Good riddance, PayPal
231–240 of 272 posts
Re: Good riddance, PayPal
#232Earlier quoted context omitted.
But the status quo seems to me like a situation in which an entrepreneur can't start an honest corporation without putting his kids' college savings at risk of highly unpredictable fraud loss. And to add insult to injury, that kind of risk is entirely the fault of the payment industry itself, for failing to implement sufficiently robust security measures. And yet, the merchant typically carries the risk, not the paym…
Merchant account providers are not in the insurance business. If you're starting a business and worried that your own product failures are going to bankrupt you, pay for insurance. It seems to me at this point that we've lost track of what a merchant account provider even does, and that your argument in some way depends on the fact that it's easier for large companies to bear losses than small ones, and so they shoul…
Merchant account providers are not in the insurance business.
And why not? They could at least be obligated to obtain such insurance. Seriously, what else are they doing with that 3% of all those transactions?
Primarily because we accept the status quo because the merchant is in such a weak bargaining position. Let us not forget that merchants and consumers form the basis of our economy whereas payment and banking systems are just plumbing.
If the financial industry had more incentive to increase the security of payment systems, then maybe we wouldn't have the absurdly insecure systems that we have now. Inter-bank ACH is fundamentally an honor system. Credit/debit networks are basically a shared secret between you and everyone you've ever spent money with.
I'm not saying merchants should be immune from all chargebacks. I'm just saying that the lack of competition in payment systems is effectively disallowing the benefits of an LLC to the little guy.
Re: Good riddance, PayPal
#233Earlier quoted context omitted.
Merchant account providers are not in the insurance business. If you're starting a business and worried that your own product failures are going to bankrupt you, pay for insurance. It seems to me at this point that we've lost track of what a merchant account provider even does, and that your argument in some way depends on the fact that it's easier for large companies to bear losses than small ones, and so they shoul…
Merchant account providers are not in the insurance business. And why not? They could at least be obligated to obtain such insurance. Seriously, what else are they doing with that 3% of all those transactions? Primarily because we accept the status quo because the merchant is in such a weak bargaining position. Let us not forget that merchants and consumers form the basis of our economy whereas payment and banking sy…
And why not?
Because I was joking; the cost to ensure businesses that risk thousands of chargebacks would be stratospheric.
Re: Good riddance, PayPal
#234Earlier quoted context omitted.
Merchant account providers are not in the insurance business. And why not? They could at least be obligated to obtain such insurance. Seriously, what else are they doing with that 3% of all those transactions? Primarily because we accept the status quo because the merchant is in such a weak bargaining position. Let us not forget that merchants and consumers form the basis of our economy whereas payment and banking sy…
And why not? Because I was joking; the cost to ensure businesses that risk thousands of chargebacks would be stratospheric.
But the cost of fraud is already bourne by the economy. It gets bourne by the taxpayers, the consumers, and the merchants. And yes it is stratospheric, but so is the revenue of the current payment industry.
What I'm suggesting is:
A. It makes the little sense for the personal savings of an entrepreneur to be the underwriter of last resort.
B. If the financial industry wasn't so easily able to push the risk off on others, we might find that they become interested in real security improvements that result in an overall decrease of fraud.
Win-win.
Re: Good riddance, PayPal
#235Earlier quoted context omitted.
To the extent this perception represents actual reality: You know how every time a new payment provider comes up and people kvelch that it isn't available in their country and how no provider is? This is because every payment provider which attempts to hit as many countries as Paypal does dies . They're killed by fraud. (Fraud kills domestic ones, too, all the time, but it's marginally less frequent.) Luckily, Paypal…
Luckily, Paypal is an anti-fraud AI company which also happens to run credit cards sometimes The thing is, it shouldn't take much in the way of "AI" to recognize that a company that has already been doing business for several months or even years is probably not going to wake up one morning and start defrauding people. Criminals are lazy, and running a business is a lot of work. It would take about 30 seconds' worth…
Some criminals are after a quick buck. Some criminal organisations (eg Mafia) are a lot of work and go on for years. It's illogical to then assuming "There is lots of activity, ergo they must not be criminals".
Re: Good riddance, PayPal
#236Earlier quoted context omitted.
You're wrong. A common type of fraud on ebay is for an account to build up a reputation buying/selling low cost items (or high cost items between a group of criminal partners) before using the account to scam on high price items. Criminals are perfectly willing to put time and effort to create fake accounts or just buy stolen accounts.
