PayPal robbed my bank account

http://www.jacquesmattheij.com/PayPal+robbed+my+bank+account

by jacquesm • 16 years ago

378 185 16 years ago

jacquesmattheij.com

cperciva• 16 years ago

How is all of this reflected (if at all) in the account history on the paypal website?

jacquesm19• 16 years ago

It shows 13(!) transactions in total, let me try to put something together that you could make sense of.

The paypal transactions do not correspond 1:1 with the bank stuff, which makes it a lot harder to follow.

here is the png with the paypal situation (I'll add it to the post too).

http://pics.ww.com/d/427289-1/paypal3.png

Voltooid = completed Verrekend = corrected Mislukt = failed

I wished I had a reliable alternative to paypal, a company that just does one thing and does it well, transfer money from me to third parties without all the bs that paypal makes me deal with.

On top of that they caused me a bunch of trouble with my bank which I'm really not happy about.

What you would expect, for 3 transactions is three entries on the paypal side and three entries on the bank side.

Instead you get 8 transactions on the bank side, 13 on the paypal side and in some of those the amounts do not even match up with the invoices that were paid, which makes for a huge problem for the bookkeeper at a later date when he has to piece it all together again.

lwhi• 16 years ago

I think the last transaction mentioned in the body text should have referred to dollars (rather than euros).

callmeed• 16 years ago

What would you be willing to pay in terms of transaction fee for a good service?

demallien• 16 years ago

Ugh. Yet another PayPal disaster. I'm gearing up to go live with a new Mac application in about 6 months time, and I had planned on using PayPal as the preferred payment method, as it seems to come with the least headaches. But it seems you can't go a month without yet another PayPal tragedy popping up on HN.

Is there any other payment service out there that doesn't have as many problems (especially with customer service) as PayPal? Or better yet, is anyone on HN creating a startup to handle credit card payments that I could use instead of PayPal - ideally, it needs to be dead simple to use - I'm thinking less than 20 lines of ruby, or 50 lines of C to use. Anyone working on something like this?

2arrs2ells2• 16 years ago

Google checkout?

ido2• 16 years ago

Only for US and UK sellers (and Amazon's payment service is only for US sellers iirc).

masklinn• 16 years ago

Nope. The experience is just as crummy, the support is even worse and there are pretty big geographical restrictions on both sides of exchanges (sales and buys).

For instance, as far as I know you still can't buy or sell from Canada (with a canadian bank account anyway) via Checkout.

Only alternatives are going straight for the credit card, or using international bank transfers (which I doubt are without hassles)

dsplittgerber• 16 years ago

As evidenced by Max Levchins recount of Paypal's problems in "Founders at Work", the massive problem with handling credit card payments is fraud, not coding or something similar. That's most probably the reason why so few firms tackle this space.

citricsquid3• 16 years ago

Exactly. A huge number of people seem to ignore this and make the naive "Why doesn't someone just do what paypal are doing, but better?" type statements.

There are so many problems Paypal faces when offering the service they do, granted some of these problems faced by people are ridiculous (like this one we're posting in) but the average problem that is reported is reasonable.

Maybe it can be argued that unless Paypal can guarantee fantastic service they shouldn't operate as a business, but I (as a customer of Paypal) love their service, it'd suck if they went :-(

auxbuss2• 16 years ago

First off, I had a bad PayPal experience years ago, so no amount of discussion would persuade to me to use them. I wouldn't use them if they, or anyone else, paid me. They are that bad.

Putting my bias aside, what you need to consider is the time and stress that will occur if -- I'm straining not to say when -- things go wrong. If they do go wrong, then you will meet a void of silence.

You will spend huge gobs of time -- and incur costs -- trying to sort things out, and you will completely without control. You will lose sleep. You will be distracted. And if the sum involved is large enough, it could be disastrous for your business and perhaps your life.

Now, ask yourself: what you would pay to avoid those risks?

I suggest the simple answer is to sidestep the risk and simply not go there.

jacquesm19• 16 years ago

You know what? I should have known better. We had $50K frozen for 6 months about 10 years ago when paypal suddenly decided they liked our money more than we did.

Eventually they paid it back but not after all the symptoms that you just described.

Then, about a year ago I did a project with a freelancer in the US (another HN'er) and I ended up having to pay him using paypal because we had no other viable option.

So, I thought maybe they'd cleaned up their act in the meantime.

Now I kick myself for being so stupid.

