posted on September 18, 2000 12:35:32 AM new
I can see why Paypal has such a problem defining precisely what they consider to be a "business" when everything they do indicates that no one in charge there seems to have the slightest bit of business savvy!
Way back when this all started, I was very hesitant to join up as it all seemed too good to be true. The concept of making a good profit on the "float", after covering the cost of credit card processing, just didn't make sense to me. I couldn't imagine how that would really work. Apparently it didn't, and now TPTB at Paypal have called in damage control. And just as the original plan seemed to lack any business sense, so does the "repairs."
Think about it...what sort of responsible company would build up its clientele with promises of "always free" for everyone? It's not at all surprising to see the debacles that followed.
First we had "verification" (what an INCREDIBLY stupid term to use, given its already tainted inference to so many people)that oh-by-the-way forced users to relinquish control of their bank account; and now this we-take-it-all-back-its-not-really-what-we-meant situation, where customers are supposed to feel guilty about not signing up in droves to pay fees.
Couple the above with the absolute lack of customer service (save for the curious participation on 3rd party message boards such as this), rather arbitrarily tarring all customers as "unverified" (I wonder how many people who do NOT access their account regularly still don't know this shows up when their customers go to pay them!), and the goofy notions of endless money giveaways ($10,000 prizes, $5 prizes, 1% bonuses, 2 small deposits to your bank account, etc.)
This is not exactly the model of a good business, with a solid, well-thought-out business plan. It sounds like something cooked up in a vacant garage by two high-school dropouts who've given up on trying to beat the lottery as a get-rich-quick idea.
I would have been thrilled a year ago had someone shown up and told me "We'll set up a credit card system you can use, and only charge you 3% or a minimum of 50 cents per transaction; and no monthly minimum or fees. All you have to do is open an account and maintain a balance of $XX." It would have been far more believable, and likely would have worked.
Features necessary to keep me (and probably most customers) happy would have been for said business to behave in a business-like manner. I.E., have some private method of resolving complaints (not just answering public wailing cries for help on a message board someplace!), require all identification up front (not making it up and asking for bits and pieces as we go along!), and putting the highly detailed rules in writing and not changing them more than once every year or more - as opposed to weekly or whenever the whim strikes.
-End of Rant-
edited for a stray thought
[ edited by barkrock on Sep 18, 2000 12:38 AM ]
posted on September 18, 2000 09:45:50 AM new
I would love to know what the original business plan really was. Why use such absolute terms as "always" and "never" unless there is a solid long term plan to back it up? Surely income projections would have accounted for sign up bonuses and absorbing credit card fees, so what actually went wrong with the plan? Did they miscalculate the volume of funds left on account on which to earn the float? Even so, they had to know they would be operating at a loss for a period of time until users built up their accounts and were comfortable leaving balances.
Were their projections were so far off-I mean way way off(can the analysts)that it became a situation of throwing good money after bad? Or were they just not making as much money, fast enough, as they would have liked? If the latter, it is short-sighted thinking. But it is their business. There is not much any of us can do about it except move on.
Assuming lack of float profit was really the issue, what would the response have been to a change in terms that required leaving funds on account for a specified period or keeping a minimum balance? Would this have been more palatable?
posted on September 18, 2000 10:09:02 AM new
Hopefulli
You just put more thought imto the Plan than Paypal ever has. Do they remind you of a couple of pimply 20 yr old geeks making policy between Quake levals?
posted on September 18, 2000 11:08:15 AM new
A changing business climate makes changes in terms inevitable. That's life. But such changes should be few and far between, and announced well in advance. Policy changes usually represent minor tweakings for a minority of customers. (Take a look, for example, at the last change in terms you received from your CC issuer.)
PP's changes here over the last month have been monumental, with no preceeding announcement(really unforgivable!), and affected virtually everyone. They represent panic-driven alterations because the original plan was obviously flawed; not revisions made necessary by market changes.
That sure doesn't represent very good, if any, planning. We're talking here about a business that wants to handle consumers' money - large sums of it. Knee-jerk policy-making doesn't exactly engender the sort of trust a financial institution needs.
I'm very glad that I never saw fit to give this undisciplined group permission to withdraw from my bank account!
What would have been more palatable to me? Well, first of all prior notification that several terms of service were changing at a particular date in the future. (And NOT a change-of-the-week plan!)
As I mentioned before, I don't object to paying a percentage or fee on sales; and I wouldn't object to a minimum balance requirement provided it were a reasonable amount left on deposit in a responsible, professional insured banking institution.
What I do object to is the extreme unprofessionalism in a banking business. It's totally unacceptable.
(And now I've REALLY put more thought into this than PP has!)
edited for UBB *sigh*
[ edited by barkrock on Sep 18, 2000 11:12 AM ]
posted on September 18, 2000 11:30:05 AM newThink about it...what sort of responsible company would build up its clientele with promises of "always free" for everyone? It's not at all surprising to see the debacles that followed.
The keystone of the PayPal strategy has always been to set the hook, then achieve profitibility even though the fish wiggles hard.
posted on September 18, 2000 12:31:00 PM new
SG52-whether that is true is what I would really like to know (but probably never will), because my decision to stay with them hinges on exactly that. And with lack of anything to the contrary, I have to make my decision based on which scenario has the better ring of truth to me.
Scenario A-Projections went into the toilet and they had to revisit policy. Forgivable.
Scenario B-Manipulate the market and then pull the rug out. Unforgivable.
posted on September 18, 2000 12:56:41 PM new
I think PayPal could've profited on the "float" and offering fee-based premium accounts, but they screwed up.
They created policies that benefitted the buyers at the expense of the sellers when they should've been putting the sellers needs first. If PayPal's policies had made the sellers comfortable, this would've encouraged sellers to keep larger amounts of money in their accounts allowing PayPal to make more money on the float. But, they made policy decisions that scared sellers and, as a result, sellers keep minimal amounts of money in their accounts killing any chance of PayPal making significant profit on the float.
Also, PayPal handled the account upgrade all wrong. PayPal has been promising debit cards, international payments and other wonderful benefits for a long time, but instead of waiting for them to be up and running, they forced people to upgrade. They should've got all these promised extras up and running and then give everyone, whether business or individual, a choice of a basic free account or a premium fee-based account. I bet at least 90% of regular sellers would've volutarily upgraded. But, no, they had to rush it before all of the benefits were in place.
