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PayPal Freezes Mailpile Campaign Funds

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Re: PayPal Freezes Mailpile Campaign Funds

#111

Earlier quoted context omitted.

And then there's Bitcoin- no fraud, no charge backs. Payments are final and instant and, best of all, don't require a middle man.

> no fraud Only for extremely specific and useless definitions of "no fraud." If I send my bitcoins to someone to buy something, I have no protection if they decide not to deliver. At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal .

The difference is you have the option to offer buyer protection or not offer it with Bitcoin.

With Credit Card companies and their proxies, Stripe, PayPal, etc. there is no option of choosing a buyer protection service provider which meets your needs (unless you consider strict to extremely strict a choice).

Buyer protection isn't always a good thing. Often it is a hindrance to progress. Merchants should be able to chose the level of buyer protection they want to offer.

Re: PayPal Freezes Mailpile Campaign Funds

#112

Earlier quoted context omitted.

And then there's Bitcoin- no fraud, no charge backs. Payments are final and instant and, best of all, don't require a middle man.

> no fraud Only for extremely specific and useless definitions of "no fraud." If I send my bitcoins to someone to buy something, I have no protection if they decide not to deliver. At which point the Bitcoin enthusiasts will say "but you can use a third party escrow service," which is true, and puts us right back into the same situation we are with PayPal .

But with Bitcoin, if you trust the merchant/recipient you can opt out of using escrow and transfer the money directly to him. With Paypal it's impossible.

Re: PayPal Freezes Mailpile Campaign Funds

#113
post #70

Earlier quoted context omitted.

People can get tired of other people telling this, but really, they should use Bitcoin. There are several advantages of this: accountability (you can verify with the block chain that they really received your payment), ease of use (utilizing 3rd parties like Coinbase, BitPay and others you don't really have to know how Bitcoin works to pay with them) and most importantly - irreversibility - once you receive Bitcoin t…

There is something I don't understand about Bitcoin: right now there is a lot of instability in the exchange rate of Bitcoin and everyday currency like dollars, euros, or pounds, from the graph I checked from here[1]. How can it be a viable alternative, when its value can change by 40% in a month? Gaining or losing value is not important (if it's increasing value, I have to delay exchanging to dollars as much as poss…

It's a new currency that is not artificially stabilized by any government, so it's only natural that it has some wild fluctuations. If you don't like big gains just avoid holding BTC and you'll be fine.

Re: PayPal Freezes Mailpile Campaign Funds

#114
post #70

Earlier quoted context omitted.

People can get tired of other people telling this, but really, they should use Bitcoin. There are several advantages of this: accountability (you can verify with the block chain that they really received your payment), ease of use (utilizing 3rd parties like Coinbase, BitPay and others you don't really have to know how Bitcoin works to pay with them) and most importantly - irreversibility - once you receive Bitcoin t…

There is something I don't understand about Bitcoin: right now there is a lot of instability in the exchange rate of Bitcoin and everyday currency like dollars, euros, or pounds, from the graph I checked from here[1]. How can it be a viable alternative, when its value can change by 40% in a month? Gaining or losing value is not important (if it's increasing value, I have to delay exchanging to dollars as much as poss…

As derefr said, there are many third party processors who will handle the Bitcoin for you and wire you the cash directly as soon as you receive Bitcoin payment. Or you can do it yourself and sell your BTC as soon as you get them.

Re: PayPal Freezes Mailpile Campaign Funds

#115
post #89

Earlier quoted context omitted.

Just like everything else.

Not really - can USA spy on credit cards issued by Chinese banks? And vice-versa? There is at least some level of privacy. But with BTC every time you make a purchase you can be linked to all your previous and future purchases.

That's only true if one has access to data at every point in the block chain. If at some point coins go to a private person or company that didn't advertise their address anywhere you're lost. There's no way to know who own a Bitcoin address if it's not part of any online service/exchange and was funded by someone else.

Re: PayPal Freezes Mailpile Campaign Funds

#116

Earlier quoted context omitted.