DeusExMachina• 16 years ago

http://www.fastspring.com/

Never had problems with them. They have a great customer support and a neat admin interface. They take payments from PayPal too, so you don't have to renounce to those.

steveklabnik• 16 years ago

While it forces you to get an actual merchant account, the experience when using ActiveMerchant is super easy to integrate. It's certainly less than your 20 lines of Ruby.

And if you wanted to go that route, it supports a ton of backends, so you could actually start with PayPal until you get a merchant account, and then switch over.

PonyGumbo2• 16 years ago

Honestly, it's really not that difficult to set up a merchant account. The only drawback (from my perspective) is the monthly fee.

petercooper• 16 years ago

Is it? Who can I get a competitive merchant account and processing with here in the UK that lets me charge arbitrary amounts (i.e. not selling "products") without a laborious signup process? PayPal's the only thing I've found close to this over the years.

wnoise• 16 years ago

Given all the horrible things they do, why do people still grant PayPal access to their money?

jacquesm19• 16 years ago

Suitable alternative please?

The only one that I have that will work in all these cases is Western Union and their fees are horrible.

cool-RR• 16 years ago

I think PayPal has become bad enough to justify taking the "suitable alternative" search to the next level. Like considering a change of career or company strategy.

loewenskind• 16 years ago

Horrible compared to just being robbed?

viraptor2• 16 years ago

International payments. I cannot pay for my Romania-based vps in any other way really. My debit cards don't support 3D-secure, credit cards fail 50% of the time (already had problems with that), bank transfers are not supported.

There's simply no alternative for me. Fortunately this and ebay are the only services that require me to use paypal anyways.

sireat• 16 years ago

Curious what would be the advantage in having a VPS in Romania?

That is, unless you are developing something for Romanian market or have it setup as a convenience for Romanian developers you hired?

jasonlotito3• 16 years ago

Lack of any alternative. And before you post an alternative, make sure this alternative has the same feature set that makes PayPal useful. And it's not credit card processing.

jcroberts4• 16 years ago

jacquesm, There are two potential solutions. The first is having a separate bank account specifically for use with paypal. This gives your "real" bank accounts some degree of separation from the at-risk account you've used to become "verified" according to paypal (note the unhealthy amount of sarcasm on "verified"). This is the only working approach if you must be "verified" by them.

The second method is far better; _ONLY_ give paypal a credit card number. You will not be "verified" according to paypal, but you now have control. If palypal does anything stupid, you just file a dispute/charge-back with your credit card company. When you reach the stupid "spending limit" for an "unverified" account, simply delete your credit card number from your paypal payment methods, then close your paypal account. Now you can create a new paypal account with a new email address and the same credit card. The result is you just by-passed their spending limit that _forces_ "verification" when reached.

EDIT: Yes, I feel giving paypal your bank account credentials is absolutely foolish. They try everything they can to get access to your bank account(s), but at least there is a way around their stupid games.

jacquesm19• 16 years ago

We're in the 'first' situation now, but the downside is that if paypal does decide to plunder your account that you are instantly below 0. I never even realized they could do that until it happened.

The second method is better but unfortunately paypal would not authorize any payments (from my credit cards!) until they had a confirmed (and thus accessible) bank account.

praptak3• 16 years ago

Just curious - how does it look from the technical side? Does PayPal use direct debit or something different?

jcroberts4• 16 years ago

> unfortunately paypal would not authorize any > payments (from my credit cards!) until they > had a confirmed (and thus accessible) bank > account.

Please elaborate. I'm not sure what you mean by this, and there may be (are!) differences between how paypal operates in the .us versus the .eu.

Were you not allowed to _send_ money with only your credit card on the paypal account?

Or were you not allowed to _receive_ money with only a credit card on the paypal account?

Sorry. It's late here, I'm tired, and I'm not reading your words as clearly as I should. Though I haven't done much in recent weeks, I do volunteer work for a non-profit organization here in the US that specializes in helping victims of online fraud. Sadly, the "paypal drained my bank account" story is repeated regularly.

lionhearted• 16 years ago

I had something similar happen with a shady merchant account company. I had changed some details I had on file with them a year earlier, so they said I couldn't cancel the contract I had with them without penalty, because we signed a two year contract and "it hadn't been two years" (it had been four years, I just changed the address and other simple details on file but apparently they were saying it was only a one year old account). I called my bank, told them to block all charges from the merchant account company and give them no access, and they did. The merchant account company sent a number of threatening letters and would call me at asinine hours (5AM Los Angeles time) but eventually they went away, and they didn't get their $600 cancel fee or whatever nonsense. This was a few years ago, when online payments was more of a wild wild west type deal, I think it's gotten better since then.

