Why Isn't Paypal More Successful? 31 comments
May 26, 2009
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I just bought a replacement part at an online store I've never shopped in before. I was dreading the checkout process since I have not committed my various credit cards to memory. But thankfully this store offered checkout with Paypal. I clicked on it, entered my paypal credentials, and was out of the store in less than a minute. It was an awesome experience, as simple and easy as checking out at Amazon (AMZN).
And yet, Paypal has not really taken off among my friends and family as a way to pay for stuff online. The Gotham Gal doesn't like Paypal and avoids it at all costs. I find that most people I know feel the same way.
Why is that? Is it that Paypal works like a debit card and the money is taken out of your checking account immediately? Is it that the Paypal implementation used to be clunkier and most people have bad memories of failed checkouts? Is it that most people have committed their credit card info to memory and don't mind filling out the web forms? Or is it something else?
All I know is that when I see a checkout with Paypal option, I take it every time. And if everyone else did, Paypal would be so much bigger. But it's not. And that's worth thinking about. Because there is a very big opportunity to reinvent the way payments work and Paypal is front and center in that opportunity.
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This article has 31 comments:
There customer service emails are very often indecipherable. If you have ever tried to get something resolved over the telephone with their outsourced customer service center, all you get are people who have been trained to repeat certain lines on their computer screens regardless if it has anything to do with the issue at hand.
I have invested in their money market fund only to have them not credit me a month's worth of investment earnings due to a "technical glitch".
There online account usability is very difficult for anyone who is not computer saavy and patient.
I could go on and on. But the bottom line is paypal is an example of technology that could be terrific but due to their poor management and programming fails to provide good user experiences.
Simple answer:
eBay owns it.
The company puts profits ahead of customer service. Fees are onerous.
System errors are frequent, and when they occur, no estimate of duration is offered.
Customer service is virtually non existent. Choose between spending an hour on the phone with uninformed agents that offer little or no help or email communication which takes a day or more to respond with replies that are often off topic and of no help whatsoever, requiring multiple contacts that take days to resolve. Phone calls often need to be rerouted and disconnects are commonplace.
Of course people are reluctant to allow a company this poorly run to have access to their bank accounts and credit card information.
Responsible people say "no".
I honestly believe that the state of payments today is hampered by the definition of "payments". That is to say that folks have applied super glue and duct tape to the same essential model originally implemented in the early 70's. The net result is a security and infrastructure nightmare which, if defined in different terms, should be a secure, value adding choice for merchants and consumers.
With proper funding, there are ways to capitalize on this opportunity.
Contrary to your testimonial, I DO know up close and personal some who have had serious problems with Paypal. It isn't a little haha joke. It's real. To the point where the cops in a small town were beside themselves because Paypal wouldn't take action against some criminals, who later got away. The other party, the seller, ended up losing several thousand dollars as a result of this inaction.
Do you wonder why cops don't use ebay and paypal? Think about it.
Et tu, Brute!,
SoberUp's comments carry no validity or weight whatsoever, as he is most likely a paid eBay operative. And let's not forget his childish kindergarten-like name calling comments in an early postings located here: seekingalpha.com/user/....
Ignore the employees, they get paid to distort the truth.
And the truth is Paypal IS NOT A BANK! They are not bound to federal regulations such as an FDIC financial institution. They can make up their own rules and as long as they can squeeze those "catch 22's" into their countless page agreement, they will continue to do what they want with your account, such as freezing your funds without an explanation.
President Obama is making the credit card companies clean up their tricky wording by making the fine print not so fine. My hope is that this administration will not over-look Paypal and eBay - the "we're just a venue" company.
jmo
Better to take your chances with PayPal....
I've had money withdrawn from my account to be held for a liar. I've had my MORTGAGE money withdrawn from a checking account to cover a socalled dispute where the only problem was the liar at the other end forgot he signed for the certified mail, return receipt item.
I will NEVER trust them. EVER EVER. I use them, but trust?? no mymom raised some stupid children but it wasn't me.
2) they redesigned their site. Have you looked at it?? Could you find, in less then 5 min, what they had done with a) all the transactions you just need to look over??? b) the multi-ordershipping (which is the only reason I still use them?)
Of course not, they took a clean simple design and made it harder and more convoluted to navigate. COUNTER-Intuitive to what all the webdesigners in the world and all the web-design gurus recommend.
Did you log out of your account? Could you leave the page?? or did it force you, like it did me, to go to their shopping page.... over and over. I will never buy anything from that page cause it annoys me so much to be FORCED to go there. And just try to go somewhere else..just try.
So - googlecheckout or Paypal...EASY PEASEY DECISION for me!!! (are you sure I can't send you a check or a money order?)
