I can't think of a company that has done more to democratize banking than PayPal.
Setting up a Merchant Account can be a real pain (and I too hope PayPal improves in this regard), but I really hope the author thinks harder about the title next time before making such a generalization.
If you want to know why PayPal is not evil, try this experiment:
Go to your bank and try to open a checking account with a debit card with no minimum balance, a positive interest rate, ability to transfer money instantly without writing a check (basically a wire transfer) for free, no insufficient fund charges, no monthly fees, free online and mobile banking, etc.
PayPal offers this to everyone, regardless of how rich or poor you are. If you don't have a lot of money other banks such as WellsFargo, Bank of America, etc., could care less about you and will try and take as much as they can from you in the form of ATM charges, monthly fees, overdraft charges, etc. Of course, I may be making my own over generalization here, but suffice it to say that I don't think PayPal is evil.
It is worth noting PayPal's activity is regulated within the EU:
"On May 15, 2007, PayPal announced that it would move its European operations from the UK to Luxembourg, commencing July 2, 2007 as PayPal (Europe) S.à r.l. & Cie, S.C.A.[33] This would be as a Luxembourg entity regulated as a bank by the Commission de Surveillance du Secteur Financier (CSSF), the Luxembourg equivalent of the FSA.[34] PayPal Luxembourg will then provide the PayPal service throughout the European Union (EU)." -- PayPal's Wikipedia page.
This status, within the EU, provides some protection for both businesses and customers.
For example, Soldier's Angels had their entire PayPal account disabled for simply processing the payments for a raffle where one prize was a pistol.
They were simply selling raffle tickets for someone else's raffle, and they're a registered charity, but PayPal is very strict: it's "relate[d] to sales of … (h) ammunition, firearms, or certain firearm parts or accessories", so boom, account disabled.
"Go to your bank and try to open a checking account with a debit card with no minimum balance, a positive interest rate, ability to transfer money instantly without writing a check (basically a wire transfer) for free, no insufficient fund charges, no monthly fees, free online and mobile banking, etc."
ING Direct doesn't have a strict minimum balance, but will close your account if you use too many "free" services or if you need to much personal support.
"We fire our customers is a colorful way of putting it," said ING Direct's Kuhlmann. "While the banking business says the customer is always right, we're online guys and you can only do business with us in a certain way."
I've not had my account closed despite being a customer for almost 5 years, and I've been everywhere from broke to carrying a modest balance.
It's probably fair to point this out, though: at least ING Direct is highly unlikely to arbitrarily close my account and freeze my funds because they think I ripped someone off on eBay.
>Go to your bank and try to open a checking account with a debit card with no minimum balance, a positive interest rate, ability to transfer money instantly without writing a check (basically a wire transfer) for free, no insufficient fund charges, no monthly fees, free online and mobile banking, etc.
You can in fact open bank accounts like that in many countries (e.g. England). Charging for simple services like wire transfers is an odd US practice.
Just because you do a lot of good does not mean you can just get off with a lot of bad. Their customer service is horrible and they don't deal with issues such as this the proper way. I agree with you, they've done a ton to democratize banking. What good is all that if you lose all the money they've allowed you to make because they have poor customer service practices?
I disagree, to me when you don't offer customer service availability to departments and don't offer any real explanations for denial of service, that is bad.
Just because a "big bank" is worse, doesn't make Paypal "good". Credit Unions are the only true "good" in the banking industry. The credit unions are non-profit and thusly they don't try to gouge you.
To each story there are both sites of the story. No point was being written outlining the reasons why his accounts was being closed.
If he would be serious about doing business, he could have provided all that information in the beginning.
Four Bean Soup's account wasn't closed, the paypal account is fine. Paypal disabled the gateway credit card processing with no explanation of why. Providing paperwork is easy, but they never asked for more of it to get the gateway set back up.
"Go to your bank and try to open a checking account with a debit card with no minimum balance, a positive interest rate, ability to transfer money instantly without writing a check (basically a wire transfer) for free, no insufficient fund charges, no monthly fees, free online and mobile banking, etc."
I don't think anyone actually thinks PayPal is "evil" (in the Jungian sense), but, as this story suggests, and the story it linked to suggests, and as the number of upvotes its received suggests, there is plenty of evidence that indicates PayPal isn't known for stellar customer service, and therefore you might at least want to consider having a Plan B before signing up with them.
I typically upvote articles to "save" them for future reference. It doesn't in any way mean I "agree" with the point of view, just that I think either the article or the discussion attached to it is something I might want to revisit for some reason.
I'm tempted to ask everyone who has been affected by PayPal's "security measures" (a frozen account) to write a post and submit it to a blog. -But I don't want to waste anyone's time. Anyways. Aye. I have been affected.
paypal's security measures can seem draconian, but they are necessary in many ways. the relative ease with which you can open an paypal account (versus another type of merchant account) makes them vulnerable to fraud. i'm not saying it couldn't be improved, i'm just saying that it's necessary in many ways.
where paypal falls on its face (in my humble & biased opinion) is that they are pretty inflexible and unaccomodating with customer service. this turns a frustrating situation into an "evil" one.
disclaimer: i cofounded wepay.com, which competes with paypal (in a few limited ways)
Well. I hate to be like this -but- you are now my friend. You go competitor! You go!
Okay. Now for the "ness" which makes this post not spam.