Anyways - you can always call your bank and explicitly them to block access. For bonus points, tell them you're recording the call in the beginning (even if you're not), and take down the person's info. Then if there's a problem, you can say, "I explicitly told teller John Winterman on 18th October at 2:25PM to deny access to Paypal." This kind of accurate record keeping makes banks take you very seriously. So yeah - call the bank and deny access, or reverse-reverse charges... the bank is generally on your side if they're decent. (And if they're not decent, get another bank! I've found all the RBS owned banks to be good quality - RBS, Citizen's, and Charter One, if any operate near you)

StavrosK4• 16 years ago

One of the things I love Greek banks for is that they have none of this overdraft nonsense. If you have no money in your account, the transaction fails. I've tried to buy groceries and things a few times without having money in the account, and it just didn't go through.

jseliger3• 16 years ago

The worry about Paypal dropping you below zero is a very good one, as I wrote about my experience with it: http://news.ycombinator.com/item?id=1664224

gst3• 16 years ago

In many European countries (I don't know about other countries) there's not so much different between these two options. In fact, in Austria it's even easier to cancel a charge to your normal bank account (which you can do without giving any reason, and even if you initially approved the charge), compared to your charge to your credit card (where you need to claim that the charge was unjustified).

matwood• 16 years ago

The first is having a separate bank account specifically for use with paypal.

IMHO, this is crucial. Years ago some friends started an online business selling trinkets and they asked me about paypal. The advice I gave them and still give is to open a completely separate account for your paypal deposits. As as soon as paypal pays you, move that money into your real business account. This will not prevent paypal holding your money hostage, but it will stop them from taking money back out of your account.

If you only need to use paypal to purchase things you can use the method above, but it's easier to just hook it up to a credit card.

sams99• 16 years ago

And I was reading this today http://tortoisesvn.net/howpaypalscrewsopensourceprojects ouch

metachris• 16 years ago

More on this topic:

* http://sourceforge.net/apps/trac/sourceforge/ticket/13993

* http://sourceforge.net/blog/warning-to-open-source-projects-...

I didn't realize PayPal also froze the account of the developer of minecraft (containing about €600,000):

* http://notch.tumblr.com/post/1096322756/working-on-a-friday-...

* http://en.wikipedia.org/wiki/PayPal#Criticism_and_limitation...

citricsquid3• 16 years ago

The Minecraft story isn't a good example. Markus had an account taking maybe 1k euros a day for around a year, then suddenly in a month it shoots up to 100k euros a day. It would have been negligent of Paypal not to temporarily suspend payments when someone without a history of taking that much money suddenly does.

The solution is not to build a business around Paypal. If Paypal suspending an account you operate for 14 days is going to cripple your business you should look into new solutions.

cturner• 16 years ago

    Now, for me a BANK (which is what PayPal is here in
    Europe)

If they are a bank, I'd anticipate that you could call them and insist on speaking to a compliance officer. Keep a log book, if they fail to do so, complain to the regulator.

bond• 16 years ago

They are registered as a bank in Europe so they must comply with European bank regulations...

CWuestefeld• 16 years ago

Real banks make mistakes all the time.

I once had a $35 check clear the bank for $4,035. That caused a domino effect of bounces. But the bank fixed it up -- I even got them to write me a letter of explanation to give to my landlord, and use in the future for any credit questions.

My wife is a bit anal about the bank (she's an accountant). She used to call the 800 number every morning (that was before online banking) to double-check the balance. It was quite common to see random discrepancies of as much as $5, which would resolve themselves the next day (this was a different bank than the anecdote above). I have no idea how that happened, but it didn't seem to make any difference to the monthly bottom line.

jacquesm19• 16 years ago

That last part of what you write is what it is all about. This did make a difference to my bottom line.

The mistakes bank make are all backdated and your statement is adjusted, you'll never see the difference once it's all over. But what paypal did here created a mess that will take quite a bit of work to untangle when it needs to be explained to Her Majesties beancounters.

Tycho• 16 years ago

Indeed. Seems like PayPal is a good argument for the anti-regulation philosophy. Reputation on the free market is just as good a protection/guarantee as any regulation. Of course it would be even better if PayPal had stronger competition.

cosmicray2• 16 years ago

> Real banks make mistakes all the time.

Indeed they do. Not only do banks make mistakes, but the Federal Reserve does as well. For those who don't know this, the Fed is responsible for national check clearing (other than bank-to-bank cash letters, what we in IT would call direct peering). The Fed is the operator, for check clearing, of what we would call the core routers.

