I began using Paypal right when they launched, when it was an application for beaming payments over the IR ports of Palm Pilots (remember that?!).
I continued to use Paypal after they migrated to web payments and discontinued the Palm support.
About four or five years ago I became hugely disillusioned with Paypal and never use it, and refuse to support it at my two ecommerce companies.
Why?
As a customer:
* Supporting Paypal is a signalling mechanism. It says "I am too rinky dink to get a merchant account".
* The dispute resolution process drags a third party in.
* The account can be frozen.
* The appeals process is laborious and indeterminate.
* There are too many steps at checkout.
* Paypal wants to force me to upgrade to a full verified account. I have to supply too much information. I have to wait for 2 deposits to clear, then report their sizes.
* Even for the 1-off "act as a merchant account" process flow, if I try to use a credit card that has previously been registered with Paypal as a full account, Paypal will NOT LET ME do the one-off transaction; I have to come up with a (long forgotten) password to the Paypal account.
* There are about 50 more user-interface horrors that I don't recall right now, but I would seriously (seriously!) hit my fingers with a framing hammer before I would use Paypal again. I don't have emotional reactions to most brands. Apple? Eh. Windows? Sort of dislike it. Amazon? Sort of like it. ... Paypal? HATE HATE HATE HATE HATE.
* crappy interface to delegate rights to other employees
* fear of having funds frozen
* inability to re-charge a credit card for follow in transactions (unreturned DVDs, late fees, etc.)
I wish Paypal nothing but death.
--- Travis Corcoran, President SmartFlix.com "What do you want to learn today?"
jseliger
· 7 months ago
This is a great response and encapsulates many of the issues I have with PayPal. I would add to it that enough people have been burned by PayPal to give it a lousy reputation; you can't write a post about the company without people chiming in with horror stories. My family's business, Seliger + Associates, is the kind of company Paypal would presumably want to use their service, but after I had a bad experience with them, I never would.
The first comment on Hacker News answers, "Because they appear, from many people's perspectives, to be nothing but scam artists?" With this kind of reputation, why _would_ people use Paypal.
i2pi
· 7 months ago
*~-*~-*~- A+++ Post, Great Commenter! *~-*~-*~-
I completely agree. I have been burned by PayPal at so many turns. I've had a $3000 payment held up for months as they suspect that the funds were fraudulently taken from my account. It took me a month before they would even let me prove that I indented to pay for that item on eBay. Needless to say the seller was pissed.
As someone who moved from Australia to the US, I continue to have troubles with some accounts tied to no longer existent Australian cards and I am unable to transfer the balances or status over to my American paypal account.
Ugh. I hate paypal.
Simon Edhouse
· 7 months ago
Wow... Fred, seems you have touched a raw nerve with this topic. (!!!) - I am a little surprised, as Paypal does seem easier from a quick transaction POV. - I have heard similar reports from some friends. A lot of polarization evident for this brand... interesting.
fredwilson
· 7 months ago
Exactly
I don't have any hard feelings toward Paypal but a lot of people I know do
And a lot of people who read this blog do too
owenl
· 7 months ago
Completely disagree. I have the opposite experience. I will never use a merchant account again and have never had a problem with Paypal as either a customer or a business. Nor have any of my customers. I don't have a huge volume and I provide the best customer service I can, so that helps. But I found Paypal to be easier, more accurate, easier to set up, better customer service (as in they didn't actively hinder me) and MUCH cheaper.
emptyofwhat
· 6 months ago
I would have to agree. My experience with merchant accounts is that they are painful to setup, expensive and the customer service is terrible. You have what amounts to a separate agreement with each of the credit card types.
With my last account, I did not get much American Express traffic, but then one of my clients paid me a large some with Amex, and they held the money for 2 weeks. That was enough for me.
francisplace
· 3 months ago
You are comparing apples and oranges when you say paypal is easier than setting up a merchant account. Paypal charges 2.9% and $0.29 per transaction. Most Merchant accounts are typically between 2.00 to 2.25% and $0.10 to $0.20 (sometimes even cheaper). The Merchant accounts do have other charges but even including them Paypal is significantly more expensive. Also setting up Merchant Account varies from acquirer to acquirer. Get the right acquirer and it'll be much easier than Paypal.
Andy Swan
· 7 months ago
Let's not forget that "paypal" just sounds rinky-dink....like some spammy 1999 way of sending $40 that you don't have to a friend that you owe for the keg.
bijan
· 7 months ago
At some point I think we will see "amazon connect" with their billing and payments on 3rd party sites
Paolo
· 7 months ago
Absolutely. I also believe that an "ebay connect" would definitely make sense...
tanomsak
· 7 months ago
Agreed. I'd prefer "amazon connect" over Paypal as I have fantastic experience shopping from Amazon.
I also avoid using Paypal at any cost, as I don't like to "deposit" money to Paypal account first.
jakemintz
· 7 months ago
I am not sure there is enough friction in the process to motivate enough people to sign up for and use a new account. Taking your credit card out of your wallet is a hassle, but a small one compared to signing up for a new account and having to log in and update it every time your address or credit card numbers change. I signed up for "Google Checkout" when they were paying people to use it a couple years ago (so it has my credit card info already) and I don't use it now. Amazon would also risk hurting or diluting their brand. When I see the Amazon checkout screen I think "this is a low risk transaction because Amazon has great customer service and free shipping." Their customer service is amazing even when you are not buying from them, I bought from another seller through their site and amazon gave me a refund when I didn't receive the item. Putting "amazon connect" on a bunch of websites could hurt that perception. My guess is that credit cards are good enough for most people. I could be wrong and hope entrepreneurs are able to prove me wrong!
Simon Edhouse
· 7 months ago
Jake...
you said: "My guess is that credit cards are good enough for most people. I could be wrong and hope entrepreneurs are able to prove me wrong!"
A report by Mastercard in 2002 indicated that around 70% of US consumers did not use credit cards on the web. http://bit.ly/11ykmI - Another survey in 2007 puts the figure at 51%... http://bit.ly/byXOI Either way, in terms of Clayton Christensen's criteria for 'Disruptive Innovation', these are large groups of 'non-consumers' of web payment systems. It seems (after reading comments above) that PayPal 'non-consumers' might be a distinct sub-set inside the consumer-group using credit-cards.
Credit cards and existing payment systems including Paypal and even Amazon Checkout are "good-enough" for many, but game-changing innovation may now be innevitable. As an entrepreneur who has looked long at hard at the issue of alternative web/internet payment systems, the issue is never simply about technology, (alternative technology solutions are relatively easy to conceive and likewise to implement), but rather about 'market-power', either in the form of massive user-base (Amazon) or Service-Provision (Banks). However, Banks would never drive serious innovation. Amazon, is more free (in theory) to innovate, but somewhat constrained by other forces. (legacy web architecture)
The 'perfect-storm' for game-changing financial service innovation on the internet, (IMO) is tied to solving other macro problems, i.e. Music Piracy in a post-DRM world. (Disruption rarely occurs when and where it is expected) - If any one is seriously interested in discussing this subject, email me at: simon at virtusoft dot net ... we have been working on the issue since late 2005)
kidmercury
· 7 months ago
hot damn! that last paragraph nails it. game economies/virtual currencies are where i think the banking disruption starts. if done properly, i think it can reach the non-consumers you reference, and can earn the trust and instill the regulatory standards appropriate for the transaction.
Simon Edhouse
· 7 months ago
Kidmercury... Yes, 'game-economies' and 'music/content-distribution'... Abso-f-ing-lutely... To quote the great man...
"...I’ve been to the mountaintop. [edit] ...and I’ve looked over. And I’ve seen the Promised Land. I may not get there with you. [edit] ...and so I’m happy tonight. I’m not worried about anything. I’m not fearing any man! Mine eyes have seen the glory of the coming of..."
...the end of credit-cards on the internet, which were not born on the web, but forced on us, by those most treasured of institutions on the planet... the Banks.
;) @simonedhouse
cemilturun
· 6 months ago
There is a larger issue and that issue can be solved by using a global web currency, possibly coming from game virtual money space.
The issue is, PayPal and credit cards are all agents of the old economy which grows 4-5% yearly, at its best. However, the fast companies of the web, Facebooks and Twitters grow 75-100% or more yearly. Whatever transaction you commit suffers from an incompatibility of valuation. The internet economy is NOT an extension of the main street economy, but acts entirely as a new country economy. As if the web is one vast global country with its much faster and liquid economy. Maybe it deserves its faster global currency which is pegged to its fast growth. :)
Cemil
ccrowley1
· 6 months ago
Cemil...I had not previously thought about the Web in that way, but I assume you are right.
To build on your idea: like any "orderly" economic entity there are regulatory bodies that act as traffic signals (or, at least that's the idea) to "protect" against unfair or fraudulent actions. But in the real world, they never work because the bodies themselves are not truly democratic/responsive to the needs of the "pullers" or users. I wonder if in the new economic entity of Webistan there couldn't be a social-based regulatory body that gains trust and acceptance through the prudent moderation of Webistan's market. For example, in a community-moderated MMOPRG that my sister created as her thesis at NYU, students vote on the value of other participants/content as to its continued inclusion or sanctioning level -and it was "proven" a successful means of moderation (kinda like the original intent behind eBay's stars...but a little more 2.0ish). This could work in a virtual economy as well, the only issue one would run into is the conversion of dollars (or other currency) into the new, community-regulated Webistani Dollar...unless of course it's STABILITY (key to successful value-store characteristics) surpassed real world currencies, from which point entities would begin preferring to pay in the Webistani Dollar, from which a person could then remain in the Webistani economy without suffering the negative (inflationary) effects of conversion. One could do this today if they were earning a living selling items via the Internet, earning in a "token", Web currency, and able to purchase their need/want items exclusively within this closed system.
Just a thought; and, oh yeah: PayPal sucks.
cemilturun
· 6 months ago
I am very much enlightened by your comment. Especially, the last two sentences. That is exactly a bet we have made many years ago and is now trying to experiment with a vw called Yogurtistan.com.
How did you come up with the word "Webistan"? That word explains worlds about the idea of a global web economy. It is clearly an underdog now, as you have also stressed the fact by the "istan" fix. Unless you have a decent way of turning back and forth between real-world currencies and Webistani dollars, within a well defined set of market rules and regulations (like a well designed board game where players agree to stick to the rules all the time for enjoying the game) there is no game. Hence, this is the first problem to attack.
Cemil
fredwilson
· 6 months ago
I love all the currency revolutionaries on this blog. Kid should corral all of you and lead a full blown cuirrency revolution!
Duncan Lennox
· 7 months ago
Agree with the brand problems that have been mentioned.
On the "Amazon Connect" issue Amazon has offered Amazon Checkout for a while but their newest developer offering Amazon Flexible Payments service is wonderful (from both a developer and customer point if view).
It provides a very smooth payment process much like PayPal but it feels "easier" and I would argue "safer" (due largely if not entirely to Amazon's brand value).
It also of course lets you use your Amazon username/password and automatically pulls in your default payment method etc without ever exposing that information to the merchant (which is a benefit for both parties).
PayPal should own this space based on their historical position but I believe Amazon will due to innovations like FPS (which also allows very complex workflows such as subscription models to be built and is cheaper, especially for sub-$10 transactions. And of course it is well integrated with all their cloud computing offerings.)
Would Paypal benefit from white labeling their service? They could be the engine behind an "ebay connect", "amazon connect" or any other "ecommerce connect" solution while avoiding their existing branding issues.
Great thought!
andrewparker
· 7 months ago
This is how Meetup.com implemented payment for group meetups. You pay with your Amazon acct. But it's not very connect-ish... right now it takes you to Amazon's site, much like PayPal does today. I would like a see truely embedded payment, more like FB Connect's workflow.
saieva
· 7 months ago
I like using an Amex card for the buyer benefits and services (points, purchase protection, customer service, online statements and transaction histories, etc). Although PayPal allows you to setup a credit card to execute transactions, it is not their default; PayPal prefers that you transact with their service against a bank account as a debit card service. Since I would rather use Amex, PayPal becomes another (unnecessary) layer. PayPal doesn't support or stand behind my transaction the way that Amex does.
kriswood
· 7 months ago
Totally agree and if you use some sort of wallet or password program that can easily input your credit card and address information, not only is the PayPal layer eliminated, but it becomes a very convenient (1 or 2 click) experience. You don't have to drag out your credit card nor do you even have to enter it manually. Plus you get all the benefits (points, buyer protection, etc) that saieva mentioned.
It seems to me that Paypal needs to gets as credit card friendly as it is bank account friendly and give users the choice without sacrificing convenience.
fredwilson
· 7 months ago
but paypal can server as a stored credential for a credit card and i would think more people would choose to use it this way
kriswood
· 7 months ago
I don't disagree. But given the choice between giving anyone somebody's bank account information vs. having a convenient, fairly secure (albeit local on the machine) credit card experience, I think most people would opt for a credit card solution. The reason being is that with a credit card, I report the card stolen, get a new number, dispute any charges and move on with my life. If someone taps into my bank account information, they can actually take my money. I think that's a huge impediment.
The killer solution would be an open solution, like a 1password, that retrieves the information from a server rather than from an encrypted file on your hard-drive.
I also wonder why Amazon can't solve this by making their on-click basket available to other merchants on a pay as you use basis, even if they they don't use the Amazon network. There are business model issues there that I have not thought through but they already have my information and are in position to create a secure and seamless experience.
fredwilson
· 7 months ago
I like the idea of making amazon checkout a consumer proposition in addition to a merchant offering
I'd use it all the time
harpos_blues
· 7 months ago
Consumer checkout via Amazon have been available for years now, it's part of the of the API. Several of the large vendors that use Amazon's complete back-end have always made Amazon credentials an option. For a quick test, go to Target.com, add a product to the shopping cart, and you will have a choice of using a Target account or using your Amazon credentials. Again, nothing new here, it's been part of Amazon Web services since forever, please see Amazon Payments Business Solutions at https://payments.amazon.com/sdui/sdui/business?... .
While were on the discussion of poorly implemented credentials, why does Disqus Hate me? This if the fourth time I've attempted to post a comment to Fred's reply regarding:
"I like the idea of making amazon checkout a consumer proposition in addition to a merchant offering"
Disqus doesn't recognize me, after prompting for login credentials on three prior attempts using Firefox 3.0.1.0 on a Mac. Finally I received an error message from Disqus -- "That wasn't supposed to happen, Our Fault? Tell us" . Yeah no shi--.
Adding a comment via Disqus has become a major inhibitor for me, and is a large reason why I'm not a more active participant.
Success posting with Safari 3.2.1... finally
harpos_blues
· 7 months ago
Yeah, since it took numerous attempts to post via Disqus, I forgot to add my remarks about PayPal.
I've never had problem with PayPal as a consumer, though my PayPal transactions are rather small (i.e. less than $50.00 USD) and are covered by my bank's "Online Protection Service". However, I've heard numerous horrendous first-person stories from my clients who have used PayPal on the seller-side.
fredwilson
· 6 months ago
I'll forward this to disqus to debug. But you can login with facebook or twitter as well
As to the point of a consumer offering from amazon, we still need the merchant to offer amazon checkout
What I was hoping for is the ability to checkout anywhere I use a credit card with my amazon credentials
saieva
· 7 months ago
While it's true that I can use my preferred credit card via PayPal, the only reason I would do that is if the Web site only accepts PayPal. Otherwise, it is simpler and more direct to type in my credit card information, and if I have a dispute with the transaction I'll have a single counterparty (the credit card company) for follow-up.
A PayPal transaction is streamlined and their functionality appears to integrate well, but they don't offer anywhere near the customer service perks that Amex provides to their customers.
Duane Lawrence
· 7 months ago
I've noticed that as well, and have always assumed that credit card transactions were more expensive for Paypal than bank transfers. Either way, i find the two extra clicks to be only a minor inconvenience. For me, it's definitely worth the combined benefit of loyalty points & purchase protection w/o having to give out my ccard number.
henryyates
· 7 months ago
I think it has/had a brand problem. people do not like giving Paypal their credit card details to store but have no problem doing the same thing with Amazon. It may have suffered being market leader at the height of phishing scams.