The only sensible way to make use PayPal of is to link it to your credit card, not your bank account. That way you have the benefit of the effective dispute resolution process offered by the major credit card companies (you can actually talk to a human being, and usually not one in the Philippines).
PayPal will never be as effective or as secure as the major credit cards offered by the banks. The banks vet their credit card merchants: you have to have an account with the bank and they therefore have some knowledge of you. They certainly need to vet their credit card holders.
eBay sees only the potential for making more easy money out of PayPal fees than it does out of eBay fees, and eBay will therefore allow just about anyone to receive funds via PayPal to the extent that there can be only limited security (as many buyers have found to their cost) for anyone paying for goods if the goods don’t arrive, etc. eBay is not a bank and PayPal does not have the backing of a bank, nor is PayPal regulated as a bank or a party to any of the codes of conduct as are the credit card companies. eBay wants to take the nice additional fees for a labour-free computerized process, but with little or no warranty obligation to the users.
Captain “Noise” Donahoe of the USS “eBay” and some market analysts seem to be suggesting that PayPal’s manning of the pumps will keep the good ship “eBay” afloat. I certainly would not put my money on PayPay for the long term. I have no doubt that eventually the major credit card companies will get off their butts and introduce a similar universal card/terminal-less on-line payments system that the participating banks can incorporate into their internet banking systems—and they will do it properly—and that, my friends, will undoubtedly be the end of PayPal outside of the Donahoe-dwarfing eBay marketplace ...
www.guardian.co.uk/mon...
So, for your info, most people avoid Paypal like the plague, because Paypal IS the plague. Wait until the first time they freeze up your account for no apparent reason, or put a hold on some payment you're waiting to receive "for further investigation", which usually turns out to be bogus, and is just a way for them to collect more interest on YOUR money. Wait until you buy something from a bogus Paypal merchant and Paypal refuses to work with you, forcing you to bypass PP's claim system to do a charge back through your credit card company. But, oh wait...from the sound of your article, you don't back your paypal purchases with a credit card, you draft payments from your bank account. Bad idea! Because, you see, if you pay for an item with funds in your paypal account or a draft from your bank, and Paypal rejects your claim, then you just lose your money outright. So, just a suggestion, but I would recommend you start backing all payments with your credit card, because given the chance, Paypal will screw you in a heartbeat.
This has got to be the saddest, most poorly written, and desperate advertisement for a second rate money mover that I have ever seen in print.
1. PayPal IS aware of how disgruntled people are, and why they're disgruntled and efforts are being made to improve the customer experience. Sweeping changes don't come overnight.
2. Its worth mentioning, that for people that have found reason to hate PayPal, there are many many others who love and thrive on the service. Unfortunately its only the bad experiences that get face-time. Which in a way is consistent with the 3/11 rule in sales - for each thing you do right, 3 people will tell their friends about it, but for each thing you do wrong, 11 people will tell their friends about it.
3. And most importantly, what people don't understand is that although PayPal at first glance appears to be a payments service, its buck is actually made MANAGING RISK. If managing risk with online transactions was that easy there'd be 100 other PayPals out there, but none have survived. There are fraudsters and the scamsters and fake-merchants, money-launderers and other elements who're trying actively trying to use PayPal whose accounts are shut down (rightfully so) all of the time because of the checks and fraud-transaction profiling built into the PayPal system. Unfortunately no fraud model is perfect and its the few innocent casualties that are left feeling that PayPal has wronged them.
I Hate PayPal because eBay owns it. If you knew the depths of my hatred for these companies, you'd run like hell, and I am not alone. Anyone who works for eBay or PayPal has my utter contempt.
They are both going to go down hard. Get your resume ready, you are going to need it.
Tell JD the Noise will Never stop.
They know quite a bit about me. My CCard #, my SS #, my checking account # and all sorts of personal data. I have used them for a long time, but I have never trusted them for a single minute.
They have no principles. That's primarily due to their association with ebay. True, most of my distrust stems from a "seller's point of view" and how I am at their mercy; even when they may know The Truth, they will typically rule in favor of Expediency.
That commitment to Expediency, rather than Truth and Fairness, is a double-edged sword, at times. It can sometimes cut the buyer - one that has been scammed by an unscrupulous seller of bogus goods.
The Paypal employee's comments above may be factual, but they neglect one basic point. It may be true that only a few people are left to twist in the wind, but the majority of that "few" has most certainly been fleeced, Big Time!
Scammers don't usually make it a habit to ply their trade in the Nickel and Dime market. If you get scammed, and you have no CC company to fall back on, you will be out a considerable sum of money.