A number of years back, the Fed made a mistake in my favor (a sizable mistake). I discussed it with the bank. The bank said they had to wait for the Fed to resend them the correct item. We're both still waiting. Sooner or later I'm going to give up waiting :)

Retric• 16 years ago

If it's a significant amount of money you should probably talk to a layer of some kind before you "give up waiting :)"

However, chances are this is one of those wait 7 years from the event then close the acount and keep the money.

rlpb• 16 years ago

> Much to my surprise, about a half hour later, paypal reversed the charge, but the amount was paid in to the account of the recipient. Free money, or so it seemed :)

If I understand this correctly, double entry bookkeeping should have made this situation impossible (or, at the least, Paypal should then notice their net loss). It's a bit worrying to see indications that Paypal's internal systems can't keep track of money correctly.

Have you considered reporting this to your regulator?

jacquesm19• 16 years ago

> Have you considered reporting this to your regulator?

We're getting there.

I have plenty of stuff to do but if this is not resolved within the next 7 days or so (and that includes backdating all transactions so the effect on my standing with the bank and lost interest are corrected) there will be trouble.

iwr• 16 years ago

So what's wrong with setting up an account with a payment processor rather than paypal? The processor only provides the interface, but does not actually hold money hostage or have other arbitrary restrictions.

lsc2• 16 years ago

you must have much better credit than I do. Every payment processor that will do business with me 'holds' 25-50% of my money for a certain number of months even when you aren't doing something suspicious.

Now, last time I looked was a few years back, so things may have changed, but this was my experience last time I had a merchant account... Paypal isn't any good, but they are the best of a bad lot, as far as I can tell.

jasonlotito3• 16 years ago

25-50%? I never saw that rate, and I've dealt with a LOT of processors. 5-10% is common. It's what the banks hold in case of chargebacks.

jacquesm19• 16 years ago

I was paying money, not receiving it.

gst3• 16 years ago

Seems that you're from the Netherlands or from Belgium.

Are such "wrong" charges really an issue there? In Austria I would just let my bank cancel those charges (you can do this for free) if they are not justified.

As far as I know, going below "0" wouldn't be a problem either, because the bank then retroactively "recalculates" your account history without the charges in question.

jellicle• 16 years ago

The whole idea behind Paypal was:

-- we'll do everything a bank does, but without all those "laws" and "accountability for mistakes" that the other banks labor under

Go on, look it up.

And they achieved that goal. Paypal largely escaped regulation as a banking entity. Banks are trustworthy with your money (to the extent that they are) not because they're magically trustworthy, but because there is a regulatory state forcing them to be. Paypal has no regulatory apparatus overseeing it. Paypal will steal your money and your only recourse is to sue them.

PayPal has made the calculation that the vast majority of their customers will not sue them. Therefore, it is profitable for Paypal to steal from these customers. This is now common knowledge. If you use Paypal today, you have no excuse for not knowing that they will steal your money.

gst3• 16 years ago

Actually, in Europe Paypal operates as Luxembourg-based bank.

mise• 16 years ago

Does this mean that the horror stories of frozen assets donn't/won't happen to European accounts?

all3• 16 years ago

Technically, this is true. Being based in Luxembourg, however, effectively abrogates the effect of the regulatory aspect of things. I am not au fait with the ins and outs of Luxembourg's banking laws, but I do know it is a grey area of banking in the wider scene. Countries that tax worldwide income (e.g., US, Germany) routinely decry Luxembourg as a tax haven. I suspect, therefore, that Luxembourg does not regulate or apply its laws to commerce that occurs outside its borders. As I noted in the last round of "Paypal-was-architected-by-robber-barrons", Amazon in Europe is also incorporated in Luxembourg. Aside from its proximity to Brussels and being at the centre of western Europe, this is almost certainly for tax reasons. That is, they don't ship (or ship pitifully little) to Luxembourg itself and so pay considerably less in taxes than they otherwise might. Similar, though considerably less convenient, havens also include Jersey, Gibraltar, and Cyprus, all semi-autonomous regions belonging to the UK that attract businesses by taxing only commerce that occurs between two parties within their borders.

FWIW, I wouldn't touch PayPal with a barge pole. We use RBS WorldPay because 1. we get favourable terms as we have an account with RBS, 2. we get 1% transaction costs with no monthly fees,and 3. we get fraud protection by RBS WorldPay for free.

