet have regulation that covers their type of activity. Paypal's idea is innovative and it's going to take time for the regulators to revise laws to govern their activity. This being the case, I believe that it is premature to call for the demise of this company. Their business plan and fundamentals are sound and they have a strong market presence in the niche they serve and the outcome may result in a viable, profitable entitity.
Only the future knows for sure. Are you going to fold your hand or are you going to stay in the game to see how it plays out?
posted on January 29, 2002 09:06:03 AM
"They're starting this process NOW?"
A lot of companies operate this way. Even ebay adds new rules as they go along to abide by certain state laws. The enforcement agencies are understaffed, and an investigation usually starts only after there are some complaints, so it quite easy to get away with violations for a long time.
posted on January 29, 2002 09:22:04 AM
I think regardless of what this implies in everyday terms, it's best just to transfer your funds out on a regular basis unless you use your debit card often enough.
I never felt comfortable enough leaving funds to accumulate with an online service--at least not enough that I would care to lose. In this age of dot bombs and the very frequent service changes at PayPal, news reports don't change my transactions much.
posted on January 30, 2002 11:40:30 PM
Regarding: "Those familiar with IPO filings know that these risk disclosures must be present in the prospectus in order to comply with SEC regulation. The info provided that you are linking to are boilerplate disclosures and they should not cause alarm. "
I beg to differ. I have been involved in four successful IPO start ups, the most recent of which I was on the Prospectus writing and reviewing team for.
Yes, one works hard to cover all of the possible risk factors in order to minimize the chance of shareholder lawsuits later if things go down the tubes.
However, the specific risk factors PayPal documented are hardly boilerplate, standard items, especially with regard to banking regulation issues.
Yes, many "internet" companies have played very fast and loose with regard to accounting and legal practices, and most crashed and burned at least partly because of their cavalier attitude and a huge willingness to put every other person and business who deals with them at risk.
posted on January 31, 2002 02:07:06 PM
IF PEOPLE WERE SMART THEY WOULD RUN FOR THE HILLS BECAUSE PAYPAL WILL SOON BE NO MORE ONCE THE STOCKHOLDERS GET INVOLVED AND SEE THE SERVICE OR LACK OF SERVICE MANY HAVE RECEIVED. THE INVESTORS WILL BE APPALLED WHEN THIS ONE HITS WALL STREET
posted on January 31, 2002 02:59:34 PM
Paypal doesn't have an adequate business plan. The federal laws are not yet established for them to succeed. It's still a game wo rules. TAKE YOUR MONEY OUT AND RUN!
posted on January 31, 2002 04:11:09 PM
Any company that makes a lot of money off me on a continual basis is worth investing in. I'll wait when the stock price reaches a cool level.