To accept your statement that I'm "wrong," I'd need to see some examples of false business fronts that were not obviously bogus from day 1. On eBay, yes, it was pretty easy to play the "Sell a bunch of stuff for 99 cents and then pull the big scam" game. But none of the widely-publicized cases where PayPal has basically attempted to wreck the lives of startup founders fall into that pattern. These people have all had…
Selection bias. You do not see all the times paypal has successfully frozen an actual criminal organisation (i have no idea the numbers). If paypal's accuracy was 99%, then there would be 1 innocent startup squashed for every 99 successful defections. Do you think paypal need 100% accuracy?
Re: Good riddance, PayPal
#237Earlier quoted context omitted.
And why not? Because I was joking; the cost to ensure businesses that risk thousands of chargebacks would be stratospheric.
But the cost of fraud is already bourne by the economy. It gets bourne by the taxpayers, the consumers, and the merchants. And yes it is stratospheric, but so is the revenue of the current payment industry. What I'm suggesting is: A. It makes the little sense for the personal savings of an entrepreneur to be the underwriter of last resort. B. If the financial industry wasn't so easily able to push the risk off on oth…
The fraud/abuse we're talking about in this case is perpetrated by the merchants themselves. Want to see what a system of "real security improvements" looks like for a payment processor that doesn't require your personal credit staked to your account?
It's called Paypal.
Re: Good riddance, PayPal
#238Earlier quoted context omitted.
If someone could make money by offering merchant services to businesses with no credit history, they'd already be doing it. They are already doing it, every time a new business opens an account with them. No law requires banks to require personal credit checks for merchant accounts. I'm not talking about credit checks, I'm talking about a personal guarantee, of the "taking your house" variety.
Why would expose themselves to such obvious fraud? The personal guarantees go away once your business is a going concern.
Sorry, what obvious fraud?
And if the personal guarantees are going to go away once the business is a going concern, there's no problem with writing a shut-off date into the contract to make this explicit from the beginning, is there?
Re: Good riddance, PayPal
#239Earlier quoted context omitted.
Because they don't have to. The negotiating positions are entirely one-sided, and since they command all the power, they can essentially impose arbitrarily harsh terms to any extent the law permits.
I'm not sure you're following what I'm saying. That's probably my fault, for being terse. Even if the negotiating positions are "entirely one-sided" right now, that position leaves the door open for a competitor to capture market share by offering accounts without personal credit attachments. And yet nobody does that. That suggests one of two things: either (i) you can't capture much market share by offering easy ter…
Even if the negotiating positions are "entirely one-sided" right now, that position leaves the door open for a competitor to capture market share by offering accounts without personal credit attachments. And yet nobody does that.
Are you sure about that?
That suggests one of two things:
No, there are other possibilities. One is that the merchants assume that you're right and everyone is going to screw them the same way. Another is that they simply don't understand the profound legal implications of a couple of lines of small print and one more signature because, like most start-ups, they're trying to build a company and not paying lawyers thousands to review dozens of pages of terms sent by every financial service provider they've contacted.
Re: Good riddance, PayPal
#240Earlier quoted context omitted.
But the cost of fraud is already bourne by the economy. It gets bourne by the taxpayers, the consumers, and the merchants. And yes it is stratospheric, but so is the revenue of the current payment industry. What I'm suggesting is: A. It makes the little sense for the personal savings of an entrepreneur to be the underwriter of last resort. B. If the financial industry wasn't so easily able to push the risk off on oth…
The fraud/abuse we're talking about in this case is perpetrated by the merchants themselves . Want to see what a system of "real security improvements" looks like for a payment processor that doesn't require your personal credit staked to your account? It's called Paypal.
The fraud/abuse we're talking about in this case is perpetrated by the merchants themselves.
But the merchant account issuer doesn't distinguish fraudulent merchants from losses due to stolen cards, fraudulent customer chargebacks, etc. So currently in the US, essentially all fraud costs tend to be passed on to the merchant (and for small entrepreneurs, their kids' college savings).
It's called Paypal.
Note that most of the criticisms people level against Paypal aren't against their policies and mechanisms that are a rational defense against risk. It's things like the destroyed antique violin, banning merchant accounts for "editorial" reasons, outright hostile customer relations, and (last but not least) a penchant for holding on to other people's money for as long as possible for completely unjustified reasons.
Hopefully we can agree that the root cause here is the prevalence of fraud itself. A more secure transaction system could make things nicer for everyone. The problem is that the payment networks are the only ones who can institute meaningful change and the current system (that enables them to pass the costs on to merchants) suits them just fine.