The tech folk at RBSWP are not the sharpest tools in the shed, but RBSWP itself has proven to be good for us financially. Another one that is quite popular but whose breadth of availability I do not know is SagePay.

johnitsagal• 16 years ago

How come nobody sues them? How come there hasn't been enough of an uproar to get congress involved in regulating PayPal?

Reading HN, these horror stories seem to be fairly common, or maybe I'm just hearing the same stories over and over again.

yummyfajitas2• 16 years ago

Currently we have two choices. You have banks, which are huge, bloated, slow, massive barriers to entry. If you want to build an MVP and accept payments right away, good luck with a bank. But your money is safe.

On the other hand, we have PayPal. Sometimes they steal your money. For a very small business, paypal is easy to get going with. Millions of small business people have decided that this tradeoff is right for them - worst case, you lose a few grand.

I'm hoping congress doesn't turn PayPal into a bank. If they do, we will only have one choice (banks), and life will be harder for smaller businesses.

Thousands of very small businesses have decided PayPal's offers the right set of costs/benefits, why do we want congress to second guess them?

Vivtek4• 16 years ago

I've been using PayPal since 2001 when I signed up in order to send Sluggy Freelance a $5 donation. Since 2002 I've used it increasingly for payments from my freelancing customers - there was no other convenient way to get money from Europe to America, and PayPal revolutionized the translation industry (along with Moneybookers and similar services, but PayPal is the biggest).

Not once have I had any problem with them.

Jacques, I've had a bank - a real live regulated bank - deduct my paycheck instead of depositing it, and not notice until I complained. Granted, they fixed it immediately when I complained, and PayPal may not, but human error does occur. Certainly PayPal has never gratuitously deducted money from my account.

Judson3• 16 years ago

1) I hate paypal.

2) I would respectfully argue that your point about banks being safe due to regulation is quite false. On the contrary I would say that it is (over-)regulation that causes banks to lose sight of their reason for existence (hint: its not selling mortgages to fanny and freedie), protection of capital (a service they used to charge for - Remember monthly checking fees?).

Banks used to be in the business of protecting capital before the FDIC insured deposits for them at an insanely low price (relative to the risk the banks can take), thus killing the "Capital Preservation" specialized bank and entered free checking / free saving / free homes. Low reserve ratios and a never evolving asset classification (Mortgage backed securities were satisfying the reserve ratio for banks? Only government regulators could think up that one) allowed banks to play with everyone's money. Was it because of greed? Kinda. Exacerbated by having customers deposits insured? Now we're getting somewhere.

Your point is not necessarily wrong, since most regulation is just a standardization of norms and practices common in the industry. But regulation can be bad (as almost anything in excess can be). The real reason Paypal sucks is my next point.

3) The real reasoning for their horror stories lies in the fact that they are simply an intermediary (of sorts, I believe that Paypal, the intermediary, is separate from Paypal, the bank). Person X pays Paypal and Paypal pays person Y. There are many ways this system could break down, but the most expensive for paypal are:

- Person Y (the getting-paid) has their account hacked and starts scamming people on eBay, listing a lot of auctions and getting paid, never shipping stuff, and running with the money. eBay has made it harder to do this though, since you have to provide proof of shipping to get the funds released.

- Person X (The payer) - has their account hacked (or their just a terrible person) and they charge up $1,000 in online shopping. Person Y ships the merchandise and Person X files a chargeback against Paypal. Paypal must then freeze that amount, sometimes taking it out of your bank account, to make sure they have the cash in case they lose the chargeback claim (which is really easy to do).

In the end, I'm not really sure where they system breaks down. Paypal is over-zealous about trying to prevent fraud, but, unfortunately, they are at the mercy of the Credit Card processors. Its kind of amazing that they were able to create a market where they are bullied on all sides, by essentially bullying their customers.

_delirium2• 16 years ago

Banks used to be in the business of protecting capital before the FDIC insured deposits for them at an insanely low price (relative to the risk the banks can take)

They were never very good at that business, though. The main problem is that even a very conservative bank can't survive a large-scale bank run, and bank runs happened about every 15-20 years for an extended period of time: in the U.S., the Panic of 1819, Panic of 1837, Panic of 1857, Panic of 1873, Panic of 1893, Panic of 1907, and finally the panics of the late 1920s.

KirinDave2• 16 years ago

It isn't necessarily an evil thing to want to be out from under those regulations. A lot of them are what conspire to make your banking experience terrible. For example, why can't you transfer from your savings account all you want? Regulations. Why do banks have such onerous process for signing up for a new account? Regulations.

