[rip747]

About time, but $25M is nothing for them.

Nowadays we have all our clients using Stripe for their CC processing, but back in the day, our clients could use anyone they want. One poor soul choose to use PayPal against our insisting he not. Three days before he had to give the security deposit to the convention center where his organization was hosting their conference, PayPal froze the account. I can't express the stress and despair this poor guy had in voice while talking to him, explaining there was nothing that I could do on my end and that he would have to contact PayPal and try to explain the situation and get the funds released. Ultimately the conference went on, but I never followed up to find out how, if he got the funds released, worked something out with the convention center or something.

[sshanky]

I sold an iPhone on eBay once. More than three months later, I received an email from PayPal stating that I'd been charged back because the buyer was disputing her credit card transaction ("Buyer stated that they did not authorize the purchase"). Although I always pull any balance out of PayPal, I owed them the balance. I was required to find proof that I had received the order (right there on eBay), and that I had shipped it (shipping label had been created, and was also visible on eBay). They ended up reversing the chargeback, but the strange thing was how much work I had to do, when it was all systematically available to them.

[woah]

I once did a chargeback against an eBay merchant who never delivered. PayPal was no help, and they strongly advised me against the chargeback. Ultimately, charge backs are part and parcel of receiving credit card payment, and as a consumer I am glad they exist.

[colechristensen]

The real core business competence of a payment processor isn't handling or distributing money, it's dispute arbitration.

[pjc50]

Yes, absolutely; and this is one of the things that Bitcoin advocacy ignores. It goes in the other direction: all transfers are final, legitimate or otherwise.

[MertsA]

The problem I have with just about every payment processor out there is something that Bitcoin does well with from a protocol perspective. Right now you can copy a credit card with a mag reader in seconds, compromising some website that accepts credit cards means no limits to how much you can spend with other merchants, even having your credit card number stored in an RFID tag that can be read from a few feet away inconspicuously!

The status quo might mean that money can be clawed back after it's sent but identity fraud (or using someone else's credentials) should not be a problem in 2015, we've had SIM cards that can provide a secure method for identifying a physical device since the 90s. Why can't any payment processor come up with a decent alternative to having a magic number that you have to give out all the time that can be used to authorize arbitrary transactions? Maybe eventually every citizen will get a smart card of some kind and we can just use that.

[pjc50]

ApplePay potentially meets that description. Also, chip-and-pin cards.

[colechristensen]

You maybe should have noticed already, but this already exists and the transition is in progress.

http://blogs.wsj.com/corporate-intelligence/2014/02/06/octob...

You should have already (or very soon be) getting new credit cards in the mail with a SIM chip in them.

After October 15, 2015 credit card companies (instead of merchants) will be liable for financial losses due to credit card fraud where the consumer is forced to use the mag stripe. (In the US of course)

[tluyben2]

We have been working on a solution for exactly that and it works well. Launching soon with actual product.

[nadaviv]

There are solutions that can be built on top of Bitcoin. See https://www.bitrated.com/ (full disclosure: I'm the founder).

[bduerst]

Reputation systems and multi-sig escrows are not substitutions for chargebacks.

There are plenty of instances where you need to refund something the day after you received it, by which point the escrow money is long gone. Then the solution becomes "Hold transactions in escrow for 30 days" which isn't a solution.

And reputation systems don't work on the internet, especially when purchasing is involved. How do you competitively solve this problem?

[ikeboy]

If you want, you can use third parties with chargeback support, or escrow with multisig. Bitcoin gives you the option to choose exactly what level of security you want.

[Rmilb]

The thing with Bitcoin is that within the Bitcoin protocol the seller and buyer can choose an arbiter for disputes.

[stephengillie]

This sounds like cash.

[dirkdk]

for a marketplace like Ebay? yes! for a payment processor? I'd say no.