P. Moehring
· 7 months ago
I agree. Also, just "paying with your email address" seems less secure than going through all the steps at a normal retailer (it really isn't, but the feeling counts). When using amazon, people seem to think of it as a much bigger enterprise, probably because they actually "sell stuff". So it's really a brand/perception problem and paypal should market itself more as a bank to be trusted.
henryyates
· 7 months ago
I agree trust is absolutely key. Reading some of the other comments it is clear they have a massive brand issue (this blog has such a large readership it is almost a statistically valid sample!).
I love the way that companies such as Patagonia and Oakley gave lifetime guarantees on their products. They were confident enough on their offering that they knew they could do this and strengthen their brand without losing money. In the same way I can see the brand that wins the "unbank" game will give 100% guarantee on refunding fraud and deliver on their promise. They will be able to do this by providing a simple service with great security (which I am sure is not easy).
sfmitch
· 7 months ago
"it is clear they have a massive brand issue"
I couldn't disagree more - Paypal has a massive product quality issue. Sure, if everything goes right then they are a great company. But, as we all know, until you are faced with a problem, you don't see a Company's true colors. Dealing with Paypal is a nightmare.
fredwilson
· 7 months ago
i think that may be right.
ajay and olga lednichenko
· 6 months ago
I think its:
[1] a Branding and perception problem. payPAL has it roots in paying a pal for micropayments. Their success in that segment is the biggest deterrent in being taken more *seriously*.. Think of it this way -> " will you buy shoes if it had a label that says ' made by IBM'? ..In the minds of the customer: IBM = Big + complex + computer + things about computers.. similarly Paypal = email +buddies + left over payments
[2] yes.. paypal does freeze accounts - for really weird cases.. I had a payment frozen for 6 months 1 AND this is when i was paying for an item. So. i have my money frozen by my *bank* .. tell me, if one exclamation mark would do ?
[3] Most people dont have the *credit card memorization problems*.. moreover, the cost of filling up the web form is not that significantly higher than what paypal may like to think it is..and well.. the browsers typically have autofills..for name, and address ie..
regards ajay mishra and olga shulman lednichenko
nickdavis
· 7 months ago
Ug. I can't stand PayPal.
I sold an item on eBay recently. Paypal decided to lock down my money for 2 weeks. Why? I have no idea. I've been a customer with a long track record (I signed up when they were giving away $10 - over 10 years ago).
I smell a scam every time I have to deal with them these days. I hope some financial reporter digs into the locked funds issue. My guess is that they do it as often as possible for as long as possible, then take the float on the money.
PayPal + EBay = the reason I pretty much only use Craigslist to sell these days.
Robert Alvarez
· 7 months ago
The biggest issue for me is that they demand bank account information to "verify" my credit card accounts once cumulative transactions go over a certain level. I have absolutely no interest in having my bank account numbers all over the place on different sites' servers, and at the same time they have no need for the information as I always use an (obviously valid) credit card through them.
Instead I do online purchasing through a single credit card that is easy to cut off should the need arise. I think this demanding of extra information really hurts them in the US. So I only use them when I need to send some money to a buddy to cover concert tickets or something like that, and use my credit card directly on any normal ecommerce sites. At least in my case they've shot themselves in the foot by strong arming you into providing so much more information.
mwheinz
· 7 months ago
Maybe it's because they don't offer the protections a bank does, tend to have terrible customer service and because, in my case, they can't even seem to talk to my bank correctly, so that my account never gets verified.
My favorite part came when I gave up, closed my Pay Pal account, and then discovered I could no longer use my credit card with Pay Pal-based merchants - Pay Pal would reject the credit card because it had been associated with the account I closed.
fredwilson
· 7 months ago
That's awful
augustus963
· 7 months ago
I have had a terrible experience with their service and vowed never to use it again.
I bought a piece of software on eBay that was pirated (of course they didn't list it that way). When I asked PayPal to reimburse me they voided my appeal because I didn't follow their protocol correctly.
I am not using Paypal in this lifetime. I think many people may have had a similar experience.
Brenden
· 7 months ago
The user experience aspect that bothers me every time I use Paypal is the payment method default to my bank account, even though every time I've ever used it I've opted to pay by credit card. This is obviously because they don't have to pay the credit card fee when using a bank account, but it drives me crazy how they position the bank account as a much better way to pay for the user. I think they call it quicker, with better protection, when in reality it's just them trying to save 2.5%. I think it's deceptive, and it always makes me want to cancel the transaction.
Also, Paypal's buyer protection is a complete joke. They claim to be able to help, but I lost all faith when I received this response from their resolution center after blatently getting ripped off by a web designer scammer (Alex Chen - email alexchen1@epicbizs.com or mtlangfuhr@gmail.com):
"After careful review, we have determined that the seller is at fault but regret to inform you that we were unable to recover any funds from the seller's account." How this reads to me: "You're screwed and we tried to help for 7 seconds but then didn't feel like helping anymore so we stopped." When I asked further, they said that they could only recover funds if there was money in the at fault account. The obvious question: if I was stealing money from someone, and knew that if I left it in my account, paypal could get it back, why the hell would I ever leave any money in my account?
So that's a major issue with Paypal, their protection isn't protective.
Ahh, feels good to rant.
nickdavis
· 7 months ago
Not to mention that if you want to transfer money out of PayPal and into you bank account via ACH, they say it takes 5-7 days. Really? 5-7 days for an ACH transaction?
hardaway
· 7 months ago
Well, Travis has summed it up quite well, but let me tell you my latest Paypal experience. Because I have been a victim of identity fraud over the Internet (credit care I use to pay online was used to download porn), I tried PayPal again to buy a Wordpress theme over the Internet a couple of days ago. After I paid for it, with a bank account that has a line of credit well over the $165 the theme cost, Paypal would not authorize the merchant to give me a key to download the theme because my e-check had not cleared. This takes days, unless you link a credit card as well as a bank account to your Paypal account. This makes it complex, kludgy, and not worth it. Easier to memorize a credit card number.
Ed
· 7 months ago
I use Paypal. But another entity could eat their lunch. If there had been a great competitor, they'd be out of business.
They built a wall of 'experience fear' between themselves and their users for years. Not to mention a horrible website and UI.
Don't underestimate the widespread damage that was achieved when they held hands with ebay and enjoyed the pre-twitter/social media* "FU-O-Sphere" (Sorry bloggers, I love you all for blogging, but no one brought them to their knees).
Not everyone on ebay, experiencing the Hell with Paypal was thrilled buying junk [thanks Weird Al] http://is.gd/EHCY
There were millions people of every economic, social, educational background experiencing the same thing; pain. No decent customer service, then okay customer service paired with punitive policies.
I think the money makers (the default elite), forget this. The masses are not that stupid. They're just powerless. Er, strike that. They were powerless. (Thanks for fixing that Jack, Ev, Biz).
When executives in back rooms have a "Let them eat cake" attitude and appear to "win", they of course have not really. They'll never calculate what wasn't; what didn't materialize. People vote with their wallets. The brash if reclusive suits charged ahead.
The result? Fred Wilson asking in 2009 'why isn't Paypal ubiquitous'? That's why.
They made far more mistakes than Twitter. But we didn't call them mistakes. They were called "you'll take it and like it!".
fredwilson
· 7 months ago
I think you nailed it. They have a brand problem
nickdavis
· 7 months ago
They have an operations problem, along with a policy problem. You seem to use PayPal to buy items, which is a pretty good process.
Spend a month selling and receiving money through PayPal and you'll see why.
Grocio.com Founder
· 7 months ago
My startup's early focus group asked for PayPal as a payment option. As a retailer looking for broadest possible scale I'll tell a paying customer "Yes" on a regular basis. Yes, we have our own merchant account too. But, PayPal's too big a payment option to omit.
Sure, PayPal has some inefficiencies (settling with my commercial bank and their fees). But, when Steve Chase (AOL) starts getting into the game... I see PayPal being put on notice and getting some slack out of their system.
I have to hand it to them... they have a fairly good system (ala Microsoft) and while it's not elegant by any means (ala Apple) it's no surprise to me "good enough" claimed the high ground and the market share.
jenslapinski
· 7 months ago
I think it is more than a brand problem. Let me put it like this: when I want to dispute a payment on any of my credit cards (Master or Visa based with various banks) I have NEVER had a problem. Not once in my life. That is what credit cards are there for. These guys work for you.
PayPal works for the merchants, not for me.
So, why would I use these guys as a consumer?
BTW: 'get out the credit card' - totally memorized, have used the same card online for some 10 years now, takes seconds to type it in.
Kevin Marshall
· 7 months ago
To be fair, I don't think paypal works for either us or the merchant...I'm on both sides of the coin and I can say that it's often a painful experience both trying to sell (or collect rather) via paypal as it is to buy via paypal...and as a merchant, especially a small one, the fees are still way too high considering you get very little support/benefit for your money...
In the long run, paypal is a nice-to-have for any ecommerce system, but because of it's brand issues it's not a must-have...but neither are the competitors like ipay.com or any of the other paypal-like systems...so primarily thanks to it's roots with ebay, paypal is still the lesser of all evils for micro-payments and small merchants will continue to jump through hoops to follow their rules because it's the 'easiest' way to get 'some' money...
Ed
· 7 months ago
oops, I forgot to complete the * from above
*Could we conceive a new term or terms to replace "social media"? It was once an appropriate herald.
Now media is truly becoming synonymous with 'social', as sharing becomes instant and widespread across populations and platforms.
talke
· 7 months ago
Personally, I feel that the experience of jumping in & out from the Paypal site to complete a transaction is a pain. More importantly, it can make users feel uncomfortable.
pi3832
· 7 months ago
Paypal has ridiculous policies and crappy customer support.
A few years ago, PayPal decided to turn off my account. They needed to "verify" my identity. To do this, I had to give them my home phone number--and cell phones didn't count. I didn't have a land-line, so PayPal told me to go to some place with a land line and wait by the phone. Fuck you, PayPal.
So, I requested they close my account. They refused because I no longer have access to the email account I used to sign up with PayPal 7 or 8 years ago. So, they are still holding my banking information but won't let me use it.
The verification requirements almost make sense, but why the FUCK are they refusing to close my unusable account?
PayPal might be a good idea, but the implementation is crappy to the point of evil. Not to mention that they are probably an illegal corporation since they do the kind of things banks do, but aren't a bank.
P. Moehring
· 7 months ago
They actually ARE a bank, at least here in Germany they are incorporated as one.
Joseph Flaherty
· 7 months ago
My biggest problem with PayPal is that I use it so infrequently I forget the username/pw I used to set my account up 5 yrs ago and have to go through the longer direct payment process or request a reset. 95% of what I buy is on Amazon or the iTunes store and I imagine that is a big reason PayPal isn't bigger, most useful services have their own systems.
fredwilson
· 7 months ago
That's a good point. I used to have that problem but now I've got a good paypal login which I can remeber easily
harpos_blues
· 7 months ago
I use PayPal for my iTunes payment. It's a direct pass-thru. Again, this have been available for several years now.
Stephen Konig
· 7 months ago
I can tell you one of the reasons why I dislike it: their buyer protection policies stink. The fact that they debit my account right away isn't really a problem in my mind, but they offer very weak protections against fraud or damaged goods, particularly for services. I had one terrible experience where I paid a seller $500 as a downpayment for a larger purchase. The seller subsequently decided to not proceed with the transaction but wouldn't give me my $500 back. I disputed the transaction with PayPal but they refused to do anything, saying that since it was a d/p it wasn't covered by their policy (they also don't cover payment for services). I literally had no way to get my money back other than to take the seller to small claims court (which I eventually did, though it cost me a decent amount of money in court costs). Had I used a credit card, I could have disputed the transaction with them and they would have just handled it for me. But PayPal make direct debit the default pay method and if you're going to use a CC, why not just use it directly with the merchant? PayPal only makes sense if you want to pay with direct debit, but their protection policies make it unsafe for a lot of scenarios.
fredwilson
· 7 months ago
I wonder if many people have been burned like you. If so, that's a big issue for them
Paolo
· 7 months ago
IMHO the only real strength of a service such as a Paypal is to give some kind of trust to less known/unknown merchants. On major ecommerce sites it's just "another (unnecessary) layer". I also suspect that many people think that by using it they would pay double commissions. Last but not least pre-paid credit/debit cards are much more convenient and familiar to the general public, at least here in Italy.
kriswood
· 7 months ago
I don't mind Paypal, but using 1Password for the Mac is almost as seamless and in fact better in some ways. In one keystroke, I can fill in my address (I choose which one) on almost any form and in another keystroke, I can fill in my credit card (again, I choose which one). I prefer being able to determine the type of payment (ie, which credit card to use) than being held to a primary and back-up funding source on Paypal. I don't have this problem, but I think others also care about giving out bank account, vs. credit card information.
fredwilson
· 7 months ago
i haven't tried 1password. i wonder if that's a mainstream solution
Brenden
· 7 months ago
I agree that 1password is GREAT. A little pricey for mainstream (I think in general it will be hard to go mainstream @ $30/user), but I use it everyday and never have to worry about having my wallet or remember a credit card number.
Ryan Graves
· 7 months ago
I think that at $30/user it definitely won't catch on. In the age of Google people expect free services & even though it may be better that Paypal people don't see the value unless they are a big web shopper, which the mainstreamers aren't.
Dave Hyndman
· 6 months ago
Fred, 1Password is a must-have in the Mac arsenal. Remembers credit cards, form fill-outs and all web logins. Is also good at getting people out of the habit of using 1-2 go-to passwords for everything. They also have an iPhone version that syncs w/ the desktop. The company is *very* active in updating the product and very good communicators. It's a real gem. Go get it.
sfmitch
· 7 months ago
1Password is great. I can't imagine not using a good password filler / ewallet type of program.
GVRV
· 7 months ago
However, me and my friends exclusively rely on PayPal online as we never use or don't have credit cards.
agegelabs
· 7 months ago
Over the weekend I was just thinking about this as well - How I hate having to bring my credit card out for every online transactions. Paypal takes away all those issues.
ghaff
· 7 months ago
Online shopping aside, I don't even quite understand why more people don't use Paypal for personal activities. For example, I run trips for an outdoor activity group and--especially for last-minute signups, Paypal makes a lot of sense yet people rarely use it. Yes, there's a transaction fee but it's worth it to eliminate hassle. In this case, I suppose it's something of a network effect (combined with the transaction fee).
Phanio
· 7 months ago
Have to agree with all of the above but add a question - how much market penetration does paypal have? Sure they are on the big sites where consumers have many choices - but what about all the mid-to-small size sites? Most smaller businesses use other applications for their business (like quickbooks or their ecommerce application) that also offer credit card payments making it easier and cheaper for the business. Paypal needs to get its product in these other applications.
chartreuse
· 7 months ago
Paypal is decent for consumers but most merchants hate it. There are websites dedicated to horror stories about the way they treat merchants. Accounts being frozen while they figure out their mistake is the usual one. http://www.paypalsucks.com/
In an age where everyone is/can be a merchant word spreads quickly. And the people who have problems with Paypal don't just complain. They say (as seen in the comments) the company is "evil".
They have some core customer issues to fix, obviously.
vincentvw
· 7 months ago
Maybe it's a cultural thing? I don't have the empirical facts on this, but I do know that generally Americans prefer to buy stuff on credit (OK, maybe not so much any more) and most (not all) European countries prefer buying via cash they have. So if Paypal takes money off the account directly, perhaps that bothers people? Again, I don't know whether there are significant continental differences as far as the use of paypal is concerned.
Vladimir Vukicevic
· 7 months ago
Money-related mistakes resonate for a long time. I tried using PayPal in 2001 and had a bad experience - I never used it again. Based on anecdotal evidence, many have tried it but few stick with it.