Which is not to say that PayPal isn't sleazy-as-all-hell. The whole point of PayPal was to find a way around the regulations so that they could make a ton of money by gaming your financial transactions in their favor, and cutting out the credit card middle man. Have you ever paid attention to how ardently PayPal tries to stop you from using a credit card to pay?

The really sad part is that PayPal had the chance to become the Next Big Financial Thing. Their core ideas—if you separate away all the evil, that is—are not bad ones. “Make online payment easier and more secure.” Unfortunately, they seem to have dropped the second part and just settled on “Make online payment”. They took the short-term road to profit and missed a much, much larger play.

sprout3• 16 years ago

"Make payment easier" is a bad idea. The difficulty is designed to make it easy to track. Making it easier makes money harder to track, which is a Bad Thing.

bryanh3• 16 years ago

Cynically stating that PayPal is truly attempting to "steal" from their customers is incorrect. Based on most of what I've read (and I, like everyone here, have read a of PayPal horror stories...), PayPal "stealing" is really just PayPal giving a false positive about fraud and having abysmal customer service. While the end-result is indistinguishable from "stealing", they at least deserve the distinction.

However, that certainly doesn't excuse their actions. I wouldn't object to further regulation for PayPal but I have a feeling this won't happen anytime soon.

ellyagg• 16 years ago

No. They are fully aware that their support is abysmal and they are fully aware of their false positive rate and they are fully aware of the positive consequence to their bottom line. Just because they abstract the stealing process doesn't make it less stealing.

jimbokun3• 16 years ago

"While the end-result is indistinguishable from "stealing", they at least deserve the distinction."

Sometimes the most straight-forward word to describe a thing brings the most clarity to the discussion. Doesn't pretty much any thief have a euphemism for what it is they do?

sausman• 16 years ago

Businesses don't need the government to tell them how to treat their customers. It is in a company's best interest to be accountable for their mistakes because if they don't they will lose business.

Fraud is and always has been illegal, so why we would need a regulatory institution to tell businesses how to treat their customers is beyond me.

If anything, regulations just protect bigger companies from smaller competition because smaller companies can't afford to bear the cost of complying with regulations.

CamperBob2• 16 years ago

Businesses don't need the government to tell them how to treat their customers.

Apparently some do.

cookiecaper• 16 years ago

The annoying thing is that in cases like this, people are not supposed to just resign themselves to take it and they are not supposed to try to get Congress to force PayPal to do what they want by fiat, they are supposed to look around, say, "Oh, PayPal is a dishonesty entity that makes a lot of money from stealing; if it hasn't happened to me yet, it is more happenstance than anything else", and not use PayPal. This is a great opportunity for someone to create a non-broken, non-evil PayPal and make money off of it.

That is how the market is supposed to work but people are generally too lazy to care or do any research before they go on with something. What good is it to keep running to the government to tattle on everyone who crosses us? We need to teach people to cultivate a brain and learn from their mistakes instead of getting upset and running to Uncle Sam crying about the bully down the street; instead of trying to make your dads fight, just don't play with the bully anymore and the problem goes away.

PayPal should be running amiss of generic anti-evildoing laws involving fraudulent activities and deceitful business practices without the need for any specific legislation.

dangrossman• 16 years ago

I don't think the problem is as much that end-users don't care enough to want alternatives, but that it's near impossible for an alternative to exist. During the dot-com era when PayPal came about, there were many other 3rd party processors doing the same thing, and they went out of business primarily because they were losing more to fraud than they were making on fees. PayPal was losing tens of millions of dollars a month at one point, but they managed to create good enough screening systems and policies in place to stay in business.

These days even if another company were to manage the fraud as well (which will almost automatically make them as bad as PayPal with freezing funds and accounts... you know real merchant accounts underwritten by banks do this too), but the regulatory climate around finance is so different that they'd be unlikely to get off the ground. Visa/MC/Amex/Discover would never agree to allow such large scale factoring (accepting payments on behalf of another business, forbidden in every standard merchant account agreement) again.

brc2• 16 years ago

A bank doesn't exist to safeguard your capital. That's what they tell you to convince you to deposit your funds there. The government promises to make good any bank failure in order to convince you to deposit your funds in a bank both because it helps the economy and because it makes it easier to keep track of you for tax purposes. Before this guarantee it was common enough for a bank to fail and depositors would lose all their funds.