[Moru]

I once ordered some things together with a few friends. The total sum ended up around $3500, much more than I usually buy for. The buy went through and the company got the message from Paypal that everything was ok and the money was on their account. Sadly they had a vacation day (small home-run company) and did not send the items directly. Two days later when they were back, Paypal had just pulled the money back from their account and left the message that the user disputes the buy or something like that. I had done no such thing. One month later I got the money back except for $20 for 'investigation charges' or some such...

If the company would not have been on vacation at that time they would have sent the goods and we would have gotten both the things and our money back. I ended up transfering the money via the bank as normal and got the stuff about $100 cheaper than over Paypal.

Haven't used Paypal since.

[tokenadult]

You haven't said what jurisdiction you are in, but are you saying you were effectively charged for the item before it was put in shipment? For some forms of payment in some jurisdictions, that is strictly illegal.

[dlubarov]

It's just network policies that prohibit charging before shipment, so it wouldn't be problematic if this was an ACH payment.

If it was a credit card payment, most likely PayPal had just placed an authorization and was holding off on capturing. That would explain their aggressive timing -- if they let the auth hang for too long that would result in higher interchange fees, and eventually the auth would expire.

[DrStalker]

Doesn't PayPal get around that by charging your credit card to buy credit on Paypal, which is then used to purchase the item you want? Or do they only claim that when it is convenient to do so.

[jahewson]

Huh? This story doesn't really make much sense. PayPal don't charge investigation fees, don't cancel orders after two days (how would they even know to do this?) and don't allow fees to be passed on to customers ("$100 cheaper").

[Moru]

Yes, how would they even cancel an order with another company? What are you talking about? I have never claimed that they canceled my order.

They do however own the money on your account as long as you keep the money on your paypal account. They had just pulled the money back from the sellers account and gave it back to me again (much later). At that time the SEK->UK pounds exchange rate was much lower and the bank transfer usually ends up a few percent cheaper that paypal too.

[cmdrfred]

$20 in 'investigation fees'? can anyone confirm this? I won't use them again if true.

[GolfyMcG]

I haven't gotten 'investigation fees' (or at least not that I've noticed) but I would just not use them anyways for the very reason that they're so much less accessible than stripe.

[asddubs]

I once had someone initiate a chargeback over 5 transactions of 10$ they paid via CC. It ended up costing me 100$ because on top of the 10$ they charged back, every transaction also added a 10$ fee for being charged back. So I was scammed, and then had to give paypal 50$ for it on top of that.

[speleding]

Are you sure those were from PayPal? I've been charged those fees, but they were passing on the fees from the credit card company that the payment came from.

[asddubs]

Well, that could be the case. Either way, someone sent me 50$ and I ended up losing those and paying another 50$. That shouldn't really happen when you just have a private paypal account. This wasn't a commercial transaction.

[fsargent]

Save yourself the trouble and just don't use them!

[tehwebguy]

Spent a lot of time working with PayPal, never heard of this. I've also used their dispute process on both sides.

Something else happened here, a 2 day dispute process is not a standard PayPal dispute.

[Moru]

It was not a two day dispute, they just pulled back the money after two days and then I had to wait for a very long time to get the money back.

[ewang1]

There's a $20 chargeback fee, but that's typically charged to the seller.

[artursapek]

You should be avoiding them already.

[aleksandrm]

Agreed, $25M is nothing and they should be slapped with a much higher penalty. PayPal is the scummiest company on Earth. A buyer opened a dispute with them, and PayPal robbed me of $2500, tried fighting them for 2 years but eventually gave up.

[coffeedrinker]

PayPal has some serious issues with regards to what you say, but I used it last summer to transfer money from USA to Europe for my daughter and the fee was a fraction of what the bank wanted. Banks can be pretty scummy in their own way.

[1_player]

Have you ever tried TransferWise? With customers and family around the world, I'm thinking of switching to them to handle transfers instead of Paypal/Stripe. They seem to have the most honest fees around.

Disclaimer: not affiliated with them. Just genuinely curious.