Then you'll be talking to "Jim" (who has a curious Punjab accent), after 4 phone calls and twice as many disconnects, who tells you that *if* paypal can get the money back from the Seller (scam artist now enroute to parts-unknown), then You will get your money back.
And not one dammed minute sooner.
How often do you hear someone complaining about a “bad” experience with a credit card company (other than the outrageous interest rate that they charge, and guess what eBay is also attracted to)? Credit card companies understand that customer service is actually what their business is all about. When I regularly buy a product or service from a provider, I expect to get/have a "good" experience every time. Is it any wonder then that people talk about their bad experiences with PayPal.
The trouble with eBay management is that they can only see the easy computerised fee stream; they are not interested in any of the responsibility that goes with such an operation. Frankly, I cannot understand how PayPal is allowed to operate without more stringent prudential supervision.
Frankly, I can’t sleep at night in anticipation of the joy of the day when the major CC companies launch their own card/terminal-less payments system. They will undoubtedly do it properly, and PayPal will then very quickly be driven back to, and whither on, the Donahoe-dwarfed eBay marketplace.
What’s it feel like to be so loved by so many, PayPal employee? And I never thought it could be possible for any organisation to become more hated than “the banks”: at least the banks understand that they have to give service.
Whether you choose to hear this or not: The truth is, its not easy managing a payment service where users are anonymous save for an email address and you have all sorts of scamsters constantly attempting to use the service for all sorts of insalubrious activities, from fraud to money laundering. That too when the service has a global footprint the likes of which PayPal has built.
As far as waiting for a PayPal killer from the CC companies, you might be waiting for a long time. Banks and CC companies are big slow movers to begin with and in the current financial environment of distress, building a PayPal killer is probably way low on the priority list.
And finally, I find it necessary to repeat what I said earlier: PayPal is trying to improve the customer experience, but these things don't happen overnight.
The fact remains, some folks have been screwed. When screwed, it was for more-than a pittance. When they contacted paypal, they got the bum's rush. End o' story.
It really doesn't matter if it was "only" a mere .001 percent, that equates into thousands of people. And they tell eleven people, and they tell eleven people, etc.
And as far as combating these scenarios... **YES** - these things don't happen overnight. But neither did the problems.
Paypal has had ample time to much farther along the FIXIT path than they are, currently. They chose not to address these issues, many years ago.
It was the Expedient and More-Profitable thing for them to do. Now, they've supposedly changed their stripes. Good for them! Time will tell if it's too late.
For many, it is.
Well, at least you admit you are a PayPal employee and your loyalty to your company is admirable; I hope it is reciprocated.
As predominantly a buyer on eBay, I am perfectly happy to use PayPal (on eBay only), it is convenient; as an occasional seller, PayPal is an abomination for all the reason referred to above and by others and more.
“The banks” already have in place a very smooth working credit/debit card and internet payments system, which from the users’ point of view (both merchants and customers) are now as secure as any such system can be; the banks do not interfere with transaction, and they also have an effective dispute resolution process if a problem does ever arise.
The simple fact is that if “the banks” put their minds to it and extend their existing system to include card/terminal-less payments, based simply on customers’ unique email addresses, they will do it properly and when they do (I am praying hard) PayPal will undoubtedly shrivel back to the Donahoe-dwarfed eBay marketplace.
The simple fact is neither PayPal nor eBay has any concept of the word “service.” Indeed I doubt that a business “consultant” has any concept of long term development: consultants invariably go in, shuffle some paper around, collect their fee, and leave five minutes later. (Please Mr Intel, now that he has “proved” himself well enough for a directorship, please, please, please offer him a full-time executive position over at your company.)
How much work do you really think there is involved for the banks to extend their existing smooth-working electronic payments systems to encompass card/terminal-less payments, in particular a terminal-less system for very small “merchants” which is PayPal’s only real advantage?
Anyone who has an internet banking arrangement with a bank already has supplied all the necessary information for the bank to implement such a system.
Knowing that “the banks” are as attracted to a nice easy automated 2-3% (of everything) fee stream as anyone else would be I cannot imagine that they are not already working hard on same. I would not be surprised if we don’t wake up one day with an email message from our bank telling us that the new payments portal is launched and all we have to do is insert the payee’s bank-registered email address and the payer’s bank-registered email and password instead of credit card details.
The banks may well offer varying warranties under such a payments system as they do with card transactions with merchants and on-line banking transactions. It may be that the banks would not offer warranted “merchant” services to entities that have no substance (banks at least have some idea if you have any substance), or they might even “hold” the payment for a “clearing” period as they do with “paper” payments; whatever, and I am sure that the banks will let PayPal continue to dabble in that riskier part of the business.