A bank exists to take in deposits, pay interest and then loan that money out to other people at a higher interest rate. It's a completely different model to PayPal, which exists as a payment transfer company along the likes of Western Union. Yes, they avoid banking regulations, but the banking regulations exist to protect the banking industry, as widespread bank failures can seriously damage the economy. This is because banks use fractional reserve banking and actually don't have the funds to satisfy all depositors at the same time. There's no reason why a payments transfer company should be regulated like this, because PayPal should be able to make good all requests for funds at the same time, as they don't (well, I hope not) leverage the funds on deposit and lend them out again.

If any regulation should be applied to PayPal, it should be in the area of consumer protection by having an ombudsman or defined area of recourse for settling disputes. But because of the trans-national design of the business, this is never going to work. And any increase in regulation is going to cause an increase in fees, which is the reason everyone uses PayPal in the first place.

netcan3• 16 years ago

I wouldn't jump to conclude that regulation is the only answer. One of the reasons we have so little competition and innovation in this space is regulation.

It would be nice if Paypal got pulled in to line a little, but what I would really like is an alternative.

BTW, don't we already have laws against stealing?

known2• 16 years ago

Does Visa/Master/Amex have their share of PayPal's robbery? Why are they not offering an alternative and credible service?

voidpointer• 16 years ago

If you feel like PayPal stole from you, shouldn't you be contacting the police?

vaksel2• 16 years ago

you know what I don't get...is why with all the paypal stuff like this happening...why don't the banks themselves create their own paypal type service

you can use your ATM card at any bank...so banks can work together...they should just create bankpal and have it be a service you can use to send money to your friend's account

jules3• 16 years ago

This already exists. For sending money to a friends account you just log in to the bank website, type their bank account number and the amount and voila.

For sending money to companies there is something called iDEAL. On the company's website you click checkout and you get sent to your bank's website where you get a page with the amount and a button to confirm. Unfortunately this iDEAL system is currently only available in the Netherlands.

vaksel2• 16 years ago

account # is way too long, I meant something that is tied to an email address

shelfu• 16 years ago

I'm pretty sure you can in Canada, using the interac (debit) network:

http://www.interac.ca/consumers/productsandservices_ol_emt.p...

tszyn• 16 years ago

According to the PayPal agreement for the Netherlands "To obtain Verified status you must complete the following steps: 1) Set up Direct Debit and complete the Random Deposit Process (available to applicable customers); or 2) add a credit card and complete the Expanded Use Programme." So it seems you don't have to give PayPal direct debit authorization to lift the receiving limits. Am I right?

smutticus• 16 years ago

You have the same bank as I do, Rabobank. My suggestion would be to contact them and demand the money back. I've had similar problems when other companies stole money from my account. I've called Rabobank and they've gotten my money back.

Forget about PayPal they'll never help you. It's not in their interest. In The Netherlands once you give a company the right to take money out of your bank account you have to watch them. Because they can take as much money out of your account as they want whenever they want. And their only consequence as far as I can tell is that I can ask for it back and get it.

stakent• 16 years ago

Solution for personal account:

I have a personal Paypal account associated with Visa credit card. The card is for the use on the Internet only and available money amount can be set by me as necessary.

If there is not enough money on the card then transaction fails.

I don't know if it is possible in case of company Paypal account.

kenjackson• 16 years ago

Dumb question, but with the free $1000 didn't he still come out ahead or did that eventually withdrawn from the account too, which I missed?

sanj• 16 years ago

I'm still flummoxed that people give PayPal access to their bank account.

I give access to a credit card, knowing that I'll only be liable for $50, but nothing more.

SriniK• 16 years ago

Good point. I give access to my secondary bank. This avoids extra charges when I pay to a friend.

danielnicollet• 16 years ago

Just a tip for those who are looking for a US-based alternative. I have just done a study of various payment processors here for our startup (http://commerce.exorbyte.com). While PayPal may appear cheap with their low flat fees on all cards, their monthly fees, transaction fees, etc. end up costing you.

My conclusion was that there are much better rates and better service with the company that provides us already our accounting software (Intuit - QuickBooks Pro). Their rates are about a third of what Paypal asked in terms of monthly subscriptions, even lower if you are referred by Intuit Pro Advisor (just say you are if you know one - or look for one in their online public DB).

I trust much more a company that provides more than just payment services than one that does that and only relies on payment fees to enrich itself. Good luck, Dan

chmike3• 16 years ago

I used money bookers (http://www.moneybookers.com) once and it was OK. A bit expensive but exactly what I needed.