[vezycash]

About TransferWise. I checked their site based on your recommendation. However, something bothers me.

There's a form on the Top-right corner. "You send," "You Receive." I tried checking how much would be received in dollars if I sent $1000. However, the form wouldn't let me. It doesn't allow comparison between the same currency.

It felt shady to me.

I've sent this message to them already. But wow! They do support a lot of countries - far more than Stripe. I'm surprised I've never heard of them before.

[lucaspiller]

> It doesn't allow comparison between the same currency.

Their use case is transferring funds between currencies, why would you want to do that?

[Dylan16807]

The site says "transfer money abroad". If for some reason they only want the more difficult kind of transfer, it would help to make that clear.

I'm confused by you asking why when the answer is both obvious and explicitly stated in parent comments. Sending someone money in a different country, but they happen to use the same currency.

[jotm]

Heh, I said the same thing - their explanations and their site needs a bit of rework. As it is, they look shady :-)

[toomuchtodo]

Bump for TransferWise. They're a treat to work with!

[linuskendall]

I have used TransferWise for both USD and SEK/EUR transfers to INR. Works perfectly, their time estimates are spot on (usually I receive it on the day or one day early) and the exchange fees are very competitive (and I've probably compared most other forms of transfers - including Bitcoin/Localcoin).

[dhimes]

I use them. It's been great so far.

[gav]

I've used Xoom in the past as to send money to family in the UK, it's always been fast and easy.

However they charge $4.99 up to $2999, with TransferWise there's no fee and slightly better rates (0.6346 vs. 0.6262). I'm going to try them out next time, thanks for the tip!

[jotm]

How does it work? I wanted to use them once, but it was the first time I heard about them and their site doesn't explain anything.

If anything, it looks shady - "outsmart your bank, use us, we do it super cheap, promise!" but no explanation of how it actually works...

[NearAP]

From their website (step 3 of how it works)

TransferWise converts your money at the mid-market rate and matches you with people sending in the other direction. That's why it costs so little.

My understanding - after you've given the money you want to transfer to TransferWise, they find someone in your destination country who wishes to transfer money to the country where you are (kind of like a swap). This way, they cut off the banks and their fees and charge you a lower fee.

[jotm]

That's how I understood it, but then I thought "what if there's no one in that country?" Do they use their own funds or does the recipient wait several weeks.

I imagine it's the former, but at the time I just used SWIFT - rather expensive, but guaranteed to work everywhere.

[tim333]

It works by them having $90m in VC funding from people like Richard Branson and Peter Thiel which they then use to subsidise the super cheap transfers with the aim of growing big.

[linuskendall]

It works well, you initiate a bank account transfer from one country (denominated in say USD) and in a few days your recipient receives it as a deposit in their bank account in their local currency. In between TransferWise keeps you updated with status via e-mail and on the website.

[Moru]

I always compare with my normal bank when I'm forced to use paypal and so far they have always been slightly higher than the bank. I live in Sweden though.

[fapjacks]

My wife uses Nordea and they go out on a limb for her every time she needs something (and she lives in the US with me, so hardly can go into the bank for things).

[linuskendall]

Curiously for use abroad ICA banken (affiliated with the grocery store of the same name) turns out to be really beneficial, free withdrawals anywhere in the world and completely aligned with remote customer service (as they don't in fact have any branches that they can ask you to visit..).

[Moru]

Nordea and Handelsbanken is probably the best big banks when it comes to service.

[scrollaway]

I've heard good and bad things about both of them. I've been looking for a better international alternative, though.

Simple bank looks absolutely amazing (https://www.simple.com/), but sadly they are US-only. Does anyone know a similar bank to Simple that is friendlier to international travelers/EU citizens?

[fapjacks]

I can't pretend to know, but she always seems happy with their service.

[Lawtonfogle]

>PayPal is the scummiest company on Earth.

Maybe second. Nestle still wins worst place with their infant formula scandal.

[ryanlol]

And the exact same thing could've happened with credit cards.