The company has a trust issue - which goes back to your "defaults" post from a few days ago. Trust is a major requirement for a company to become the "default."
Dan Lewis
· 7 months ago
I know my CC# by heart (and, obviously, my name and address too), and even if I didn't, it's in my pocket. Plus, I tend to trust the web more than I did during PayPal's heyday. There's little reason for me to use a third party site to process my payment.
jeremystein
· 7 months ago
i think its deeper than a brand problem. i have about 30 accounts at different payment processors throughout the world. many of them are what you would call "sketchy" and paypal is far and away the most trustworthy.
the best ones have one thing in common: theyre drop dead simple. the best ones have only three options: withdraw, load, and transfer. seems to me like its more UI than anything (if i have a retail account, why do i need to see a merchant tab?, etc)
pointybob
· 7 months ago
When PayPal works, it works great. However, when it doesn't work, it breaks horribly.
1) For me, funds aren't removed from my account immediately. It takes 5-7 business days for the funds to be transferred. If I want immediate payment, I either have to use a credit card or transfer funds into my PayPal account. If I'm using a credit card, I can just open my wallet and grab the card, no need to have yet another online account with credentials to remember (and that password better be a good one). And I don't particularly want to transfer funds to my PayPal account, as I don't shop online enough to warrant having $500 sitting around in an account that is otherwise inaccessible (not to mention that the transfer itself also takes 5-7 business days). Yes, both my account *and* my address are verified. And no, they don't warn me *before* submitting the transaction that it will take 5-7 business days, only after.
2) They make it *incredibly* difficult to do anything that deviates from their process. Recently, I made a payment, realized the payment would be required before the end of the 5-7 business day time limit (late registration for a conference, my fault), and had to arrange alternate payment. However, with PayPal, I can't cancel the payment. I had to arrange with the conference organizers to refund my payment via PayPal once it cleared. Why? I can cancel a cheque with my bank, and I can dispute a charge with my CC company, so why can't I do an equivalent action with PayPal?
3) Their policies seem to change with the phase of the moon. Two years ago, after moving three times and changing phone numbers four times, I'd forgotten my password. There was, as per their policy, no way to re-obtain my account. Because my CC was tied to PayPal, I couldn't make one-time payments through their service (via online vendors who only accepted PayPal), so I was quite literally SOL. Then one year ago, all I had to do was give them my e-mail address, and they sent me a link to reset my password. What gives? I'm glad they *did* change policy, but that's an awfully extreme policy swing.
I think the better question to ask is why isn't there a successful online transaction clearing house. One that brings together VISA, Mastercard, American Express, Discovery, chequing accounts, saving accounts, heck, even gift cards. It's a great idea, with the two most popular implementations -- PayPal and Google Checkout -- leaving the public generally dissatisfied.
hoberion
· 7 months ago
not sure about paypal but in the netherlands most people use ideal (http://www.ideal.nl/?lang=eng-GB) as a service, its very populair since it does the payments through your normal bank transaction and there havent been many security incidents in the news
Mark Zohar
· 7 months ago
I'm not sure your thesis is correct. According to JP Morgan's 2009 report "Nothing But 'Net" (https://mm.jpmorgan.com/stp/t/c.do?i=3C571-1CF&...), PayPal is the largest online payment system. According to JP Morgan's "proprietary survey", 55% of online shoppers use PayPal compared with 6% that use Google Checkout and 14% that use Amazon Checkout. Moreover, among online shoppers that don't use credit cards, PayPal is the preferred method with 70% of those users choosing PayPal.
Some more interesting stats from the report:
- Among young online users (18-41), PayPal is the dominant payment system (63%) compared to Google (9%) and Amazon (16%)
- Among users that have sold something on eBay, 78% are PayPal users
- 66% of online shoppers that use PayPal rate the service as "Excellent". By contrast, 49% of users who use Amazon Checkout rate it as "Excellent".
pointybob
· 7 months ago
"55% of online shoppers use PayPal"
Is that because 30% of online shoppers choose to use PayPal, with the remaining numbers made up of online purchases from stores that accept nothing *but* PayPal? Or is it that, of those who use online transaction clearing houses, 55% choose PayPal over alternate methods? Or is it as it sounds, that of all online purchases that are made, 55% of purchasers choose to use PayPal?
The link doesn't work for me, so I can't check their methodology. But I'm wary of statistics like this, as they're usually misleading.
(And the eBay statistics are pointless, as eBay and PayPal are like peanuts and peanut butter. I'm actually surprised the number is that low.)
"66% of online shoppers that use PayPal rate the service as "Excellent"."
How many of those are the considered young online users? How many of those had a dispute with which they needed PayPal's assistance? How many of those have no credit card, thus have almost no other option (as merchants that accept PayPal are widespread, and those that accept something else are few and far between)?
I'm not looking at the comparison to Amazon Checkout, I'm looking at the quality of PayPal's service as it stands. Being the best of a poor service doesn't mean you're actually good.
fredwilson
· 7 months ago
This is fantastic data Mark
Thanks for sharing it with us
It all makes sense to me but I bet that 95%+ of the people they surveyed use credit cards as their preferred method of online checkout and the point of my post is that I wonder why that number is so high given that checking out with a credit card on a site you don't use often (or have never used) is often a pain.
donga
· 7 months ago
PayPal are bullies and people know it, I hope they fail. Excessive fees, account lockout, endless automated responses.
But what killed them for me was incessantly asking if I would "verify" my business account. I had all payments got to/from a credit card. Upon "verification" they changed the default account setting to make my company bank account the default method. I realized this only after and automatic withdrawl caused an unexpected unexpected cash flow problems.
They DO NOT make this change clear, and in fact there is NO way to reset the default payment to a credit card. Instead I have to change to "Credit Card' for *every* transaction. Changing the setting takes clicking through 3 (THREE!) separate "Confirm" clicks.
Want to complain to the Better Business Beaureu? Ha, fat chance... a simple Google shows they have stacked the local BBB board.
Total shady business practices. Thats why no one uses them Trust is paramount on the web... not the mention payments on the web.
fredwilson
· 7 months ago
It sounds like a lot of people would like to make their credit card the default payment mechanism in paypal
noripoffs
· 7 months ago
Because I'm comfortable with giving PayPal my credit card information but not the bank account information it keeps demanding. Every time I buy something with PayPal now, it tells me that I'm edging closer to a USD $8,000 limit where it'll stop letting me buy things. I don't know why they'd want to drive away loyal, long-time customers but I've heard enough horror stories about them reaching into bank accounts that they're never, ever getting that data from me. If they were to abuse my credit card number my bank would deal with them; if they abuse my bank account number my bank would say "Idiot, that's why we told you not to give that out" and I'd be out the money. The magic numbers apparently work very differently.
PayPalBurned
· 7 months ago
PayPal freezes and seizes money belonging to its members for no reason. They collect interest on this money, and although they are big enough to purchase an FDIC bank, they revel in their unregulated status, "We're not a bank, we're a company that does whatever it wants and hires folks from outside the U.S. for billing administration...."
Now what's wrong with this picture? PayPal is rogue, and has damaged their brand so severely, they'll never be very successful.
mattmaroon
· 7 months ago
Customers definitely use it when it's available as an option. On our Facebook apps, we offer people the ability to give us credit cards directly, or use PayPal, and about 55% of people opt for PayPal. Given the immense amount of work it takes to establish and fund a PayPal account, that's pretty high.
My feeling is more merchants don't accept them due to transactions costs. They take a much bigger cut of each transaction, which is highly relevant for the big online stores and services like Amazon.
tsiedleczka
· 7 months ago
Yeah mate, agreed. Problem is paypal was grass roots and never marketed correctly. There are too many 'feelings' about the brand (equity super low). Not to mention its associated with EBAY, which is too common. There is nothing wrong with the product so just need to position it correctly.
Paypal doesn't provide rewards ... credit cards do Additionally Paypal has made it confusing on what type of fees you will be charged depending on your account type (I know there are no fees for the payer but most people still feel confused)
PebbleChamp
· 7 months ago
I also use PayPal whenever I can, but I must say that I did have problems with the PayPal Firefox plug-in some time ago. I thought that it was great in concept, but the execution was definitely lacking. To be honest, I can't remember my exact qualms with it, but they were enough to uninstall it and write a note to PayPal about it (that I never received a response to). I think that PayPal should definitely invest in market research to better understand why people are hesitant--if they haven't done so already--because there is still a lot of market share up for grabs in the form of uncommitted users.
One thing I do dislike about PayPal is its obvious efforts to steer you away from credit card purchases. I prefer to use a credit card (rather than my debit card) for a few different reasons, but whenever I use PayPal I have to go through extra prompts to confirm and re-confirm that I do in fact want to use a credit card. I also get "lectured" about the benefits of using my debit card and then they try to "trick" you by changing the highlighting of the buttons so that the "no" is highlighted orange instead of the "yes", etc.
fredwilson
· 7 months ago
This comment thread would be good market research for them!
farhanlalji
· 7 months ago
Think part of it is Brand and UI (as discussed), but I don't mind the brand and think the UI is okay. It's the adoption by site's that hasn't picked up. It isn't difficult for sites to say pay by Visa, debit, PayPal...
I think a big part is the fact that post acquisition Paypal hasn't improved at all. And they haven't sold the service or marketed the service with the same intensity they did when they were starting up. The entrepreneur's got out and the parent has taken their eye off the ball - brings in a couple of bucks for ebay, that's nice. Seriously, what's changed since Ebay purchased them?
Paypal needs a solid competitor to spark some innovation there. It took Skype rumours/launch of Google Voice for them to launch a kick a** iphone app and do some innovating. Guessing it will take an "Amazon connect" type competitor to make PayPal pick up it's game.
bobrizzle
· 7 months ago
Notification of Limited Account Access
As part of our security measures, we regularly screen activity in the PayPal system. We recently noticed the following issue on your account:
Unusual account activity has made it necessary to limit sensitive account features until additional verification information can be collected.
We have been notified that a card associated with your account has been reported as lost or stolen, or that there were additional problems with your card.
Case ID Number:
Click here to verify your account
Please understand that this is a security measure intended to help protect you and your account. We apologize for any inconvenience.
If you choose to ignore our request, you leave us no choice but to temporary suspend your account.
Sincerely, PayPal Account Review Department.
owenl
· 7 months ago
Ummm - how is this different from what a credit card would do?
Jeffrey McManus
· 7 months ago
Most of the operational criticisms of PayPal are bogus and many are also true of merchant accounts.
In fact just yesterday we were listening to an NPR story about a furniture retailer in Massachusetts that was having some difficulties. Their card provider almost canceled their merchant account (they asked for a $40,000 security deposit to keep it on, which would have wiped out the business). This kind of thing doesn't happen with PayPal.
Their site navigation (from the merchant perspective) has always been execrable but it's better than virtually every bank site out there.
Agree with Fred that 95% of PayPal's problems are branding-related and not related to operations.
nelking
· 7 months ago
1. For years E Bay didn't know what to do with them 2. They started out with bad customer service and there are many who still can recall a bad experience. It seems to me that both their upfront process and back end service has improved. 3. PayPal as a payment option is only now seeing the kind of reach necessary to become a payment method of choice. You were surprised to see PayPal, that's still more common. It took awhile for Debit cards to become ubiquitous 4. I predict that in the ecommerce space in a few years, multiple payment options like PayPal and Amazon Payments will be the norm. (plus a few others) 5. Some day in the near future you'll say "Remember when we paid with cards?" just like I've started saying about cash.
Duane Lawrence
· 7 months ago
taylorwc
· 7 months ago
I agree with the bulk of the dislikes about Paypal so far on the comments--especially about the UI--it's down right terrible. For me, the biggest downside to Paypal is the setup time for adding and verifying bank accounts. I typically have my wallet with me when purchasing things online, so typing in my CC info once is much easier than taking the time to properly set up the Paypal acct.
Also, I don't like the dispute process for fraud on Paypal, and my bank account doesn't have built in ID theft protection, while the main CC's I use have protection built in for that (have used before with Discover, and it's simple and hassle-free).
In principle, I love the idea of Paypal. I just can't stand using it.
Michael Laccetti
· 7 months ago
Yeah, I'm pretty happy to use PayPal - I remember one password (well, KeePass does), and I can choose what bank account or credit card to pay things with. I don't have to worry about a third party keeping my payment information, etc, etc. Seems like a no-brainer.
BenMc
· 7 months ago
I think about PayPal exactly as you do. It's always my first choice. I LOVE to see the PayPal option when checking out. For some reason, people have one bad experience with them and it's over. Yet if they have a bad experience with their regular credit card company, they seem to ignore it. I don't get it.
whitneyhoffman
· 7 months ago
I love paying with Paypal and use it all the time, but as a merchant (when we've used it for sponsorships for Podcamp Events) it's been a nightmare, and google checkout is much friendlier. No hold times on withdrawals or limits on how much money you can transfer a month....much, much easier.
fredwilson
· 6 months ago
That seems to be a consistent theme of this thread
onetxtCEO
· 7 months ago
I have been continually amazed by the vitriolic reaction to the PayPal experience. It rivals the animosity more frequently associated with failed offline services brands that are on the cusp of being displaced by sleek, online alternatives. Currently, PayPal is suffering from an "Abandonment Rate" exceeding 50%. Greater than half of the people who have ever used this web application have simply walked away.
My hypothesis is that there are four major reasons for this:
i) Functionality: payments vs. value-added capabilities. Unlike other established payment alternatives, PayPal offers nothing but the ability to mask one's credit card number. No points, no rewards of any consequence, no advantages of status. The brand "says" nothing about its holder, and offers no real or perceived benefit. Didn't AMEX teach us the value of such matters a long time ago?
ii) Universal ID: As the market leader, Paypal had the chance to create a stable ID system for transactions in the interactive world. Kind of the like the standard 16 digit ID system for credit cards and gift cards. Or, the standard 10 digit phone numbers that anchors telecom service billing in America. Or, the passport numbering sequence administered by the ICAO.
iii) Openness: PayPal has created a disruptive of experience that is the antithesis of contemporary user experiences on the web. Creative directors, GUI designers and product managers are looking to the next step beyond the elegant approaches of Amazon and iTunes. An open platform is the only way to give a wide variety of interactive media the freedom to incorporate payments into the visual real estate in their own way. No more departures from the experience itself, jumping between sites, multiple logins, and other experience killers.
iv) Relationships: Clearly, credit, debit and gift cards still dominate (>90%) of all online transactions for multiple reasons. But, one the most obvious reasons is a clear protocol for relationship management with consumers. People simply know which party is responsible for each element of the transaction. The roles of the merchant (Target), the card issuer (Citibank), the affiliate (UCLA alumni), and the transaction processor (Visa) are all clear in the mind of the consumer. PayPal has blurred these roles in a way that has led to confusion with consumers.
Apple and Amazon have addressed all of these issues in their respective ways. However, there needs to be an alternative for the rest of the world wishing to own and manage its payments, and subsequently its relationships, with consumers without Amazon or Apple involved.
sfmitch
· 7 months ago
Without a 5th major reason - Poor Customer Service - your list is pretty incomplete.
Go ahead and use Paypal all you want, one day something will go wrong and you will need to deal with Paypal. Good Luck.
fredwilson
· 6 months ago
That's a great analysis
jseliger
· 7 months ago
"They have a brand problem"
No—they have more than a brand problem. A "brand problem" is just image. The problem they have is substance: their policies are set up to screw merchants and leave one with no recourse, or at least they were when I last used them in 2003.
After that experience, I will *never* use Paypal again. Paypal isn't a good company, and people have figured that out.
andrewwatson
· 7 months ago
I love PayPal! I even pay my Progressive Auto Insurance bill with it! I'm going to use it as the payment system for the project I just launched this weekend too!
kevinmurphy
· 7 months ago
I never have spent the time comparing debit, credit and Paypal fees associated with a transaction. I wonder how Paypal compares?