I considered using PayPal but every time I read the contract it scares me away. I am required to allow them to get money out of my bank account. There is no way I'll ever do that. Money bookers works differently and it is more trustworthy.

lisper• 16 years ago

I'm surprised that after more than 100 comments no one has mentioned Square as a PP alternative:

https://squareup.com/

chmike3• 16 years ago

Squareup doesn't provide the same functionality as PayPal.

HeyLaughingBoy• 16 years ago

Yup, and when I pointed out a few weeks/months ago that I keep a "PayPal-only bank account" and regularly sweep funds out of that account to another they can't touch, people said I was being paranoid!

Well just because you're paranoid doesn't mean they can't get you!

jseliger3• 16 years ago

Something similar happened to me -- http://news.ycombinator.com/item?id=1664224 for the gory details -- they didn't go in my bank account, but they did send me to a collections agency. I paid, sued in small claims court, and have never used Paypal again. That anyone would continue to use Paypal astonishes me.

krelian• 16 years ago

sued in small claims court

Did you win?

jseliger3• 16 years ago

Sort of. They gave me half the money back to make me go away. Given the amount of hassle getting that half of the money back entailed, however, I'd say I won the battle and lost the war. At the time I was filled with righteous anger at PayPal: How dare they treat me this way? Years later, and PayPal is still doing the same kinds of things.

w1ntermute• 16 years ago

Does anyone know how to unlink PayPal from your bank account? I can't find anything online other than "talk to your bank".

brc2• 16 years ago

I just want to be a lone voice for PayPal here. I expect downvotes but want to show a different point of view.

- PayPal is not a bank, you don't get the same level of customer service or regulations. However, you don't pay anything like the sorts of fees that you would with a bank for sending/receiving money, especially as a merchant. Try applying for a merchant, online only, account with a bank as a startup and see how far you get.

- PayPal processes a lot of transactions daily, globally, all with accounts that they know very little about. As such, their fraud detection is turned up a lot higher than a regular bank. They're obviously paranoid about any difference in patterns or strange occurences, and the usual response is to stop everything until it can be sorted out. In most cases it does get sorted out but that's after the anger has died down.

-Banks and credit card companies make mistakes all the time. My credit card issuer is always sneaking unjustified interest charges. I have to call and reverse them all the time. I've had banks bounce checks for no reason, charge me fees which cause the balance to go below zero, then charge more fees for it. That's stealing as well, but everyone shrugs their shoulders and says 'banks, what can you do'.

So my summary is : yes, dancing with PayPal is holding a Tiger by the tail, but there aren't really any alternatives. They can suck, but they're a cheap and reliable service.

But don't think that any amount of bank regulation would fix things. If they had the customer service of a bank, they'd have to charge higher fees. With the low fees, you should have low service expectations.

InclinedPlane2• 16 years ago

Another factor here is the "fear of the new". Which is worse, dying in a car accident or dying in a nuclear blast? Well, neither really. But which generates more fear in you? Dying in an accident can easily be a horrific, painful death, but everything else about it is familiar, so we turn down the knob on the fear-o-meter on the idea.

Similarly, banks treat their customers like crap all the time. But it's a crap that everybody has grown used to and come to expect. But when PayPal makes a mistake or has bad policies or poor customer service in any instance people will scream to high-heavens on the internet about it until the entire world has heard.

For myself, PayPal has treated me better than at least half the banks I've ever had accounts with (especially Bank of America), so I'm inclined to give them a little slack now and again.

dbrannan• 16 years ago

I only use PayPal to deposite into my bank.

I only allow them to access funds through a credit card, that way I can contest the charges.

Come to think of it, I never give any organization access to my bank account - ever!

If that is paranoide so be it.

netcan3• 16 years ago

Just removed my bank account from a (rarely used) paypal account.

How is paypal still the only player in this space? I don't understand it.

InclinedPlane2• 16 years ago

Site appears to be dead now (DB appears to be down), here's a cached version via google: http://webcache.googleusercontent.com/search?ie=UTF-8&q=...

jacquesm19• 16 years ago

Hm, strange, I checked and it works again...

blrgeek• 16 years ago

Jacques, if you're in the Netherlands (as your whois indicates), then you should file a complaint with KiFID, your financial services regulator.

http://www.kifid.nl/overkifid/contact

In India, most issues that the banks don't bother about get resolved very fast with a single complaint to the regulator!

known2• 16 years ago

Why PayPal doesn't use escrow protection? http://escrow.aliexpress.com/buyerprotection/index.html

PayPal robbed my bank account

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