The big difference between PayPal and “the banks” is that, unlike PayPal (and eBay), the banks understand that they are in a service industry and that they know they have to provide a satisfactory service 100% of the time to succeed. I doubt, when it comes to the home stretch, that PayPal can come to terms with that concept.
If that is correct that will be the first logical thought this guy has ever had; he otherwise clearly has no idea of what he is doing. If that MBA taught him anything then he should be negotiating with “the banks” to take PayPal and integrate it into the banks’ online payments system, in exchange for an appropriate interest in the consolidated business, of course. Because, the more successful PayPal is, the more likely it is that the banks will finally get off their butts and introduce a like system; if and when that happens the banks are going to squash PayPal like a bug in about five minutes flat.
In the meantime, if he is good enough for a directorship at Intel, could they not offer him an executive position too? Then can we can find someone to put the pieces of eBay back together again and let us all (including the stockholders) get on with having some fun and making some money.
As a buyer your protection is absolute, on eBay.
Buy something with PayPal off eBay and your 'protection' is limited to what PayPal can recover from the seller.
I offer it because the customers like it and my customer service ethic is to please the customer. I prefer Google Checkout, it has a well designed & workable dashboard, has better security checks and I jump through less hoops. GC is a PITA to integrate on any website which has the PayPal API installed, odd coincidence huh.
I no longer keep funds in a PayPal Money Market account, the User Agreement changed last year and not in my favor. I have a totally separate bank account which never has a balance of more than $100 for longer than an hour or so and I sweep PayPal deposits to it daily and on out, limiting what can be hooked out.
That is a lot of work to protect myself from a payment processor. Sooner I believe rather than later 'money exchangers' will be regulated and the consumer abuse will stop.
Here is my story. There are many others like it, scour the web. Paypal is allowing software pirates to use its service to accept payment then ruling in favor of them when disputes arise.
I lost $605 because Paypal sided with someone selling pirated software. Here is my story:
I responded to an ad on Craigslist for a copy of photoshop. It was clearly outlined in the ad that it was for a licensed copy of adobe cs4 master collection. The individual claimed it was from a company that had recently gone under due to the bad economy. I spoke to the individual who reiterated the claim that the software was legitimate and I could register the license with Adobe.
I paid for the item through paypal as the individual sent an invoice for $605. The invoice had very clear wording as to what I would receive "Adobe creative suite 4 master collection." This individual sent me the package and included buyer confirmation. When the package arrived, I signed for it. Upon opening the package, I realized I had been scammed. The individual sent me a copy of photoshop, but it was not legitimate. It was a pirated copy on a memorex DVD.
Feeling confident in Paypal's buyer protection, I filed a dispute with paypal. I marked that the item was significantly not as described - counterfeit. I then immediately escalated the matter as the only proper solution would be a refund. The individual clearly does not have legal copies of photoshop as claimed. The team at disputes immediately ruled against me as the individual did ship something. I was shocked. Since I paid via the default payment option in paypal, an ACH, I could not chargeback the payment.
I called customer service to explain the issue and after escalating through four levels of the call center was told that there was nothing I could do. I have since started contacting government agencies that may be able to help me with this issue. I have also written several emails to Paypal executives that were handled in the same way - they referred me to a customer service rep who said pirated software isn't grounds for a reversal.
In addition, paypal has refused to release the information necessary to pursue civil or criminal action against the individual who knowingly sent the counterfeit item. Paypal's user agreement explicitly states that using paypal to sell pirated software is prohibited. In addition, your privacy policy states that paypal can
release your information to:
Law enforcement, government officials, or other third parties when
* we are compelled to do so by a subpoena, court order or similar legal procedure
* we need to do so to comply with law
* we believe in good faith that the disclosure of personal information is necessary to prevent physical harm or financial loss, to report suspected illegal activity, or to investigate violations of our User Agreement.
I believe this is clearly an instance when those who I talked to over
the phone believed in good faith releasing the information was necessary to report suspected illegal activity. It is also necessary in order to file a civil claim against the seller of the software. I will lose the claim I filed with the bank (because it is an ACH, not a credit card), paypal denied my claim, and the only other recourse I have is through small claims court. I can't go this route because I don't have the necessary information.
Currently, I am out $605, the person who sent me pirated software has $605 less paypal fees, and paypal gets to keep its fees on the transaction. I have clearly expressed and can present evidence that show it is more than likely that this individual did send me pirated software. My dispute also clearly explained the matter. If Paypal allows this theif to keep the money, then Paypal is knowingly
participating in and facilitating a felony. Paypals actions are akin to allowing drug dealers to use its services to accept payments.
Rob R.