And the lack of protection that is a common comment in most of the above comments is a big issue.
deancollins
· 7 months ago
I use paypal BUT i still hate how the 'manipulated' checking accounts earlier on like they own you as a customer rather than you giving them a privilege to access you account.
Whats surprising is google checkout hasn't grown faster either.
wow - there seems to be a lot of pissed of people here. I have never had a problem with them, it just works fine for me. but then its always gone well. Just look at Freds view on Amex - sometimes its the luck of the draw with any customer interaction. This is what organisations need to bring back - consistency and communication.
Peter Rad
· 7 months ago
saieva is correct about the extra steps to use AMEX via PayPal. If you leave a balance on Paypal, it gets used first regardless. That's an accounting PITA. Half in PayPal funds, half in bank when I forget that I have to change the funding source. PITA.
PayPal is and always has been Non-User friendly. Almost like the programmers do not use it. Ever.
It has a branding issue. And like Skype, eBay didn't know what to do with it, other than as a module for payment and a small source of revenue.
Joyce Lai
· 7 months ago
For me, Paypal is an intuitive way to collect money. But when I want to pay someone else, using a credit card just seem to make more sense. I use my credit card (or debit card) for everything else, so the first tool that I associate with paying is credit card. The last thing I want to do is to keep track of my expenses through multiple companies.
subconsciously, a long string of complicated numbers feel more secure than my email address.
BryanThatcher
· 7 months ago
I've been using 1password for a couple of years, I find it invaluable, I never have to remember more than a single password. Plus it has an iPhone app so you passwords are portable. Also has secure notes so you can record things like bank account numbers.
I use paypal all the time, I agree that their brand has tarnished edges that they don't seem to be trying to fix. I'm in the middle of building an ecommerce site and was leaning away from paypal, but changed my thoughts to allow a choice when checking out, paypal, google, amazon. It will be interesting over time to see what people prefer.
bobrizzle
· 7 months ago
couldnt agree with you more Peter Rad
Spencer Fry
· 7 months ago
I'd love to take the rest of the afternoon off to slam PayPal, but I don't have the time to do that justice. :) Any Merchant that has worked with PayPal will tell you that it's one of the biggest headaches around. They've been better in the past few months, but there was a solid block of 6 years when (1) their API would fail for no reason; (2) their website would just crawl to a halt unexpectedly; (3) subscription renewals would simply not renew for unnamed reasons; and (4) chargebacks are always awarded in the favor of the buyers no matter how detailed the digital logs you provide PayPal with are.
That being said, ~25% of our paying customers use PayPal, so we're forced to support it. :)
inspireinc
· 7 months ago
I'm curious as a business paypal griper (Cause I'm one too), what you think of a new service like this: http://www.inspirepay.com . I built it as a way to "replace" the normal functions of paypal. It's not great for selling items, but it works wonders for making monetary requests. Your feedback is very welcome if you have the time to watch the video (only two minutes long with cool graphics).
Spencer Fry
· 7 months ago
It looks like a neat little service, but it's unclear from the video if it has the biggest benefit of PayPal. That benefit being that our International customers, who may not have credit cards that our Merchant will accept, can deposit money into their PayPal account and then pay us using that. That's the biggest benefit to PayPal from my perspective. Otherwise everyone should just use a credit card.
inspireinc
· 7 months ago
We have a "currency preservation" partner that will be powering our global back end. It allows for people to pay in their chosen currency (but the merchant receives it in their own currency). It is very cool technology that avoids the customer having to pay the conversion, or calculate how much they are really paying. If they pay 10 pesos, that's what they pay, all the way to the bank. But yes, it is all credit card based. Doing the direct deposit on a global basis is tricky. Paypal does do this well.
fredwilson
· 6 months ago
Paypal's big advantage over amazon is international. Once amazon offers that, the race is on
Spencer Fry
· 6 months ago
I'm looking forward to that day!
Lenny
· 7 months ago
Personally I think that PayPal could be most useful for transferring money from one person to another but if you check out their fees for this type of transaction it makes it very unattractive.
jamtoday
· 7 months ago
It's funny you write about this now, since just a few days ago I had a *terrible* Paypal experience.
I paid my roommate some rent money at the end of last week, and he told me the next day that he received the payment twice. Sure enough, it turns out that two identical payments were made - within 9 hundredths of a second. As a developer, I instantly recognized this as a double-submitted POST form, and I was somewhat astonished that Paypal would fall for such an amateurish problem.
I filed a complaint, clearly explaining what had happened. I expected a quick resolution, and surely enough, we got one. My roommate just received a call that his account is being suspended while they investigate his account history. Even though, of course, the problem is not in any way his fault.
I don't know about you Fred, but I'm really hoping there's a better option than Paypal when it comes to reinventing the way payments work
fredwilson
· 7 months ago
This is a horrible story!
Jordan Cooper
· 7 months ago
There's a real opportunity for any subscription based service with a critical mass of users and credit card info on file (i.e. Netflix) to improve the consumer experience of online checkout. Traditional challenge of building a payment company (chicken and egg btwn signing up top 500 retailers and building a user base) doesn't exist when you are bringing xx million subscribers to a retailer's door and reducing dropoff by allowing payment through a vehicle very similar to how I commented on this blog by signing into twitter... backend would probably look something like what Google Checkout tried to do, but google didn't have a transactional relationship with thier users when they tried to do it... So why isn't Netflix in the payment space? don't know, but i'd like to be the white label provider that does it for them and a couple of other subccriber bases in non-competitive verticals...
fredwilson
· 6 months ago
This is why I think amazon is a force to be reckoned with in payments
Ryan Graves
· 7 months ago
I've received 2 sketchy fishing emails over the last 2 weeks trying to disguised themselves as Paypal and I've forwarded both of them to spoof@paypal.com to help fight the cause. I definitely agree that Paypal has suffered by being a market leader in such a scam heavy sector.
kidmercury
· 7 months ago
the one word answer to the question in the title of this blog entry: regulation
Paypal is an awful service and I have had so many problems with them. I recommend using Propay you can actually speak to real people on the phone if you have any questions. Google checkout works well to and I would try giving google base a try to for selling stuff.
BarryJames
· 7 months ago
I HATE PayPal - and REFUSE to use it. Reasons:
1) I don't want anyone having direct access to my checking account - I have run into fraud on the Internet for the third time in two years via credit cards 2) PayPal oes NOT have the protection of using a credit card e.g., maximum exposure is $50 AND the credit card companies look out for fraudulent uses of your account(s) 3) If you use a credit card with PayPal, they limit it's use to $2,000 maximum and then require access to your checking account. See #1.
I even told my wife and daughter's NOT to use the Blackberry store because it only accepts Paypal. BTW: wife going to Pre; daughter going to iPhone (t-Mobile) soon.
Why aren't you using Google Checkout? It's safer, and you and I both know the CEO :-)
Stay Tuned...."Barry James" Folsom
senith
· 7 months ago
We at graduatetutor.com use paypal and have had no issues with it. But we have been using it only for a year or so now. Some of their earlier issues combined with poor customer service may have lead to the frustrations above leaving a bad taste in the market! User interface and customer service could get better. I wish they develop an app for the BB too.
Our customers are MBA students and working executives looking to learn various subjects and 9/10 of our customer dont have an issue with it (so far at least)!
Caryn Rose
· 7 months ago
I hate Paypal. Three times I have had issues with purchases and each time I had no protection because of some obscure regulation. If I had paid with AmEx, there would have been no question. Done. Over. Credited back to me. With Paypal? By my reckoning I've lost $150 or more over the years. Not a big deal? It is to me. Especially when a I wouldn't have been in that situation if I'd just used a plain old credit card.
I hate Paypal because as a random person who wants to sell stuff on eBay, I have to have a Premier account so people can use credit cards. There's no "hey you get 5 transactions a month" nor do they put the surcharge on the person using the credit card. So now I have a Premiere account, and when my sister wants to Paypal me cash to cover her share of the Mother's Day present, I lose cash because Paypal gets a cut.
I hate Paypal because I make $35 a month on ads on my web site and because they pay me with Paypal, and because i have to have a Premiere account, Paypal gets $2.41 of that money every month.
I hate them. I don't trust them. They're not as bad as before when eBay bought htem, but I still think they are bad, they just look more professional doing it. But I honestly view them as just as dodgy as they ever were. I will only gladly use them with small transactions (such as Etsy) or if I have to use them for something larger, I change it to go to an AmEx card product (even though they make that ridiculously difficult - "are you sure? you're still protected" - um, no i'm not, morons, or I wouldn't be doing this).
sholvar
· 7 months ago
Hi Fred, thats a interesting topic to talk and think about.
I am one of those guys, who don't like paypal on a subconcios level. I think that might be because I heard very often how much money you lose using paypal. At the time I started the online money business, netteller was just much cheaper. So every body else just told me, not to go to paypal. And I think that might be still in my head, when I think about paying with paypal or something else.
jasonspalace
· 7 months ago
"there is a very big opportunity to reinvent the way payments work" - yup... the amount of capital it will take to create a new entity that disrupts online payments may be high, but once the new concept and infrastructure are in place i see a renewed confidence in ecommerce for both the merchant and the consumer.
Tony_Alva
· 7 months ago
I use it when I have to, but only then. The thing that deters me? I would rather have my PayPal payment charged to my credit card as a DEFAULT, but they won't let you do that. You have navigate to three screens (sucks on a mobile device), select your credit card, and go back to complete the payment. All I had to do was forget once to re-direct my pay to my credit card vs bank account and have to feel the arrogance and pain of having to call them to know what my long term strategy would be in the future. Bearish on PayPal...
fredwilson
· 6 months ago
Doing transactions on your mobile pat! You are well ahead of the curve
bfletcher
· 7 months ago
lots of great comments here . . . does anyone have any experience/recommendations for setting up a paypal account in a foreign country (i.e., bank and/or credit card tied to paypal account would be in a foreign country) to take and process orders from customers accessing web sites in other countries, including the U.S.? Ideally, processing payments via paypal would be offered since it supports credit cards as well as payments from bank accounts. If not, does anyone have any experience they could share about reasonalbe international merchant account solutions? I'm guessing these wouldn't support paypal. Thanks in advance.
swalkergibson
· 7 months ago
This is surprising in that PayPal is the "default" provider of payments online. You would think that the trust they have cultivated among Internet users would be enough to pull people into using their service. I too use PayPal whenever it is available, it's just easier and I don't have any concerns about fraud.
juandissimo
· 7 months ago
I have only used Paypal a few times - and then only recently - they seem easy enough to use on the buyer side for small purchases (less than $300). I've never really had a compelling reason to use Paypal up until recently - as I'm fairly plain vanilla in my purchases (most consistently Amazon.com). My only take on this discussion is that it does seem a bit cumbersome, in this day and age, to have to leave the merchant site to establish payment and then return to finish up. My perception, prior to using the service, had always been that Paypal was a bit too hokey sounding to be regarded as a serious company. Perhaps if the name had been more along the lines of "Super Big Ass Universal Payment Systems Inc.," I might have given them more credence.
Perhaps what is most intriguing about the commentary, at least from my perspective, is the comments appear to have some measure of similarity. Those who love it, love it...those who hate it, hate it....and the reasons are fairly consistent. Not surprising.
What I did find surprising is that there appears to be a measure of segmentation between the audiences that PayPal serves. Love or hate...the PayPal "merchant" has a very different perspective than the PayPal consumer. Again, not surprising considering that they serve more than one audience. It is, perhaps, an interesting case study on the multi-sided market concept as applied to what is, in essence, an established industry player.
I would agree that many of the woes called out in other comments point to a brand issue (which is, perhaps, due to a product issue). That is worthy of further rumination.
Ari Herzog
· 7 months ago
110 comments and counting over who likes and dislikes Paypal? I like it, I use it, and I don't understand why people have problems with it.
marshal sandler
· 7 months ago
I had a bad experience with Pay Pal cost me $45.00 it was impossible for me to resolve the situation in our house Pay Pal is as dead as Custer!
nookaNOW
· 7 months ago
as a online shopper and an entrepreneur with an online business i must agree with the negative comments with a special focus on conflict resolution – which really boils down to customer service. when you have a problem with traditional credit card charge, you call an 800 number, and that's it. if they need additional documentation, they let you know, but for the most part, they are good at researching and resolving a problem. whether or not paypal is good at this now, i too had a bad experience in the past and have not used them since. the big question is: why haven't the traditional credit card companies set up a system where one can make a charge with an easy to remember email address or name+password process similar to paypal?
samnet
· 7 months ago
Actually it has more to do with how paypal treats it's merchants / website owners.
I've heard horror stories, one after another of paypal taking / freezing the money in paypal accounts --- claiming that their account has been tagged due to some type of issues.
- Sam
fredwilson
· 6 months ago
That's the consensus - paypal has a mixed reputation with buyers but a mostly bad reputation with sellers
FonoSIP com
· 7 months ago
we offer paypal and gcheckout at www.fonosip.com. paypal does around 90% of the business.
fredwilson
· 6 months ago
That jives with the jp morgan survey cited in this thread
Karl341
· 7 months ago
I totally agree with the first commenter. Paypal deserves to die because there is no seller protection at all. Their system is fundamentally broken - if someone means to rip you off, there's not much one can do as a seller. A customer simply has to file a claim that he hasn't got his package, the decision always goes to the buyers favor. I've been ripped off many times with this method and now take great precautions that it won't happen anymore: I don't accept Paypal for countries where more secure payments work (credit card, bank wiring, ...). People who pay via Paypal must come up for the fee for a registration of their package (so I have something in my hands in case a claim is filed). I run two small independent businesses (music and merchandise mailorder). Paypal had hurt my business more than once. Fees are not an issue and pretty decent actually. It works like a charm if the buyer is honest (most of the times), but if he files a claim and rips you of there's no way that you can do anything,
David Barkhausen
· 7 months ago
Wow, everyone here really seems to dislike PayPal a lot. I've got both a US and UK PayPal account (though I don't use the US one - set up to transfer money whilst I was abroad). I have noticed that there are differences between the two sites and I think the UK one is a bit more user-friendly, albeit still a pain to navigate sometimes. For the most part though, I don't visit the PayPal site very often, except for making transfers.
There are a few instances where I've been annoyed by PayPal, especially the length of time it takes for money to be sent back to your account when you cancel a transaction/transfer, but overall I have to say I like to use the service wherever possible. I prefer it because it means that I don't have to pull out my debit card for every transaction or enter my details/set up accounts on online stores that I'm not going to visit again. It makes check-out swift too. Yes, it would be nice if you could use credit cards as primary payment methods too and frankly I'm surprised they still don't have that functionality.
I find it great for transferring money too - they're instantaneous and doesn't involve me having to fill out lots of paper-work or messing around with security tokens to set up payees in my online banking.
Fred, in terms of PayPal not taking off - I don't know of many other similar online payment methods (Haven't heard of most of these: http://en.wikipedia.org/wiki/Category:Electroni...). I've used Google Checkout, but I find that it's not on as many sites as Paypal. Perhaps it's just more popular in the UK? It's the recommended payment method for most sellers on Ebay (because they own PayPal I suppose), and RIM has announced they'll be using PayPal as the payment partner for their app store. So in that regard I think they have large portion of the market share, but it may just be because there's nobody that's really as big or better at the moment!
It seems to me that PayPal's Achilles Heal at the moment is their poor customer satisfaction rate, which is something they clearly need to work on if only a small minority, such as myself, are happy to use the service. Especially so if Ebay's strategy is to shift from the online auctions business to the payments business: http://online.wsj.com/article/SB124329254255652...
coldspring
· 7 months ago
Just curious for those of you that use debit cards/Paypal to hit your bank account immediately, why? It seems it would be better all around (protection, float, etc.) to use a credit card and pay off the balance each month before interest starts.
