A VC - Latest Comments in Why Isn't Paypal More Successful?

Re: Why Isn't Paypal More Successful?

francisplace — Tue, 01 Sep 2009 04:59:12 -0000

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.

Re: Why Isn't Paypal More Successful?

francisplace — Wed, 15 Jul 2009 16:56:28 -0000

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 )

Re: Why Isn't Paypal More Successful?

hv23 — Tue, 07 Jul 2009 07:00:21 -0000

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!

Re: Why Isn't Paypal More Successful?

venkat2009 — Sat, 27 Jun 2009 08:14:09 -0000

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

Re: Why Isn't Paypal More Successful?

Kate Swift — Fri, 05 Jun 2009 17:29:48 -0000

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! :)

Re: Why Isn't Paypal More Successful?

Guest — Wed, 03 Jun 2009 11:57:57 -0000

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

Re: Why Isn't Paypal More Successful?

Gonzojh — Mon, 01 Jun 2009 21:01:11 -0000

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.

Re: Why Isn't Paypal More Successful?

Jack — Mon, 01 Jun 2009 18:53:57 -0000

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.

Re: Why Isn't Paypal More Successful?

fruity — Sun, 31 May 2009 01:26:17 -0000

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

Re: Why Isn't Paypal More Successful?

johnfurst — Sat, 30 May 2009 10:59:10 -0000

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.

Re: Why Isn't Paypal More Successful?

Geoff — Sat, 30 May 2009 09:46:17 -0000

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. .

Re: Why Isn't Paypal More Successful?

Liz — Fri, 29 May 2009 22:27:28 -0000

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.

Re: Why Isn't Paypal More Successful?

RacerRick — Fri, 29 May 2009 10:23:47 -0000

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.

Re: Why Isn't Paypal More Successful?

fredwilson — Fri, 29 May 2009 08:01:08 -0000

I agree that the mobile device could be that physical instantiation of something that is otherwise very intangible

Re: Why Isn't Paypal More Successful?

fredwilson — Fri, 29 May 2009 06:32:54 -0000

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

Re: Why Isn't Paypal More Successful?

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Re: Why Isn't Paypal More Successful?

Jeff Levine — Fri, 29 May 2009 00:33:17 -0000

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.

Re: Why Isn't Paypal More Successful?

vruz — Thu, 28 May 2009 21:20:25 -0000

I think it's mostly the user interface and the lack of a decent api.
You're right, it's a shame.

Re: Why Isn't Paypal More Successful?

Peter Renshaw — Thu, 28 May 2009 19:53:59 -0000

"... 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...

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.

Re: Why Isn't Paypal More Successful?

Guest — Thu, 28 May 2009 12:23:49 -0000

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.

Re: Why Isn't Paypal More Successful?

Spencer Fry — Thu, 28 May 2009 09:35:24 -0000

I'm looking forward to that day!

Re: Why Isn't Paypal More Successful?

Gotham Gal — Thu, 28 May 2009 07:28:54 -0000

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?

Re: Why Isn't Paypal More Successful?

fredwilson — Thu, 28 May 2009 06:39:07 -0000

You were the reason this post got written so thanks for joining. Did you read all the comments?

Re: Why Isn't Paypal More Successful?

fredwilson — Thu, 28 May 2009 06:39:06 -0000

I love all the currency revolutionaries on this blog. Kid should corral all of you and lead a full blown cuirrency revolution!

Re: Why Isn't Paypal More Successful?

fredwilson — Thu, 28 May 2009 06:39:02 -0000

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)