"they are pretty inflexible and unaccomodating with customer service"
Yes. That is a problem. Another problem is that they freeze accounts almost to the point of "seemingly randomly". In my opinion. It's not uncommon either. It's not rare enough to be forgiven as a mistake. Paypal has problems with (I guess?) flagging "spam". If the problem is viewed as originating because of the ease of access (easy to sign up), then Paypal should make it harder to sign up.
However, if you build a fence, you must consider the consequences for when it falls down. Anyone who has personally been affected by Paypal is also at fault for not considering it might happen and planning ahead. That statement is my opinion and I stand by it. There is a reason why I don't have a Paypal account with ten thousand dollars in it. The reason is that I will need those ten thousand dollars and I expect Paypal to take it away from me. My paranoia, however, is founded from experience.
Which payment processor did you end up using for dealing with credit cards and whatnot? What were the fees? Would appreciate any information you might have.
Short version: Client of mine (legit business, bricks and mortar store, been around for years) had their PayPal merchant account suspended. No warning, no explanation and no appeal. It really is an evil way to treat your customers.
> I'm tempted to ask everyone who has been affected by PayPal's "security measures" (a frozen account) to write a post and submit it to a blog.
I'm tempted to ask everyone who has _not_ been affected to do the same. Except that there are millions upon millions of them. I've used PayPal for years. I remember using eBay before PayPal. A morass of checks waiting to clear the bank and other nasty confusion was horrible.
To the original article: if you're running a business, just like with your computers, never have _any_ single point of failure. Including payment processors.
The problem with these stories is that the millions of PayPal users who have never had a problem aren't heard from, so there is no sense of perspective or balance.
That said, I have a low trust tolerance of payment processors, so I (1) have alternate payment methods setup and available, and (2) transfer cash out frequently.
The evil part of paypal is that they don't learn from their mistakes very quickly and they seem to not realize they are affecting peoples MONEY. Kinda silly but true. It's business as usual over there regardless of $1 or $100,000 they just tied up of your cash.
I went through the same scenario in 2003 with paypal with tens of thousands of dollars locked up pending a review... Thankfully we had a back up plan (credit card processing)
The plus side of paypal... when you and if you can process some serious loot through them you get treated like a rock star and you get access people and help you wouldn't otherwise get.
It wasn't to them at the time... not until we had processed about 80-100k did things settle down.
I think they have a hard time with their risk management protocol. Keep customers happy and loose a lot of money or piss off customers and loose less money from scammers...
Hackers (and I do think that, by and large, HN is still populated by "hackers") are aesthetes. When we say that something is "good" or "evil," we're not making a moral judgement, but rather an aesthetic one.
Consider, for example, that most people here would consider the famous MIT pranks to be "good." There is no argument that can be made that they are morally good—but they are certainly aesthetically pleasing, and we respect that. This article points out the contrapositive: PayPal, no matter its ethical implications (which breck pointed out above), is aesthetically displeasing—it offers a bad communicative interface to the developer (a bad API), and the rules governing it cannot be elegantly described (a bad design).
This also explains quite a bit of what HN seems to love or hate. We love Apple because they care about aesthetics, but we hate the App Store because it is capricious and seemingly internally shoddy/"crufty." We love Google because they're open about everything they do, and so they're predictable—they give us a sense of being a controllable force, even if they're too large to actually control.
None of this has anything to do with whether their actions are helping or harming us. It's purely a matter of subjective Quality, with no quantitative measurements going on behind it. No one here ever shuts up and multiplies[1]—and that's okay. Humanity is pointless without subjective experience. But it's good to be conscious that that's what we're really talking about here.
That scares the shit out of me. I am planning to start offering a paid option on my startup and using Paypal (so far it was free to everyone)...
Is there a simple solution (at least as a backup) to paypal? I am not in the US, so most of the recommended solutions I see only work for US companies.
In the most recent PayPal horror stories I've read the common denom has been digital goods. PayPal doesn't seem to know what to do when there's no physical product being shipped, and no tracking number. Do similar problems happen with physical items?
Although there are customer service horror stories about Google itself, the stories about PP seem to keep on coming (as, apparently, do their policies/procedures).
I make a practice to process only that $ amount through PP that I am comfortable losing.
With all the horror stories around I'd say they're simply not a professional choice as a Merchant Account. Simple as that. They do a lot of other stuff very well.
What's evil is offering Twitter software that lets people auto-follow followers and auto-tweet rss feeds. The former helps perpetuate all the follower spam out there and the latter fills Twitter with yet more redundant content.
I can't think of a company that has done more to democratize banking than PayPal.
Setting up a Merchant Account can be a real pain (and I too hope PayPal improves in this regard), but I really hope the author thinks harder about the title next time before making such a generalization.
If you want to know why PayPal is not evil, try this experiment:
Go to your bank and try to open a checking account with a debit card with no minimum balance, a positive interest rate, ability to transfer money instantly without writing a check (basically a wire transfer) for free, no insufficient fund charges, no monthly fees, free online and mobile banking, etc.
PayPal offers this to everyone, regardless of how rich or poor you are. If you don't have a lot of money other banks such as WellsFargo, Bank of America, etc., could care less about you and will try and take as much as they can from you in the form of ATM charges, monthly fees, overdraft charges, etc. Of course, I may be making my own over generalization here, but suffice it to say that I don't think PayPal is evil.