Mo Koyfman
· 7 months ago
great discussion as always. i continue to believe there is a huge opportunity for a flexible, frictionless, embeddable, mobile enabled, virtual-currency-friendly provider to come into the market and do something interesting here. and don't count facebook out -- i suspect currency and payments will be a big part of their future growth plans.
Facebook User
· 7 months ago
They froze my account because I made a payment which they tried to pull from a closed bank account. I could have resolved this quickly by inputting a new account number but could not because -- you guessed it -- you can't update account details on a frozen account.
The only option was for me was to send Paypal a PAPER CHECK and wait for it to arrive and clear. Im not making this up.
Have you tried contacting their support? Do it by email and you get an answer from a bot that misunderstands your question half the time. Do it over the phone and the humans who answer aren't much better.
stilt22
· 7 months ago
Wonderful comments thus far. To add to a few, the main reason why I don't use PayPal is customer service. I had a few very bad experiences with them and refuse to support them going forward. They talk(ed) a good game, but once you have to deal with them, their action leaves much to be desired. Proof that simply showing up to the game isn't enough to be successful.
Jeff Judge
· 7 months ago
I didn't read through a lot of the comments (lot of action on this post), but here are the reasons why I don't like paypal and stay away from them whenever possible:
1) They default to my bank account. I hate that, I hate paying with cash, I never want to pay directly from my bank account. 2) Their guest (non-login) checkout process with sites sucks - whenever they match up my email address and/or credit card number they don't let me proceed unless I login. When I login, they default to my bank account (and make it hard to change to use your credit card). Why would I need to login if my preference would be to not login and type out my information? I'm assuming that the merchant wants to support non-paypal accounts through this manner, but Paypal is trying to hoodwink me into logging in. In the past two months I didn't not proceed with checkout 2x due to this issue. 3) I have my credit card number memorized.
I think Google has done a nice job with Checkout (very clean, very easy to use, don't mind logging in at all since I use Google for all email accounts).
It's definitely a matter of trust. I don't trust Paypal because of the reasons laid out above. I trust Amazon because they give me complete control when purchasing something.
fredwilson
· 6 months ago
This sort of sums up the comment thread from the payer side
aflow
· 7 months ago
They have caused me a LOT of grief - they made a large mistake within a "send money" transaction, & now litigation is necessary because they are totally impossible to deal with. They even publicly evaded direct questions on the BBB website. I have yet to file my report with this RipOff Reports site: http://tinyurl.com/p6jc33, where there are all kinds of similar horror stories.
Prokofy
· 7 months ago
Don't pay attention to individual complaining customers, Fred. Try to follow your hunch that PayPal is the future for digital goods and online payments, and there will be other services that compete with it and make it better, and PP itself will be better.
Second Life is doing about $450 million in virtual goods sales in 2009, all user generated content, and that is all profit for small businesses, and that is all enabled for thousands of people because of PayPal.
I love PayPal and I never understand what all the agida about it is all about, because I've never had any real trouble from it, and certainly nothing compared to credit cards or banks, with their outrageous fees and practices, which I've had in the past. I cash out the earnings from my Second Life business into PayPal, as that is how the system works, sale of virtual goods and rentals or sales of land in Linden dollars can then be transferred to real US dollars and cashed out to PayPal. I also use Paypal as well as to process income from online translation work. Then I can use it to pay online bills like phone bills or buy books and electronics on amazon.com and so on. While it's a bit slow to get it into a bank then, it can still be deposited within 5 days, and generally takes less time.
Each purchase gives a small percentage of a cashback, and there is also interest earned in a money market on PayPal, so it pays to keep the account there. I've never found it any less safe than any other online thing. I attach it to a debit card that only has limited amounts, so I don't worry that it will be used somehow wrongfully.
Some merchants don't like PayPal because they find that customers misuse it to do chargebacks. But PayPal is very good on working with you to resolve these problems. Whenever I've had a customer problem or a double charging type of problem, they've resolved it quickly.
One flaw on PayPal is that it is entirely impersonal as to customer service. There doesn't seem to be a way to easily call or get help, only through trouble tickets -- and the tickets default to the fraud case, and ask you to reset passwords, etc., so that other routine problems, like the failure to make a switch between back-up cards, don't have a slot to go into on the form. But even with this obstacle I find the main thing about PayPal is that it works. It works to help collect and pay out micropayments; it works to safely pay bills online; it also provides you with a debit card that you can use like any card.
P.S. Verifying to become a merchant verified account was a really simple matter. It's complexity is being exaggerated here.
fredwilson
· 6 months ago
Well I believe in 'where there is smoke there is fire'
I share your view of paypal but many do not
Its something worth considering
Roman Giverts
· 7 months ago
I think it's because they have a reputation for being involved in frauds.
which is ironic because if you're familiar with their story, they succeeded amongst all of the other competitors due to their ability to combat fraud.
also the fact that I have to register with discuss to post a comment is terrible. I had to pick like 3 user names until i found one that wasn't used. it makes me want to never read this blog again... incredibly surprised by your decision to do this.
fredwilson
· 6 months ago
You can log in with facebook or twitter and soon others. All of that is provided by disqus
Guest
· 6 months ago
But the whole point of the blog discussions is that you never had to sign in... it was truly open.. anyone can comment... now only registered members can comment. It used to be optional, I dont understand why it's required now?
And what if I don't want to use the same name on multiple blogs and let people track what I'm doing. That used to be easy... now I have to create a second disqus account or something???
I can see why you're doing this given your conflict of interest with disqus. As a user though, this is terrible.
fredwilson
· 6 months ago
anyone can leave an anonymous comment on this blog. i've asked disqus to look at the interface and make sure that its obvious that you can do that. this is a failure of the UI, not a change in the way it works
rosshill
· 7 months ago
I have always wondered the same thing Fred!
fredwilson
· 6 months ago
Now we don't have to wonder. The answers are right here in the comments
lucaf
· 6 months ago
I find their marketing pitches to be fundamentally dishonest. PayPal: "Let us take money out of your bank account because it's better for you". Me: "No it isn't, it's only better for you". Hence I am exceptionally reluctant about entrusting them with my credit card information. In some instances I have not proceeded with a transaction because I did not feel like going through the PayPal process.
iamronen
· 6 months ago
I live in Israel, I use Paypal to make online payment whenever possible (but not often - because I don't make many), the user experience is fine (no complaints and no love).
I am right now in the process of setting up as a merchant - a simple system with a few fixed pay-now buttons, no cart... so far it seems Paypal have managed to create a reasonably simple, straightforward and accessible entry point for merchants.
In my mind (and after some researching) Paypal is still the only available international payment system available to me as both an international buyer and merchant.
I do feel that the comments to this post are very "Americanized" and unaware of a variety of issues that exist outside of the USA. Some examples: - Paypal is not available as a local payments solution for merchants in Israel (and I assume other places). - There is not reliable/standard online payments solution in Israel. - Online payment is not taken for granted in Israel - many people (some completely computer/technology savvy) still refrain from doing it. - I am uncomfortable paying Israeli online merchants because there is a good chance that they are using primitive and unsecured solutions (credit cards kept in excel files or passed to the merchant in unsecured email messages for manual processing). - Paypal interfaces with bank accounts only in the US - Only recently has Paypal offered a means to withdraw money in Israel (and other countries) through a credit card (in Israel credit cards are tightly bound with banks and checking accounts). - The business I am setting up is targeting European customers - In Europe penetration of credit cards is much lower then in the USA. - Bank transfers are a common means of payment in Europe - to the extent that in some countries the commissions on transfers are regulated by law. - It is the year 2009 - and I am still considering (for lack of a better choice) the option of having some European customers pay by sending money in an envelope. - It is the year 2009 - and I having difficulty finding a reliable bank that operates in Europe, with full online services so I can register without actually walking into one of their branches.
I don't think there is a single "Online Payments Market" - it is more like many niche markets with diverse customer profiles, merchant profiles, price levels, economic tools/bridges/obstacles. There are many real-world problems (interfacing with some shady banking systems) and many online/technological problems.
With all their market leadership - you would think Paypal would be able to translate their "Pay Now" button into more languages. They are still working on that - they have a combo box where you can choose almost any country - but the button label doesn't change!
cemilturun
· 6 months ago
Thanks for the summary in Israel, it is more or less the same situation in many countries. For instance, the situation is exactly the same in Turkey, 27 million online users and no local PayPal transfer option.
fredwilson
· 6 months ago
Great comment and a really important perspective. Thanks
George
· 6 months ago
What a great post! totally something i have wondered for a long time. I have the same experience and lean towards paypal as a buyer, mostly because I am one of those donkeys that ships stuff to a different address than my billing address. Combine that with my fat fingers atop my I-can-make-the-changeover-to-a-mac apple keyboard and I could spend a lifetime doing checkout..
I asked my wife who runs her own online storefront selling women's pajamas and she got all-up-in-my-mug about how shlockey the brand image of paypal is. Despite that fact that she had not yet had her morning coffee, i pursued the conversation. Apparently Paypal's legacy as a low budget payment solution still hangs with the company. My wife hates the logo and wouldn't allow it within a mile of her site. Oh really, i like the logo...
This is classic eBay. As much as I love each of their businesses and their inherent market power and potential, their execution is really horrific. defeat from the jaws of victory. As a merchant acquiror the secret to their success is the satisfaction of the merchants, feels pretty obvious to me, but they do little to market and serve this community. thus, my wife and the schlockey image.
Back to my wife who is easing into her cup of coffee, greasing the wheels of conversation. She recently got a sales pitch from Amazon checkout and is leaning that way. Personally, this is the first I have heard about this service and I am a bit surprised that Amazon is willing to loan out their checkout process. FWIW, as a consumer, I religiously use amazon and a large part of that is due to checkout (again- fat fingers).
But in Amazon I trust. Their execution is flawless and unquestionable in my mind (despite the placement of the back-forward buttons on my kindle), so I imagine it is a calculated bet. I don't know anyone who doesn't have an amazon account.
One last thought, I suspect that the rubber will meet the road for my wife when she learns what amazon is going to charge her. If amazon is going to stomach that 2.5% credit card-nut plus make a margin, i suspect she is not going to like it. That said, I wouldn't bet against Amazon.
fredwilson
· 6 months ago
Great comment. Love the visual of you and your wife talking this over while you leave the comment!
If your wife sells a lot internationally, amazon won't work for her (yet)
grintoul
· 6 months ago
Two main reasons for me:
1) The interface is terrible to use and vastly over-complicated. It should be simple and straightforward, but it's just a pain to use.
2) Customer service is terrible. I had a transaction on my account and it took PayPal 3 months to refund it, despite obvious evidence that it was fraud.
I do still use it where it's the best option (e.g. I'm in the UK, so it's often useful for ordering products or services from foreign websites) but I go with card where possible.
Gotham Gal
· 6 months ago
Paypal is not always user friendly. The interface sucks and you have to cross your fingers that it will work each time you use it. I'd rather use my own personal credit card, get the miles and then be able to easily tag the transaction in Wesabe. Paypal is just a middle man making money on the transaction.
fredwilson
· 6 months ago
You were the reason this post got written so thanks for joining. Did you read all the comments?
Gotham Gal
· 6 months ago
I did. I had to go to Paypal today to update my credit card after buying something on ebay. They asked me some questions prior to the transaction that are so stupid that I will probably next remember the answers.
What is your favorite restaurant? Who are your favorite teacher? What was your dogs first name?
I honestly didn't know any of the answers to the questions put in front of me. How's that for a major company?
earthsphere
· 6 months ago
I absolutely agree with you. I use paypal often and mostly for it's convinience. Taking my payment from my checking account or my credit card account is great. I think the issue is that most people have not experienced paypal lately. So, they don't know that it provides a greater level of online security, etc.
Kevin Cimring
· 6 months ago
Hi Fred, great post which has elicited a lot of good commentary.
Without wanting to duplicate what has already been stated, I'll just briefly convey that my experience with PayPal has been very tyring indeed. It was only through sheer persistence and tear-my-hair out stuff that I managed to get my account verified and up and running. Now that its working, its pretty easy and I use the Paypal option.
But I can certainly understand why people have a dislike for the Paypal user-experience. Heaven forbid you ever have to call their automated customer help centre.
If there was a meaningful competitor out there who offered a better UX and customer service, it would stand a great chance of becoming the preferred option for many.
southpoint
· 6 months ago
As many have voiced here I have had similar concerns/problems with Paypal. They have a huge legacy of being a pain for merchants. There is a big opp for someone to come in and offer websites a seamless merchant account that is totally white labeled and customer doesn't have to leave the site. A commission is taken out for each transaction (no monthly payment or other hidden fees). Make it seamless, simple to integrate, secure. Win win.
bootload
· 6 months ago
"... 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. ..."
Somewhere there like you conclude is the answer to online payments. But only before you understand why the *perception* of a service by the crowd also influences it success. I remember Cringely looked at the technology side of this problem in $digital money$ ~ http://www.pbs.org/cringely/pulpit/2001/pulpit_...
I distinctly remember the episode on how the credit card was introduced. Maybe the idea of intangible money is the problem and the answer might lie in some sort of physical yet digital manifestation of money.
Buzz the first version of a payment service on a physical device like an iPhone.
fredwilson
· 6 months ago
I agree that the mobile device could be that physical instantiation of something that is otherwise very intangible
vruz
· 6 months ago
I think it's mostly the user interface and the lack of a decent api. You're right, it's a shame.
Jeff Levine
· 6 months ago
I pass on Paypal partly because they push the Checking account option too hard, but most importantly because they fail to give me the purchase protection that paying with a credit card does.
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· 6 months ago
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We've just started using Amazon's "Simple Payment" system. They offer some better tools and they are more trusted than Paypal (IMHO).
I think Paypal stopped improving their service when ebay bought them.
Liz
· 6 months ago
In a nutshell, I don't trust Paypal. I view Paypal as equivalent to handing my debit/credit card to the teenager down the street to make my purchases for me online. I might THINK I can trust the teenager-- but common sense tells me that would be stupid.
Geoff
· 6 months ago
Wait till you have a problem with Paypal! no telephone support, nonsensical emails and the attitude they are right and you are wrong. I nearly lost a domain name because Paypal decided the transaction was fraudulent. .
johnfurst
· 6 months ago
I don't mind using Paypal, but it's just an additional layers -- as some of you have mentioned before -- that I don't want to have if I am dealing with a very trusted vendor. For less known vendors Paypal is a great choice.
I also have heard all the horror stories about their non existing support. If you are living in Europe, but not in the U.K. than good luck with legal across jurisdictions. Probably not worth the average amounts traded with Paypal.
fruity
· 6 months ago
It's because they're not regulated with their flimsy money transmitters license, and I'm not interested in supporting Wells Fargo. paypal doesn't want to tell you that they're the merchant of record because they are on the hook for everything. But they'll be totally successful, they've acquired quite alot of the competition in the past 10 years. And I'm sure the banks are going to help them a bit
Jack
· 6 months ago
I use paypal, because I have to. But I'd rather not.
The main reason for my dislike of paypal stems from their constantly trying to trick you into using their most lucrative way to pay. I usually like to pay for things with my credit card, but unless you are very diligent and go through the long process to change your funding source, you end up with a debit to your checking account.
Just seems sneaky to me. Like a scam artist.
Too bad too, because I agree with you. Paypal is the cutting edge of internet payments. I just wish they were more user focused. Maybe google-checkout will compete with them.
Gonzojh
· 6 months ago
Very interesting discourse. I use PayPal - 1st as a buyer/third party integrated SaaS company and now as a seller. I think the polarization is primarily due to individual experiences. As such, below is a quick outline of my experiences:
As a buyer:
No real complaints - used it to pay for a variety of items (primarily eBay items) but also for direct payment for some services. Never really had an issue until I canceled and account that had my AMEX attached to it and now they won't close the account so I can add the AMEX to my new account.
Summary - It works as a payment gateway (with almost no issues) but the customer support is almost non-existent and after multiple emails I still cannot add the AMEX to my new account.