[snarfy]

You have a lot more rights to fight them when fighting a bank. With PayPal you probably agreed to third party arbitration.

[fastball]

Scummiest for sellers. They are quite a good deal for buyers.

[gav]

To add to the anti-PayPal anecdotes: I once used it to checkout from a merchant that I hadn't used before and didn't trust; there was no shipping charge added until I completed the order. Given the merchant didn't respond to emails, I contacted PayPal. They couldn't do anything until the order was shipped, then after it did they didn't care because the guarantee only covers receiving the item that was promised.

It's a combination of a bad UX that won't confirm the price of the order until you've confirmed and service that's lacking compared to using a credit card.

[silverbax88]

This is something I've seen as well - PayPal does not like the idea (for some reason) of people using their service for events. I'm personally aware of two event coordinators who had large sums of money tied up by PayPal at the last minute (around $10k and $20k) so that I never used them for my own events. Stripe all the way, never a problem.

[hga]

I gather that PayPal's secret to success is strong anti-fraud measures (and not caring about false positives), and one of them is freezing accounts that get a flood of money all at once. That also is a pattern you see in events and charities set up for a new disaster.

[saurik]

PayPal does not consider conferences a "false positive". Small events often fail: the speakers cancel, the venue falls through, not enough people buy tickets to cover costs... if you are using incoming ticket money today for things, you are essentially taking investments, not payments. PayPal's response to this is to hold most of the money until one day after the conference, as otherwise, when your conference fails, and the attendees make a ton of chargebacks, they know they are going to not be able to get their money back and they will be out thousands of dollars.

This is not unreasonable behavior on their part, and is part of a very consistent pattern of response: they don't let you use their service to sell promises of any kind. This actually leads to PayPal being very user-focussed--essentially always protecting users from even having to think about whether something might end up stealing their money--which is actually good for those for users, and by proxy, good for those of us who use PayPal to sell legitimate products.

(FWIW, you can use PayPal to sell event tickets, but be prepared to appreciate what is happening in the mind of PayPal--which should hopefully cause you to not being unreasonable or abrasive in your communication, though even if they were being bad that isn't an excuse to get angry at them--and reach out to their underwriting department to prove you are financially solvent in a way that doesn't rely on the success of the event, and preferably also provide evidence that your event will also work.)

[downandout]

> be prepared to appreciate what is happening in the mind of PayPal--which should hopefully cause you to not being unreasonable or abrasive in your communication, though even if they were being bad that isn't an excuse to get angry at them--and reach out to their underwriting department to prove you are financially solvent in a way that doesn't rely on the success of the event, and preferably also provide evidence that your event will also work.

The problem with this is that people do jump through all of these hoops (and more) and still wind up with their money frozen for interminable periods of time. That is the source of frustration and anger with PayPal - legitimate businesses jumping through every hoop and still winding up with frozen funds, held for at least 6 months.

[saidajigumi]

> This actually leads to PayPal being very user-focussed

For s/user/buyer/: I'll add the notable exception that is the root of this complaint, virtually everything about the Buy It Now business. There are the parts of the complaint, and then there's the fact that they've been badgering desktop users for long years to sign up for their credit service by making the Paypal user experience suck every single time you interact with them. It's almost amazing to me that it was actually worse for anyone who ever clicked "Yes" on one of those infernal dialogues.

I have rarely found a company's user experience so systemically hateful as Paypal. To the point where, if there is virtually any other option for payment, I'll take it.

[pjc50]

On the other hand, that's the normal way of running small events. There are a number of annual events that don't have a limited company organizing the thing and can't raise a 10k-100k float from those organising it; they have to operate in this manner.

You have however confirmed the value of having a "sweep paypal money into an unconnected bank account ASAP" operations rule.

I do wonder whether anyone's ever taken them to small claims court over an event like this and won, possibly by default.

(The original article is a straightforward violation of the Consumer Credit Act, I believe)

[genericuser]

If the event 'has' to operate in this manner, how will the event organizer provide refunds should something happen and they have to cancel their event?