> irreversibility - once you receive Bitcoin there are no chargebacks. Unless I receive the goods before paying, I would never buy anything with Bitcoin online. There’s no buyer or fraud protection whatsoever. I don’t understand how any legitimate merchant would be alright with that. If a merchant would only accept Bitcoin, that would come across just as sketchy as a merchant who wants me to mail him a cashier’s chec…

Out of the half dozen times I've purchased with bitcoins, I was ripped off every single time. I stopped using it. I'm a supporter of bitcoins and want it to succeed, I just don't trust a lot of the vendors that use it.

What were you buying?

Out of the dozens of times I've purchased with Bitcoins I have never been ripped off.

Buy from reputable companies or use an escrow service.

A homeless guy asked me for my car keys the other day. He said he'd clean the inside of my car and bring me the keys. I didn't give him my keys. Something tells me you would have.

Re: PayPal Freezes Mailpile Campaign Funds

#117
What strikes me as really disappointing here is that the person has no idea why PayPal has frozen their account. It's surprising to me that they don't understand the inherent risks to PayPal from a kickstarter program (how dare they ask me for my business plan?!). In this post at least it seems like they just think PayPal doesn't like them and wants to hold their money for a long time. I guess they should have done more reading up around the financial side of a kickstarter.

And PayPal is clearly at fault that this person is so confused and upset too. How hard is it for them to say "In the past, we have seen crowd funding sites/services that never delivered anything. That resulted in a lot of unhappy end users going to their credit card companies and initiating a chargeback which we're on the hook to pay. As you can see, if you took the money from your account and disappeared we'd be on the hook for that entire $X. That's why it's important we understand more about what you're up to"

It would be ideal if this happened pre account/money collecting but I don't know all the details around that (Perhaps this is a long term account used for "normal" credit card processing who then decided, without informing PayPal, to run a Kickstarter. Who knows)

Re: PayPal Freezes Mailpile Campaign Funds

#118
Indulge me in a flight of fancy in which we pretend, for the sake of argument, that

a) Paypal is run not by Snidely Whiplash clones but b) by smart geeks working with thin margins in a highly regulated industry where c) customers are at risk essentially never, d) merchants eat 100% of the risk if they stay in business, and e) Paypal eats 100% of the risk if the merchant doesn't.

Why is Paypal very skeptical of pre-sales? Because, if the business fails (as new businesses often do), customers will file chargebacks. Their banks will hear "Internet merchant did not deliver as promised" and sustain the chargeback automatically. Paypal will lose that argument with the bank, 99.999% of the time, and have to seek restitution from the merchant.

Paypal has to do underwriting -- basically, guessing at probable risks and likelihood of partial repayment -- for new merchant accounts. What percentage of sales are at risk of chargeback in a pre-sales business? A Very High Percentage (TM). What is the probable chance of failure of a new business in developing a new product? Fairly high. Given product failure, what assets will be available to Paypal (in the Paypal account or the linked bank account) for automatic recovery from the failed business? Very Little (TM). What is Paypal's margin on this business? A fraction of a percent.

Now we break out the Hadoop cluster and use several billions of dollars of transactional data to construct a model of what the expected loss is, expected recovery given loss, and expected margin in event of non-loss is.

This puts us in an incredibly uncomfortable position as we do not feel that it's remotely in their jurisdiction to ask for a detailed budget of our business, any more than it is within our right to ask for theirs.

This communication is incredibly useful from Paypal's perspective among multiple axes:

1) It signals very strongly "We are not only unwilling to comply with the table stakes of every underwriting process for businesses everywhere, we are so inexperienced at business as to be unaware that this is table stakes, and accordingly you should dramatically revise upwards your estimate of our risk of failure."

2) It provides Paypal a simple, face-saving out for declining this business without having to say, in so many words, that "You seem, oh, 93% likely to ship this year. You get an A! This means, however, you are 7% likely to lose all the money, and we only make .9% margins, so this is going to be a No. We get that you don't like this. We don't like having to decline hundreds of dollars of revenue either, but we have the experience of losing hundreds of millions to fraud and know that some revenue just isn't worth the risk. We respect that you might not agree with this, but don't feel the need to spend additional resources paying for our computer programmers, underwriters, lawyers, and accountants to give you an expensive education in the realities of e-commerce on our nickel."