On a scale of 1 to 10 I'd rate about a 6.5-7
As a 3rd party integrated company:
I represented accounts using PayPal integrated into our SaaS platform which was fine and dandy until PayPal had API issues. It was like pulling teeth to get a technical contact engaged and even when I did the response time left something to be desired. That being said - they did eventually solve the issue.
Summary - In general, sellers had very little issue with PayPal but when something did go wrong, there was no real escalation path. This is disturbing because when sellers can't sell - PayPal loses revenue but even that didn't seem to "light any fires" with the support team. Also, once I finally clawed into the "ivory tower" of support, I was able to leverage my contact for multiple issues. So it seems to boil down to getting to the right person while stumbling around in a virtual black hole.
On a scale of 1 to 10 I'd rate about a 7-7.5
As a seller:
In order to understand my frame of reference, I would need to give you my horrific backstory on getting started with eBay (but alas, that is another story for another time)... So after the thrashing by eBay my expectations for PayPal were not the greatest. However, here is where the unexpected upside is, the PayPal account was easy to set up and is the only payment method I currently use. (disclosure - currently I am only selling on eBay - but will offer PayPal on my ecom site primarily because eBay is my customer acquisition channel). I was able to leverage my technical contact to get the contact info of an account manager (that I have not had to reach out to yet - so this is still undetermined for my rating).
Summary - So far, no real issues other than the "holding of funds" which I agree is bs. The upside is - a good integration with eBay with at least the promise of some protection for the seller and buyer AND if you leverage PayPal to buy/print your shipping labels, your funds will be released more frequently as the tracking pulls directly into the transaction within your PayPal account. They still have some quirks (initially they would only clear my lower $ value transactions within the 3-5 (once shipping is confirmed or buyer leaves feedback) but they have gotten better about releasing the larger $ sales as my sales velocity and feedback grow. They also offer better than rack rates for UPS which is a nice value add since I am a relatively small seller.
On a scale of 1 to 10 I'd rate about a 7.5-8.5*
* I will have to update once I have an issue with a chargeback or returns as I have not had those issues... Yet.
Kate Swift
· 6 months ago
I think of PayPal as most people would think of going green its the right thing to do! Clearly, what we all need for reasons such as, saves money, provides protection, solves problems, easier to deal with, and saves time. What's the problem? CHANGE, it takes time.
Eventually, most people in the world will be using PayPal for payment transactions and incorporating into their daily routines just as is going green because its the right thing to do and we're all in this together! :)
venkat2009
· 5 months ago
Thanks For the Sharing ..I am also Using the Paypal Concept In My website For the Online Buying.I am Doing the Mobile Selling Thro Online.I was Used the site Tucktail.com For the Domain name Registration
Harish Venkatesan
· 5 months ago
As far as consumer transactions go, I think Gotham Gal summed it up with this thought: "Paypal is just a middle man making money on the transaction." A common theme on the thread was that consumers prefer using credit cards to debit over the internet, for a number of reasons, I'm sure-- better tracking and control over spending, delayed payment, etc. PayPal is just another layer added onto the credit card checkout process (not to mention the hoops they make you jump through just to use your credit card). Given that most online buyers are now comfortable with the idea of shopping online (aided in part by the good fraud protection and customer service offered by credit card co's, something not matched by PayPal), and that the credit card checkout is itself a low-friction process (especially if you use 1Password or similar form-filling applications), PayPal is a rather unnecessary layer for most consumers. The branding and UI are linked issues; I'm sure PayPal could win more than a few users just by maintaining an intuitive UI that psychologically makes it the "easier option".
The merchant side seems to have its own host of issues!
francisplace
· 5 months ago
The reason most people don't use paypal is because there is nothing in it for them. The difference between entering a credit card number and "signing in to paypal with username, password, making a payment after selecting one of the options" is not much in terms of time/effort benefit.
The reason frequent flyer miles cards are so successful is that everyone gets 1 mile for 1 dollar. Its that simple.
If you are really interested in a company trying to give consumers an incentive to use their payment system check out http://www.noca.com (super interesting proposition for merchants *and* consumers - a bunch of ex-VISA boffins changing the way payments are handled online )
All Comments
I continued to use Paypal after they migrated to web payments and discontinued the Palm support.
About four or five years ago I became hugely disillusioned with Paypal and never use it, and refuse to support it at my two ecommerce companies.
Why?
As a customer:
* Supporting Paypal is a signalling mechanism. It says "I am too rinky dink to get a merchant account".
* The dispute resolution process drags a third party in.
* The account can be frozen.
* The appeals process is laborious and indeterminate.
* There are too many steps at checkout.
* Paypal wants to force me to upgrade to a full verified account. I have to supply too much information. I have to wait for 2 deposits to clear, then report their sizes.
* Even for the 1-off "act as a merchant account" process flow, if I try to use a credit card that has previously been registered with Paypal as a full account, Paypal will NOT LET ME do the one-off transaction; I have to come up with a (long forgotten) password to the Paypal account.
* There are about 50 more user-interface horrors that I don't recall right now, but I would seriously (seriously!) hit my fingers with a framing hammer before I would use Paypal again. I don't have emotional reactions to most brands. Apple? Eh. Windows? Sort of dislike it. Amazon? Sort of like it. ... Paypal? HATE HATE HATE HATE HATE.
As a merchant (at Smartflix.com and HeavyInk.com), I won't use Paypal because
* all of the above
* crappy admin interface
* crappy interface to delegate rights to other employees
* fear of having funds frozen
* inability to re-charge a credit card for follow in transactions (unreturned DVDs, late fees, etc.)
I wish Paypal nothing but death.
---
Travis Corcoran, President
SmartFlix.com
"What do you want to learn today?"
The first comment on Hacker News answers, "Because they appear, from many people's perspectives, to be nothing but scam artists?" With this kind of reputation, why _would_ people use Paypal.
I completely agree. I have been burned by PayPal at so many turns. I've had a $3000 payment held up for months as they suspect that the funds were fraudulently taken from my account. It took me a month before they would even let me prove that I indented to pay for that item on eBay. Needless to say the seller was pissed.
As someone who moved from Australia to the US, I continue to have troubles with some accounts tied to no longer existent Australian cards and I am unable to transfer the balances or status over to my American paypal account.
Ugh. I hate paypal.
I don't have any hard feelings toward Paypal but a lot of people I know do
And a lot of people who read this blog do too
With my last account, I did not get much American Express traffic, but then one of my clients paid me a large some with Amex, and they held the money for 2 weeks. That was enough for me.
Also setting up Merchant Account varies from acquirer to acquirer. Get the right acquirer and it'll be much easier than Paypal.
I also avoid using Paypal at any cost, as I don't like to "deposit" money to Paypal account first.
you said: "My guess is that credit cards are good enough for most people. I could be wrong and hope entrepreneurs are able to prove me wrong!"
A report by Mastercard in 2002 indicated that around 70% of US consumers did not use credit cards on the web. http://bit.ly/11ykmI - Another survey in 2007 puts the figure at 51%... http://bit.ly/byXOI Either way, in terms of Clayton Christensen's criteria for 'Disruptive Innovation', these are large groups of 'non-consumers' of web payment systems. It seems (after reading comments above) that PayPal 'non-consumers' might be a distinct sub-set inside the consumer-group using credit-cards.
Credit cards and existing payment systems including Paypal and even Amazon Checkout are "good-enough" for many, but game-changing innovation may now be innevitable. As an entrepreneur who has looked long at hard at the issue of alternative web/internet payment systems, the issue is never simply about technology, (alternative technology solutions are relatively easy to conceive and likewise to implement), but rather about 'market-power', either in the form of massive user-base (Amazon) or Service-Provision (Banks). However, Banks would never drive serious innovation. Amazon, is more free (in theory) to innovate, but somewhat constrained by other forces. (legacy web architecture)
The 'perfect-storm' for game-changing financial service innovation on the internet, (IMO) is tied to solving other macro problems, i.e. Music Piracy in a post-DRM world. (Disruption rarely occurs when and where it is expected) - If any one is seriously interested in discussing this subject, email me at: simon at virtusoft dot net ... we have been working on the issue since late 2005)
"...I’ve been to the mountaintop. [edit] ...and I’ve looked over. And I’ve seen the Promised Land. I may not get there with you. [edit] ...and so I’m happy tonight. I’m not worried about anything. I’m not fearing any man! Mine eyes have seen the glory of the coming of..."
...the end of credit-cards on the internet, which were not born on the web, but forced on us, by those most treasured of institutions on the planet... the Banks.
;) @simonedhouse
The issue is, PayPal and credit cards are all agents of the old economy which grows 4-5% yearly, at its best. However, the fast companies of the web, Facebooks and Twitters grow 75-100% or more yearly. Whatever transaction you commit suffers from an incompatibility of valuation. The internet economy is NOT an extension of the main street economy, but acts entirely as a new country economy. As if the web is one vast global country with its much faster and liquid economy. Maybe it deserves its faster global currency which is pegged to its fast growth. :)
Cemil
To build on your idea: like any "orderly" economic entity there are regulatory bodies that act as traffic signals (or, at least that's the idea) to "protect" against unfair or fraudulent actions. But in the real world, they never work because the bodies themselves are not truly democratic/responsive to the needs of the "pullers" or users. I wonder if in the new economic entity of Webistan there couldn't be a social-based regulatory body that gains trust and acceptance through the prudent moderation of Webistan's market. For example, in a community-moderated MMOPRG that my sister created as her thesis at NYU, students vote on the value of other participants/content as to its continued inclusion or sanctioning level -and it was "proven" a successful means of moderation (kinda like the original intent behind eBay's stars...but a little more 2.0ish). This could work in a virtual economy as well, the only issue one would run into is the conversion of dollars (or other currency) into the new, community-regulated Webistani Dollar...unless of course it's STABILITY (key to successful value-store characteristics) surpassed real world currencies, from which point entities would begin preferring to pay in the Webistani Dollar, from which a person could then remain in the Webistani economy without suffering the negative (inflationary) effects of conversion. One could do this today if they were earning a living selling items via the Internet, earning in a "token", Web currency, and able to purchase their need/want items exclusively within this closed system.
Just a thought; and, oh yeah: PayPal sucks.
How did you come up with the word "Webistan"? That word explains worlds about the idea of a global web economy. It is clearly an underdog now, as you have also stressed the fact by the "istan" fix. Unless you have a decent way of turning back and forth between real-world currencies and Webistani dollars, within a well defined set of market rules and regulations (like a well designed board game where players agree to stick to the rules all the time for enjoying the game) there is no game. Hence, this is the first problem to attack.
Cemil
On the "Amazon Connect" issue Amazon has offered Amazon Checkout for a while but their newest developer offering Amazon Flexible Payments service is wonderful (from both a developer and customer point if view).
It provides a very smooth payment process much like PayPal but it feels "easier" and I would argue "safer" (due largely if not entirely to Amazon's brand value).
It also of course lets you use your Amazon username/password and automatically pulls in your default payment method etc without ever exposing that information to the merchant (which is a benefit for both parties).
PayPal should own this space based on their historical position but I believe Amazon will due to innovations like FPS (which also allows very complex workflows such as subscription models to be built and is cheaper, especially for sub-$10 transactions. And of course it is well integrated with all their cloud computing offerings.)
http://aws.amazon.com/fps
Would Paypal benefit from white labeling their service? They could be the engine behind an "ebay connect", "amazon connect" or any other "ecommerce connect" solution while avoiding their existing branding issues.
Great thought!
It seems to me that Paypal needs to gets as credit card friendly as it is bank account friendly and give users the choice without sacrificing convenience.
think more people would choose to use it this way
The killer solution would be an open solution, like a 1password, that retrieves the information from a server rather than from an encrypted file on your hard-drive.
I also wonder why Amazon can't solve this by making their on-click basket available to other merchants on a pay as you use basis, even if they they don't use the Amazon network. There are business model issues there that I have not thought through but they already have my information and are in position to create a secure and seamless experience.
I'd use it all the time
While were on the discussion of poorly implemented credentials, why does Disqus Hate me? This if the fourth time I've attempted to post a comment to Fred's reply regarding:
"I like the idea of making amazon checkout a consumer proposition in addition to a merchant offering"
Disqus doesn't recognize me, after prompting for login credentials on three prior attempts using Firefox 3.0.1.0 on a Mac. Finally I received an error message from Disqus -- "That wasn't supposed to happen, Our Fault? Tell us" . Yeah no shi--.
Adding a comment via Disqus has become a major inhibitor for me, and is a large reason why I'm not a more active participant.
Success posting with Safari 3.2.1... finally
I've never had problem with PayPal as a consumer, though my PayPal transactions are rather small (i.e. less than $50.00 USD) and are covered by my bank's "Online Protection Service". However, I've heard numerous horrendous first-person stories from my clients who have used PayPal on the seller-side.
As to the point of a consumer offering from amazon, we still need the merchant to offer amazon checkout
What I was hoping for is the ability to checkout anywhere I use a credit card with my amazon credentials
A PayPal transaction is streamlined and their functionality appears to integrate well, but they don't offer anywhere near the customer service perks that Amex provides to their customers.
I love the way that companies such as Patagonia and Oakley gave lifetime guarantees on their products. They were confident enough on their offering that they knew they could do this and strengthen their brand without losing money. In the same way I can see the brand that wins the "unbank" game will give 100% guarantee on refunding fraud and deliver on their promise. They will be able to do this by providing a simple service with great security (which I am sure is not easy).
I couldn't disagree more - Paypal has a massive product quality issue. Sure, if everything goes right then they are a great company. But, as we all know, until you are faced with a problem, you don't see a Company's true colors. Dealing with Paypal is a nightmare.
[1] a Branding and perception problem. payPAL has it roots in paying a pal for micropayments. Their success in that segment is the biggest deterrent in being taken more *seriously*.. Think of it this way -> " will you buy shoes if it had a label that says ' made by IBM'? ..In the minds of the customer: IBM = Big + complex + computer + things about computers.. similarly Paypal = email +buddies + left over payments
[2] yes.. paypal does freeze accounts - for really weird cases.. I had a payment frozen for 6 months 1 AND this is when i was paying for an item. So. i have my money frozen by my *bank* .. tell me, if one exclamation mark would do ?
[3] Most people dont have the *credit card memorization problems*.. moreover, the cost of filling up the web form is not that significantly higher than what paypal may like to think it is..and well.. the browsers typically have autofills..for name, and address ie..
regards
ajay mishra and olga shulman lednichenko
I sold an item on eBay recently. Paypal decided to lock down my money for 2 weeks. Why? I have no idea. I've been a customer with a long track record (I signed up when they were giving away $10 - over 10 years ago).
I smell a scam every time I have to deal with them these days. I hope some financial reporter digs into the locked funds issue. My guess is that they do it as often as possible for as long as possible, then take the float on the money.
PayPal + EBay = the reason I pretty much only use Craigslist to sell these days.
Instead I do online purchasing through a single credit card that is easy to cut off should the need arise. I think this demanding of extra information really hurts them in the US. So I only use them when I need to send some money to a buddy to cover concert tickets or something like that, and use my credit card directly on any normal ecommerce sites. At least in my case they've shot themselves in the foot by strong arming you into providing so much more information.
My favorite part came when I gave up, closed my Pay Pal account, and then discovered I could no longer use my credit card with Pay Pal-based merchants - Pay Pal would reject the credit card because it had been associated with the account I closed.
I bought a piece of software on eBay that was pirated (of course they didn't list it that way). When I asked PayPal to reimburse me they voided my appeal because I didn't follow their protocol correctly.
I am not using Paypal in this lifetime. I think many people may have had a similar experience.
Also, Paypal's buyer protection is a complete joke. They claim to be able to help, but I lost all faith when I received this response from their resolution center after blatently getting ripped off by a web designer scammer (Alex Chen - email alexchen1@epicbizs.com or mtlangfuhr@gmail.com):
"After careful review, we have determined that the seller is at fault but regret to inform you that we were unable to recover any funds from the seller's account." How this reads to me: "You're screwed and we tried to help for 7 seconds but then didn't feel like helping anymore so we stopped." When I asked further, they said that they could only recover funds if there was money in the at fault account. The obvious question: if I was stealing money from someone, and knew that if I left it in my account, paypal could get it back, why the hell would I ever leave any money in my account?