I ask because planning an event in my 2nd hand experience of weddings and such usually involves more than a few non-refundable expenses, which seem like they would prevent them from being able to provide a refund to everyone in the event of a cancellation.

I mean it just seems like Paypal's established practice, of tying up event money unless it is proven that the money isn't actually needed and will remain available in case of a charge back, is a pretty reasonable one. I mean I have been written bad checks by roommates for rent before, it is pretty damn hard to get money from people who don't have it so despite taking legal action I still haven't seen any of the money, I feel like Paypal is potentially preventing many instances of this.

Edit: Thinking back on it many of the small events I have attended ask for a $X donation from people, who in return will receive a ticket. This seems like it would get around the issue in the same way Kickstarters which don't deliver avoid the issue.

[dragonwriter]

> If the event 'has' to operate in this manner, how will the event organizer provide refunds should something happen and they have to cancel their event?

One method would be for one of the things purchased with the current payments being insurance.

[jklein11]

This all makes perfect sense. My only problem is that this is not communicated with the seller clearly. If it is a stated policy that Paypal will hold the host of a conference's money until the event materializes to cover their costs then no party involved has a right to feel cheated. Instead Paypal is classifying this risk which is inherent to their business, which is the risk of the conference materializing, as fraud. This, in my opinion, is diseptive

[EGreg]

You always have a right to feel a certain way, no?

[tomjen3]

>though even if they were being bad that isn't an excuse to get angry at them--and reach out to their underwriting department to prove you are financially solvent in a way that doesn't rely on the success of the event, and preferably also provide evidence that your event will also work.)

[nine_k]

> PayPal being very user-focussed

This works well for only the paying side of the user base. Yes, PayPal is a very convenient way to pay, e.g. in an Internet store.

Those who receive the money have much harder time, though. All complains I saw were from guys having their accounts frozen when money pour in too fast.

[pyre]

How is it that these people can jump to another provider and not end up with the same issues then?

[URSpider94]

Most likely, the other providers have not achieved the same level of "success" that Paypal have, and therefore haven't reached steady state in terms of risk losses. Or, they have painted themselves in a corner by advertising that they are much more business-friendly than PayPal, and are taking losses on the chin in the hopes of growing/inventing their way out of the problem.

[pyre]

Why has PayPal not started some sort of program (extra verification, etc) so that legit people attempting to do these things can use them without running into anti-fraud?

[s73v3r]

Part of why those other providers sprung up is because PayPal is a big bag of dicks.

[thirsteh]

So how do you like the PayPal campus?

;)

[leephillips]

As long as we're accumulating anecdotes: I run the website for an organization that puts on shows every month. We sell tickets through Paypal and have never had a problem. We're talking hundreds of $s rather than thousands, though.

[yuhong]

I am beginning to think that probably a good comparison of PayPal would be a firewall where people report packets to be looked at manually. Braintree works differently and should not have the same problems.

[ripter]

I have a friend who's small business was killed by Paypal. He had a board game shop (about five employees), but most of his business was online. He used Paypal as his bank account (dumb idea, I know.) During a christmas rush Paypal suddenly froze the account. I don't remember the exact reasons they gave, but it was something like he had too much money or was receiving money too fast.

[sblawrie]

What if you just need a page (the page can be external to your own site) that accepts payment and emails you a receipt, and you don't want to write any server-side code? Can Stripe do that the way PayPal can?

[heyalexej]

Absolutely. And it's incredibly simple, too: https://stripe.com/checkout

Alternatively you have always solutions like https://gumroad.com/ or https://simplegoods.co/ of which you can see a real world implementation here: http://foundersgrid.com/sponsor (No affiliation with any of these, just found it the other day.)

[sblawrie]

But all of these just hand you back a token which you then have to pass to your server for actually processing the charge. What if you don't want to set up any server-side code? Or am I missing something...