Let's talk about the difference between Paypal and Indiegogo:

1) You pay Paypal ~3% when their costs are probably approaching ~2%. Indiegogo would charge ~7% for the same thing. One of the luxuries when selling something which is five times as lucrative is that you can self-insure against project failure.

2) Indiegogo believes it has a different business model than Paypal and that they have a uniquely better understanding of the risks of crowdfunding, whereas Paypal has had their filters tuned by too many middle Americans selling Beanie Babies.

3) Paypal has lost hundreds of millions of VC money to fraud and Indiegogo hasn't. Paypal decisionmakers might at this point give Indiegogo the sort of look a school psychologist gives a C student with a drug habit who has just announced that they're taking a semester off to find themselves, man. They know which way this story is going to turn out, which is in its own special way as bad as not knowing how the story is going to turn out.

Are the risks larger because we are successful?

Ask a simple question, get a simple answer: yes! Paypal loses more on a $1,000,000-in-transactions account which goes bad than a $1,000-in-transactions account which goes bad, clearly. You might wonder "Well are we more risky than the same aggregate volume spread over N accounts?", in which case the answer is available to Paypal's Hadoop cluster but plausibly "Yes, with a p value which would make a statistician weep." Accounts which go 0-to-60 in processed transactions are hugely disproportionately likely to be outright fraud (Paypal has had many, many, many encounters with carders smart enough to have invented the suborn-a-botnet and make-a-lot-of-small-donations attack prior to having seen it on Breaking Bad). Additionally, it is quite plausible that Paypal could demonstrate that success is a curse to new businesses and most which blow up proceed to, well, blow up. (Which they would, of course, not love to disclose publicly.)

This dynamic is not unique to pre-sales or crowdfunding. It also explains Paypal's active hostility to many other business models, including money services businesses, third-party payment aggregators, and travel agents. (Most people don't immediately associate travel agents with having a lot of payment industry problems, but they do: they make lots of big-ticket sales but have low working capital, and if a cruise gets canceled or a hotel goes bankrupt or any of the standard vicissitudes of the industry causes them to eat a bunch of chargebacks all at once, they go bankrupt and their payment processor is on the hook for hundreds of thousands or millions of dollars as that bankruptcy causes cascading failure to deliver promised goods or services.)

Re: PayPal Freezes Mailpile Campaign Funds

#119
post #106

Earlier quoted context omitted.

> irreversibility - once you receive Bitcoin there are no chargebacks. Unless I receive the goods before paying, I would never buy anything with Bitcoin online. There’s no buyer or fraud protection whatsoever. I don’t understand how any legitimate merchant would be alright with that. If a merchant would only accept Bitcoin, that would come across just as sketchy as a merchant who wants me to mail him a cashier’s chec…

Remember that "chargebacks for everyone, no questions asked" is a US and Australia-only thing. In most other places it's not very common (you need to go premium for that), and Bitcoin would be more than welcome to reduce fees, delays, frozen accounts, and other bull . Fraud is still fraud, so if you get defrauded by someone, all you need is that a judge decides that Bitcoin is money, like it has already happened with…

> all you need is that a judge decides that Bitcoin is money

And then what, do I need to sue every time someone stiffs me? That would be a colossal waste of time and money, which means in practice that the fraud gets away with it – knowing they might not even have the funds to pay me.

The way it works now is, if I’m not satisfied and the merchant isn’t being reasonable, I can call my credit card company and request a chargeback. No lawyers and courts needed.

Re: PayPal Freezes Mailpile Campaign Funds

#120
post #70

Earlier quoted context omitted.

People can get tired of other people telling this, but really, they should use Bitcoin. There are several advantages of this: accountability (you can verify with the block chain that they really received your payment), ease of use (utilizing 3rd parties like Coinbase, BitPay and others you don't really have to know how Bitcoin works to pay with them) and most importantly - irreversibility - once you receive Bitcoin t…

I will accept goats and chickens before I accept Bitcoin. 99% of people have never even heard of it. I am pretty certain that 100% of my customers have never heard of it. Not worth my time.

Yeah, you can probably multiply your savings x10 every year by yourself anyway, no need to use a revolutionary currency for that.

http://blockchain.info/charts/market-price?timespan=all&show...

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