So that's a major issue with Paypal, their protection isn't protective.
Ahh, feels good to rant.
Because I have been a victim of identity fraud over the Internet (credit care I use to pay online was used to download porn), I tried PayPal again to buy a Wordpress theme over the Internet a couple of days ago. After I paid for it, with a bank account that has a line of credit well over the $165 the theme cost, Paypal would not authorize the merchant to give me a key to download the theme because my e-check had not cleared. This takes days, unless you link a credit card as well as a bank account to your Paypal account. This makes it complex, kludgy, and not worth it. Easier to memorize a credit card number.
If there had been a great competitor, they'd be out of business.
They built a wall of 'experience fear' between themselves and their users for years.
Not to mention a horrible website and UI.
Don't underestimate the widespread damage that was achieved
when they held hands with ebay and enjoyed the pre-twitter/social media* "FU-O-Sphere"
(Sorry bloggers, I love you all for blogging, but no one brought them to their knees).
Not everyone on ebay, experiencing the Hell with Paypal was thrilled buying
junk [thanks Weird Al] http://is.gd/EHCY
There were millions people of every economic, social, educational background
experiencing the same thing; pain.
No decent customer service, then okay customer service paired with punitive policies.
I think the money makers (the default elite), forget this.
The masses are not that stupid. They're just powerless. Er, strike that. They were powerless.
(Thanks for fixing that Jack, Ev, Biz).
When executives in back rooms have a "Let them eat cake" attitude and appear to "win",
they of course have not really. They'll never calculate what wasn't; what didn't materialize.
People vote with their wallets. The brash if reclusive suits charged ahead.
The result? Fred Wilson asking in 2009 'why isn't Paypal ubiquitous'?
That's why.
They made far more mistakes than Twitter. But we didn't call them mistakes.
They were called "you'll take it and like it!".
Spend a month selling and receiving money through PayPal and you'll see why.
Sure, PayPal has some inefficiencies (settling with my commercial bank and their fees). But, when Steve Chase (AOL) starts getting into the game... I see PayPal being put on notice and getting some slack out of their system.
I have to hand it to them... they have a fairly good system (ala Microsoft) and while it's not elegant by any means (ala Apple) it's no surprise to me "good enough" claimed the high ground and the market share.
PayPal works for the merchants, not for me.
So, why would I use these guys as a consumer?
BTW: 'get out the credit card' - totally memorized, have used the same card online for some 10 years now, takes seconds to type it in.
In the long run, paypal is a nice-to-have for any ecommerce system, but because of it's brand issues it's not a must-have...but neither are the competitors like ipay.com or any of the other paypal-like systems...so primarily thanks to it's roots with ebay, paypal is still the lesser of all evils for micro-payments and small merchants will continue to jump through hoops to follow their rules because it's the 'easiest' way to get 'some' money...
*Could we conceive a new term or terms to replace "social media"?
It was once an appropriate herald.
Now media is truly becoming synonymous with 'social',
as sharing becomes instant and widespread across populations and platforms.
More importantly, it can make users feel uncomfortable.
A few years ago, PayPal decided to turn off my account. They needed to "verify" my identity. To do this, I had to give them my home phone number--and cell phones didn't count. I didn't have a land-line, so PayPal told me to go to some place with a land line and wait by the phone. Fuck you, PayPal.
So, I requested they close my account. They refused because I no longer have access to the email account I used to sign up with PayPal 7 or 8 years ago. So, they are still holding my banking information but won't let me use it.
The verification requirements almost make sense, but why the FUCK are they refusing to close my unusable account?
PayPal might be a good idea, but the implementation is crappy to the point of evil. Not to mention that they are probably an illegal corporation since they do the kind of things banks do, but aren't a bank.
In an age where everyone is/can be a merchant word spreads quickly. And the people who have problems with Paypal don't just complain. They say (as seen in the comments) the company is "evil".
They have some core customer issues to fix, obviously.
The company has a trust issue - which goes back to your "defaults" post from a few days ago. Trust is a major requirement for a company to become the "default."
the best ones have one thing in common: theyre drop dead simple. the best ones have only three options: withdraw, load, and transfer. seems to me like its more UI than anything (if i have a retail account, why do i need to see a merchant tab?, etc)
1) For me, funds aren't removed from my account immediately. It takes 5-7 business days for the funds to be transferred. If I want immediate payment, I either have to use a credit card or transfer funds into my PayPal account. If I'm using a credit card, I can just open my wallet and grab the card, no need to have yet another online account with credentials to remember (and that password better be a good one). And I don't particularly want to transfer funds to my PayPal account, as I don't shop online enough to warrant having $500 sitting around in an account that is otherwise inaccessible (not to mention that the transfer itself also takes 5-7 business days). Yes, both my account *and* my address are verified. And no, they don't warn me *before* submitting the transaction that it will take 5-7 business days, only after.
2) They make it *incredibly* difficult to do anything that deviates from their process. Recently, I made a payment, realized the payment would be required before the end of the 5-7 business day time limit (late registration for a conference, my fault), and had to arrange alternate payment. However, with PayPal, I can't cancel the payment. I had to arrange with the conference organizers to refund my payment via PayPal once it cleared. Why? I can cancel a cheque with my bank, and I can dispute a charge with my CC company, so why can't I do an equivalent action with PayPal?
3) Their policies seem to change with the phase of the moon. Two years ago, after moving three times and changing phone numbers four times, I'd forgotten my password. There was, as per their policy, no way to re-obtain my account. Because my CC was tied to PayPal, I couldn't make one-time payments through their service (via online vendors who only accepted PayPal), so I was quite literally SOL. Then one year ago, all I had to do was give them my e-mail address, and they sent me a link to reset my password. What gives? I'm glad they *did* change policy, but that's an awfully extreme policy swing.
I think the better question to ask is why isn't there a successful online transaction clearing house. One that brings together VISA, Mastercard, American Express, Discovery, chequing accounts, saving accounts, heck, even gift cards. It's a great idea, with the two most popular implementations -- PayPal and Google Checkout -- leaving the public generally dissatisfied.
Some more interesting stats from the report:
- Among young online users (18-41), PayPal is the dominant payment system (63%) compared to Google (9%) and Amazon (16%)
- Among users that have sold something on eBay, 78% are PayPal users
- 66% of online shoppers that use PayPal rate the service as "Excellent". By contrast, 49% of users who use Amazon Checkout rate it as "Excellent".
Is that because 30% of online shoppers choose to use PayPal, with the remaining numbers made up of online purchases from stores that accept nothing *but* PayPal? Or is it that, of those who use online transaction clearing houses, 55% choose PayPal over alternate methods? Or is it as it sounds, that of all online purchases that are made, 55% of purchasers choose to use PayPal?
The link doesn't work for me, so I can't check their methodology. But I'm wary of statistics like this, as they're usually misleading.
(And the eBay statistics are pointless, as eBay and PayPal are like peanuts and peanut butter. I'm actually surprised the number is that low.)
"66% of online shoppers that use PayPal rate the service as "Excellent"."
How many of those are the considered young online users? How many of those had a dispute with which they needed PayPal's assistance? How many of those have no credit card, thus have almost no other option (as merchants that accept PayPal are widespread, and those that accept something else are few and far between)?
I'm not looking at the comparison to Amazon Checkout, I'm looking at the quality of PayPal's service as it stands. Being the best of a poor service doesn't mean you're actually good.
Thanks for sharing it with us
It all makes sense to me but I bet that 95%+ of the people they surveyed use credit cards as their preferred method of online checkout and the point of my post is that I wonder why that number is so high given that checking out with a credit card on a site you don't use often (or have never used) is often a pain.
But what killed them for me was incessantly asking if I would "verify" my business account. I had all payments got to/from a credit card. Upon "verification" they changed the default account setting to make my company bank account the default method. I realized this only after and automatic withdrawl caused an unexpected unexpected cash flow problems.
They DO NOT make this change clear, and in fact there is NO way to reset the default payment to a credit card. Instead I have to change to "Credit Card' for *every* transaction. Changing the setting takes clicking through 3 (THREE!) separate "Confirm" clicks.
Want to complain to the Better Business Beaureu? Ha, fat chance... a simple Google shows they have stacked the local BBB board.
Total shady business practices.
Thats why no one uses them
Trust is paramount on the web... not the mention payments on the web.
Now what's wrong with this picture? PayPal is rogue, and has damaged their brand so severely, they'll never be very successful.
My feeling is more merchants don't accept them due to transactions costs. They take a much bigger cut of each transaction, which is highly relevant for the big online stores and services like Amazon.
.t
(my2c3nt5.com)
Additionally Paypal has made it confusing on what type of fees you will be charged depending on your account type (I know there are no fees for the payer but most people still feel confused)
One thing I do dislike about PayPal is its obvious efforts to steer you away from credit card purchases. I prefer to use a credit card (rather than my debit card) for a few different reasons, but whenever I use PayPal I have to go through extra prompts to confirm and re-confirm that I do in fact want to use a credit card. I also get "lectured" about the benefits of using my debit card and then they try to "trick" you by changing the highlighting of the buttons so that the "no" is highlighted orange instead of the "yes", etc.
I think a big part is the fact that post acquisition Paypal hasn't improved at all. And they haven't sold the service or marketed the service with the same intensity they did when they were starting up. The entrepreneur's got out and the parent has taken their eye off the ball - brings in a couple of bucks for ebay, that's nice. Seriously, what's changed since Ebay purchased them?
Paypal needs a solid competitor to spark some innovation there. It took Skype rumours/launch of Google Voice for them to launch a kick a** iphone app and do some innovating. Guessing it will take an "Amazon connect" type competitor to make PayPal pick up it's game.
As part of our security measures, we regularly screen activity in the PayPal system. We recently noticed the following issue on your account:
Unusual account activity has made it necessary to limit sensitive account features until additional verification information can be collected.
We have been notified that a card associated with your account has been reported as lost or stolen, or that there were additional problems with your card.
Case ID Number:
Click here to verify your account
Please understand that this is a security measure intended to help protect you and your account. We apologize for any inconvenience.
If you choose to ignore our request, you leave us no choice but to temporary suspend your account.
Sincerely,
PayPal Account Review Department.
In fact just yesterday we were listening to an NPR story about a furniture retailer in Massachusetts that was having some difficulties. Their card provider almost canceled their merchant account (they asked for a $40,000 security deposit to keep it on, which would have wiped out the business). This kind of thing doesn't happen with PayPal.
Their site navigation (from the merchant perspective) has always been execrable but it's better than virtually every bank site out there.
Agree with Fred that 95% of PayPal's problems are branding-related and not related to operations.
2. They started out with bad customer service and there are many who still can recall a bad experience. It seems to me that both their upfront process and back end service has improved.
3. PayPal as a payment option is only now seeing the kind of reach necessary to become a payment method of choice. You were surprised to see PayPal, that's still more common. It took awhile for Debit cards to become ubiquitous
4. I predict that in the ecommerce space in a few years, multiple payment options like PayPal and Amazon Payments will be the norm. (plus a few others)
5. Some day in the near future you'll say "Remember when we paid with cards?" just like I've started saying about cash.
Also, I don't like the dispute process for fraud on Paypal, and my bank account doesn't have built in ID theft protection, while the main CC's I use have protection built in for that (have used before with Discover, and it's simple and hassle-free).
In principle, I love the idea of Paypal. I just can't stand using it.
My hypothesis is that there are four major reasons for this:
i) Functionality: payments vs. value-added capabilities. Unlike other established payment alternatives, PayPal offers nothing but the ability to mask one's credit card number. No points, no rewards of any consequence, no advantages of status. The brand "says" nothing about its holder, and offers no real or perceived benefit. Didn't AMEX teach us the value of such matters a long time ago?
ii) Universal ID: As the market leader, Paypal had the chance to create a stable ID system for transactions in the interactive world. Kind of the like the standard 16 digit ID system for credit cards and gift cards. Or, the standard 10 digit phone numbers that anchors telecom service billing in America. Or, the passport numbering sequence administered by the ICAO.
iii) Openness: PayPal has created a disruptive of experience that is the antithesis of contemporary user experiences on the web. Creative directors, GUI designers and product managers are looking to the next step beyond the elegant approaches of Amazon and iTunes. An open platform is the only way to give a wide variety of interactive media the freedom to incorporate payments into the visual real estate in their own way. No more departures from the experience itself, jumping between sites, multiple logins, and other experience killers.
iv) Relationships: Clearly, credit, debit and gift cards still dominate (>90%) of all online transactions for multiple reasons. But, one the most obvious reasons is a clear protocol for relationship management with consumers. People simply know which party is responsible for each element of the transaction. The roles of the merchant (Target), the card issuer (Citibank), the affiliate (UCLA alumni), and the transaction processor (Visa) are all clear in the mind of the consumer. PayPal has blurred these roles in a way that has led to confusion with consumers.
Apple and Amazon have addressed all of these issues in their respective ways. However, there needs to be an alternative for the rest of the world wishing to own and manage its payments, and subsequently its relationships, with consumers without Amazon or Apple involved.
Go ahead and use Paypal all you want, one day something will go wrong and you will need to deal with Paypal. Good Luck.
No—they have more than a brand problem. A "brand problem" is just image. The problem they have is substance: their policies are set up to screw merchants and leave one with no recourse, or at least they were when I last used them in 2003.
After that experience, I will *never* use Paypal again. Paypal isn't a good company, and people have figured that out.
And the lack of protection that is a common comment in most of the above comments is a big issue.
Whats surprising is google checkout hasn't grown faster either.
Cheers,
Dean Collins
www.Cognation.net
PayPal is and always has been Non-User friendly. Almost like the programmers do not use it. Ever.
It has a branding issue. And like Skype, eBay didn't know what to do with it, other than as a module for payment and a small source of revenue.
subconsciously, a long string of complicated numbers feel more secure than my email address.
I use paypal all the time, I agree that their brand has tarnished edges that they don't seem to be trying to fix. I'm in the middle of building an ecommerce site and was leaning away from paypal, but changed my thoughts to allow a choice when checking out, paypal, google, amazon. It will be interesting over time to see what people prefer.
Peter Rad
That being said, ~25% of our paying customers use PayPal, so we're forced to support it. :)
I paid my roommate some rent money at the end of last week, and he told me the next day that he received the payment twice. Sure enough, it turns out that two identical payments were made - within 9 hundredths of a second. As a developer, I instantly recognized this as a double-submitted POST form, and I was somewhat astonished that Paypal would fall for such an amateurish problem.
I filed a complaint, clearly explaining what had happened. I expected a quick resolution, and surely enough, we got one. My roommate just received a call that his account is being suspended while they investigate his account history. Even though, of course, the problem is not in any way his fault.
I don't know about you Fred, but I'm really hoping there's a better option than Paypal when it comes to reinventing the way payments work
the song needed to solve the problem: "proud to be a conspiracy theorist"
1) I don't want anyone having direct access to my checking account - I have run into fraud on the Internet for the third time in two years via credit cards
2) PayPal oes NOT have the protection of using a credit card e.g., maximum exposure is $50 AND the credit card companies look out for fraudulent uses of your account(s)
3) If you use a credit card with PayPal, they limit it's use to $2,000 maximum and then require access to your checking account. See #1.
I even told my wife and daughter's NOT to use the Blackberry store because it only accepts Paypal. BTW: wife going to Pre; daughter going to iPhone (t-Mobile) soon.
Why aren't you using Google Checkout? It's safer, and you and I both know the CEO :-)
Stay Tuned...."Barry James" Folsom
Our customers are MBA students and working executives looking to learn various subjects and 9/10 of our customer dont have an issue with it (so far at least)!
I hate Paypal because as a random person who wants to sell stuff on eBay, I have to have a Premier account so people can use credit cards. There's no "hey you get 5 transactions a month" nor do they put the surcharge on the person using the credit card. So now I have a Premiere account, and when my sister wants to Paypal me cash to cover her share of the Mother's Day present, I lose cash because Paypal gets a cut.
I hate Paypal because I make $35 a month on ads on my web site and because they pay me with Paypal, and because i have to have a Premiere account, Paypal gets $2.41 of that money every month.
I hate them. I don't trust them. They're not as bad as before when eBay bought htem, but I still think they are bad, they just look more professional doing it. But I honestly view them as just as dodgy as they ever were. I will only gladly use them with small transactions (such as Etsy) or if I have to use them for something larger, I change it to go to an AmEx card product (even though they make that ridiculously difficult - "are you sure? you're still protected" - um, no i'm not, morons, or I wouldn't be doing this).
I am one of those guys, who don't like paypal on a subconcios level. I think that might be because I heard very often how much money you lose using paypal. At the time I started the online money business, netteller was just much cheaper. So every body else just told me, not to go to paypal. And I think that might be still in my head, when I think about paying with paypal or something else.
the amount of capital it will take to create a new entity that disrupts online payments may be high, but once the new concept and infrastructure are in place i see a renewed confidence in ecommerce for both the merchant and the consumer.
My perception, prior to using the service, had always been that Paypal was a bit too hokey sounding to be regarded as a serious company. Perhaps if the name had been more along the lines of "Super Big Ass Universal Payment Systems Inc.," I might have given them more credence.
What I did find surprising is that there appears to be a measure of segmentation between the audiences that PayPal serves. Love or hate...the PayPal "merchant" has a very different perspective than the PayPal consumer. Again, not surprising considering that they serve more than one audience. It is, perhaps, an interesting case study on the multi-sided market concept as applied to what is, in essence, an established industry player.
I would agree that many of the woes called out in other comments point to a brand issue (which is, perhaps, due to a product issue). That is worthy of further rumination.
I've heard horror stories, one after another of paypal taking / freezing the money in paypal accounts --- claiming that their account has been tagged due to some type of issues.
- Sam
Fees are not an issue and pretty decent actually. It works like a charm if the buyer is honest (most of the times), but if he files a claim and rips you of there's no way that you can do anything,
There are a few instances where I've been annoyed by PayPal, especially the length of time it takes for money to be sent back to your account when you cancel a transaction/transfer, but overall I have to say I like to use the service wherever possible. I prefer it because it means that I don't have to pull out my debit card for every transaction or enter my details/set up accounts on online stores that I'm not going to visit again. It makes check-out swift too. Yes, it would be nice if you could use credit cards as primary payment methods too and frankly I'm surprised they still don't have that functionality.
I find it great for transferring money too - they're instantaneous and doesn't involve me having to fill out lots of paper-work or messing around with security tokens to set up payees in my online banking.
Fred, in terms of PayPal not taking off - I don't know of many other similar online payment methods (Haven't heard of most of these: http://en.wikipedia.org/wiki/Category:Electroni...). I've used Google Checkout, but I find that it's not on as many sites as Paypal. Perhaps it's just more popular in the UK? It's the recommended payment method for most sellers on Ebay (because they own PayPal I suppose), and RIM has announced they'll be using PayPal as the payment partner for their app store. So in that regard I think they have large portion of the market share, but it may just be because there's nobody that's really as big or better at the moment!
It seems to me that PayPal's Achilles Heal at the moment is their poor customer satisfaction rate, which is something they clearly need to work on if only a small minority, such as myself, are happy to use the service. Especially so if Ebay's strategy is to shift from the online auctions business to the payments business: http://online.wsj.com/article/SB124329254255652...
The only option was for me was to send Paypal a PAPER CHECK and wait for it to arrive and clear. Im not making this up.
Have you tried contacting their support? Do it by email and you get an answer from a bot that misunderstands your question half the time. Do it over the phone and the humans who answer aren't much better.
1) They default to my bank account. I hate that, I hate paying with cash, I never want to pay directly from my bank account.
2) Their guest (non-login) checkout process with sites sucks - whenever they match up my email address and/or credit card number they don't let me proceed unless I login. When I login, they default to my bank account (and make it hard to change to use your credit card). Why would I need to login if my preference would be to not login and type out my information? I'm assuming that the merchant wants to support non-paypal accounts through this manner, but Paypal is trying to hoodwink me into logging in. In the past two months I didn't not proceed with checkout 2x due to this issue.
3) I have my credit card number memorized.
I think Google has done a nice job with Checkout (very clean, very easy to use, don't mind logging in at all since I use Google for all email accounts).
It's definitely a matter of trust. I don't trust Paypal because of the reasons laid out above. I trust Amazon because they give me complete control when purchasing something.
I have yet to file my report with this RipOff Reports site: http://tinyurl.com/p6jc33, where there are all kinds of similar horror stories.
Second Life is doing about $450 million in virtual goods sales in 2009, all user generated content, and that is all profit for small businesses, and that is all enabled for thousands of people because of PayPal.
I love PayPal and I never understand what all the agida about it is all about, because I've never had any real trouble from it, and certainly nothing compared to credit cards or banks, with their outrageous fees and practices, which I've had in the past. I cash out the earnings from my Second Life business into PayPal, as that is how the system works, sale of virtual goods and rentals or sales of land in Linden dollars can then be transferred to real US dollars and cashed out to PayPal. I also use Paypal as well as to process income from online translation work. Then I can use it to pay online bills like phone bills or buy books and electronics on amazon.com and so on. While it's a bit slow to get it into a bank then, it can still be deposited within 5 days, and generally takes less time.
Each purchase gives a small percentage of a cashback, and there is also interest earned in a money market on PayPal, so it pays to keep the account there. I've never found it any less safe than any other online thing. I attach it to a debit card that only has limited amounts, so I don't worry that it will be used somehow wrongfully.
Some merchants don't like PayPal because they find that customers misuse it to do chargebacks. But PayPal is very good on working with you to resolve these problems. Whenever I've had a customer problem or a double charging type of problem, they've resolved it quickly.
One flaw on PayPal is that it is entirely impersonal as to customer service. There doesn't seem to be a way to easily call or get help, only through trouble tickets -- and the tickets default to the fraud case, and ask you to reset passwords, etc., so that other routine problems, like the failure to make a switch between back-up cards, don't have a slot to go into on the form. But even with this obstacle I find the main thing about PayPal is that it works. It works to help collect and pay out micropayments; it works to safely pay bills online; it also provides you with a debit card that you can use like any card.
P.S. Verifying to become a merchant verified account was a really simple matter. It's complexity is being exaggerated here.
I share your view of paypal but many do not
Its something worth considering
which is ironic because if you're familiar with their story, they succeeded amongst all of the other competitors due to their ability to combat fraud.
also the fact that I have to register with discuss to post a comment is terrible. I had to pick like 3 user names until i found one that wasn't used. it makes me want to never read this blog again... incredibly surprised by your decision to do this.
And what if I don't want to use the same name on multiple blogs and let people track what I'm doing. That used to be easy... now I have to create a second disqus account or something???
I can see why you're doing this given your conflict of interest with disqus. As a user though, this is terrible.
I am right now in the process of setting up as a merchant - a simple system with a few fixed pay-now buttons, no cart... so far it seems Paypal have managed to create a reasonably simple, straightforward and accessible entry point for merchants.
In my mind (and after some researching) Paypal is still the only available international payment system available to me as both an international buyer and merchant.
I do feel that the comments to this post are very "Americanized" and unaware of a variety of issues that exist outside of the USA. Some examples:
- Paypal is not available as a local payments solution for merchants in Israel (and I assume other places).
- There is not reliable/standard online payments solution in Israel.
- Online payment is not taken for granted in Israel - many people (some completely computer/technology savvy) still refrain from doing it.
- I am uncomfortable paying Israeli online merchants because there is a good chance that they are using primitive and unsecured solutions (credit cards kept in excel files or passed to the merchant in unsecured email messages for manual processing).
- Paypal interfaces with bank accounts only in the US
- Only recently has Paypal offered a means to withdraw money in Israel (and other countries) through a credit card (in Israel credit cards are tightly bound with banks and checking accounts).
- The business I am setting up is targeting European customers
- In Europe penetration of credit cards is much lower then in the USA.
- Bank transfers are a common means of payment in Europe - to the extent that in some countries the commissions on transfers are regulated by law.
- It is the year 2009 - and I am still considering (for lack of a better choice) the option of having some European customers pay by sending money in an envelope.
- It is the year 2009 - and I having difficulty finding a reliable bank that operates in Europe, with full online services so I can register without actually walking into one of their branches.
I don't think there is a single "Online Payments Market" - it is more like many niche markets with diverse customer profiles, merchant profiles, price levels, economic tools/bridges/obstacles. There are many real-world problems (interfacing with some shady banking systems) and many online/technological problems.
With all their market leadership - you would think Paypal would be able to translate their "Pay Now" button into more languages. They are still working on that - they have a combo box where you can choose almost any country - but the button label doesn't change!
I asked my wife who runs her own online storefront selling women's pajamas and she got all-up-in-my-mug about how shlockey the brand image of paypal is. Despite that fact that she had not yet had her morning coffee, i pursued the conversation. Apparently Paypal's legacy as a low budget payment solution still hangs with the company. My wife hates the logo and wouldn't allow it within a mile of her site. Oh really, i like the logo...
This is classic eBay. As much as I love each of their businesses and their inherent market power and potential, their execution is really horrific. defeat from the jaws of victory. As a merchant acquiror the secret to their success is the satisfaction of the merchants, feels pretty obvious to me, but they do little to market and serve this community. thus, my wife and the schlockey image.
Back to my wife who is easing into her cup of coffee, greasing the wheels of conversation. She recently got a sales pitch from Amazon checkout and is leaning that way. Personally, this is the first I have heard about this service and I am a bit surprised that Amazon is willing to loan out their checkout process. FWIW, as a consumer, I religiously use amazon and a large part of that is due to checkout (again- fat fingers).
But in Amazon I trust. Their execution is flawless and unquestionable in my mind (despite the placement of the back-forward buttons on my kindle), so I imagine it is a calculated bet. I don't know anyone who doesn't have an amazon account.
One last thought, I suspect that the rubber will meet the road for my wife when she learns what amazon is going to charge her. If amazon is going to stomach that 2.5% credit card-nut plus make a margin, i suspect she is not going to like it. That said, I wouldn't bet against Amazon.
If your wife sells a lot internationally, amazon won't work for her (yet)
1) The interface is terrible to use and vastly over-complicated. It should be simple and straightforward, but it's just a pain to use.
2) Customer service is terrible. I had a transaction on my account and it took PayPal 3 months to refund it, despite obvious evidence that it was fraud.
I do still use it where it's the best option (e.g. I'm in the UK, so it's often useful for ordering products or services from foreign websites) but I go with card where possible.
something on ebay. They asked me some questions prior to the transaction
that are so stupid that I will probably next remember the answers.
What is your favorite restaurant?
Who are your favorite teacher?
What was your dogs first name?
I honestly didn't know any of the answers to the questions put in front of
me. How's that for a major company?
Without wanting to duplicate what has already been stated, I'll just briefly convey that my experience with PayPal has been very tyring indeed. It was only through sheer persistence and tear-my-hair out stuff that I managed to get my account verified and up and running. Now that its working, its pretty easy and I use the Paypal option.
But I can certainly understand why people have a dislike for the Paypal user-experience. Heaven forbid you ever have to call their automated customer help centre.
If there was a meaningful competitor out there who offered a better UX and customer service, it would stand a great chance of becoming the preferred option for many.
There is a big opp for someone to come in and offer websites a seamless merchant account that is totally white labeled and customer doesn't have to leave the site. A commission is taken out for each transaction (no monthly payment or other hidden fees).
Make it seamless, simple to integrate, secure.
Win win.
Somewhere there like you conclude is the answer to online payments. But only before you understand why the *perception* of a service by the crowd also influences it success. I remember Cringely looked at the technology side of this problem in $digital money$ ~ http://www.pbs.org/cringely/pulpit/2001/pulpit_...
I distinctly remember the episode on how the credit card was introduced. Maybe the idea of intangible money is the problem and the answer might lie in some sort of physical yet digital manifestation of money.
Buzz the first version of a payment service on a physical device like an iPhone.
You're right, it's a shame.
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I think Paypal stopped improving their service when ebay bought them.
I also have heard all the horror stories about their non existing support. If you are living in Europe, but not in the U.K. than good luck with legal across jurisdictions. Probably not worth the average amounts traded with Paypal.
The main reason for my dislike of paypal stems from their constantly trying to trick you into using their most lucrative way to pay. I usually like to pay for things with my credit card, but unless you are very diligent and go through the long process to change your funding source, you end up with a debit to your checking account.
Just seems sneaky to me. Like a scam artist.
Too bad too, because I agree with you. Paypal is the cutting edge of internet payments. I just wish they were more user focused. Maybe google-checkout will compete with them.
As a buyer:
No real complaints - used it to pay for a variety of items (primarily eBay items) but also for direct payment for some services. Never really had an issue until I canceled and account that had my AMEX attached to it and now they won't close the account so I can add the AMEX to my new account.
Summary - It works as a payment gateway (with almost no issues) but the customer support is almost non-existent and after multiple emails I still cannot add the AMEX to my new account.
On a scale of 1 to 10 I'd rate about a 6.5-7
As a 3rd party integrated company:
I represented accounts using PayPal integrated into our SaaS platform which was fine and dandy until PayPal had API issues. It was like pulling teeth to get a technical contact engaged and even when I did the response time left something to be desired. That being said - they did eventually solve the issue.
Summary - In general, sellers had very little issue with PayPal but when something did go wrong, there was no real escalation path. This is disturbing because when sellers can't sell - PayPal loses revenue but even that didn't seem to "light any fires" with the support team. Also, once I finally clawed into the "ivory tower" of support, I was able to leverage my contact for multiple issues. So it seems to boil down to getting to the right person while stumbling around in a virtual black hole.
On a scale of 1 to 10 I'd rate about a 7-7.5
As a seller:
In order to understand my frame of reference, I would need to give you my horrific backstory on getting started with eBay (but alas, that is another story for another time)... So after the thrashing by eBay my expectations for PayPal were not the greatest. However, here is where the unexpected upside is, the PayPal account was easy to set up and is the only payment method I currently use. (disclosure - currently I am only selling on eBay - but will offer PayPal on my ecom site primarily because eBay is my customer acquisition channel). I was able to leverage my technical contact to get the contact info of an account manager (that I have not had to reach out to yet - so this is still undetermined for my rating).
Summary - So far, no real issues other than the "holding of funds" which I agree is bs. The upside is - a good integration with eBay with at least the promise of some protection for the seller and buyer AND if you leverage PayPal to buy/print your shipping labels, your funds will be released more frequently as the tracking pulls directly into the transaction within your PayPal account. They still have some quirks (initially they would only clear my lower $ value transactions within the 3-5 (once shipping is confirmed or buyer leaves feedback) but they have gotten better about releasing the larger $ sales as my sales velocity and feedback grow. They also offer better than rack rates for UPS which is a nice value add since I am a relatively small seller.
On a scale of 1 to 10 I'd rate about a 7.5-8.5*
* I will have to update once I have an issue with a chargeback or returns as I have not had those issues... Yet.
Eventually, most people in the world will be using PayPal for payment transactions and incorporating into their daily routines just as is going green because its the right thing to do and we're all in this together! :)
The merchant side seems to have its own host of issues!
The reason frequent flyer miles cards are so successful is that everyone gets 1 mile for 1 dollar. Its that simple.
If you are really interested in a company trying to give consumers an incentive to use their payment system check out http://www.noca.com (super interesting proposition for merchants *and* consumers - a bunch of ex-VISA boffins changing the way payments are handled online )