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Oct 14 2013

How is Paypal still in business anyway?

I’ve been sitting here all weekend waiting for money in Paypal to hit my checking account so I can actually use it, budgeting out doc appointments and stressed that I’ll lose my health insurance along with my job this week, and it just struck me as I see the transfer has still not posted: how is Paypal still in business? There’s no other financial institution I have to deal with that delivers such shitty service as those assholes. Nothing even close. I can move money from a savings and loan to a checking account at another bank in another state over night, but Paypal can take up to a week or more to do it.

Obviously they don’t want you to take your money out of Paypal, they would prefer you buy stuff from eBay or Amazon or some large online retailer, clearly they have allowed obstacles and delays to remain or fester to facilitate that business model. I think that’s a mistake, Paypal could be great, or could have been great. It doesn’t have to suck like this.

Banks also don’t want you taking your money out, but have nevertheless learned that people like having actual access to their own money. The faster and better the access the happier the customer. “Like” having access is too weak a word, people like it so much that banks, working in a truly competitive market, find they prosper by offering it. People like it so much that they become irrational and even violent at bullshit delays at getting to their money, this is widely known and has long been known by every human on earth including, presumably, the clowns running Paypal.

So these delays are intentional, no doubt about it, and the clowns don’t give a flying fuck about their customers getting our hands on our money, or they would have fixed basic shit like that a long time ago. I understand all that, I get that we’re all forced to use Paypal and therefor they get to be assholes for the time being. What I don’t get is how another company that does all the basic stuff Paypal allows you to do, but doesn’t play games with transfers and commit the other screw ups Paypal is notorious for, hasn’t arisen and taken them out by now. It’s an absolutely necessary piece of Internet infrastructure. Paypal does some things well, sending money by email is so incredibly handy, it almost has to be available these days. But taking a week to transfer money to yourself is incredibly inconvenient and opens a textbook vector of attack by competitors. I bet that that happens sooner or later.

I’d switch in a second and I bet a lot more people would too. I’m not that worried about having a big useless Paypal balance, I am that worried about getting money into my checking account that pays every bill, that receives every direct deposit paycheck, that has thousands of ATMs around the world networked in if I need cash, that handles several auto-debits every month, that has 24 hour live customer service if I have a problem with getting my money, and that has branches all over the world where I can walk in and talk to an actual human being or withdraw cash anytime I need to. When a company arises that allows us to send money via email as easily as Paypal, and which allows us to transfer money to ourselves as easily as we can email it to friends, that’ll be the end of Paypal as we know it.

In fact lets just rant about the entire Internet: it sucks. The PC I’m on right now and the networks it’s attached to are supposedly super fast and advanced compared to what I had a decade ago, but from my perspective they don’t seem one bit faster than they did then. All that extra advertised speed gets soaked up by everything having to run through AV software on my end, or an obscure plug in I don’t know about not being updated, or one single tiny ad being slow to load on the webpage that’s hanging up on the other end, and on and on and on, until our end result is surfing the infobahn is just as slow and frustrating now as it was circa 1997.

I was bitching about this a few weeks ago, when a developer/network friend gave me the most honest explanation I’ve ever heard. He said something to the effect of blame the companies, not just Paypal, MSFT, IBM, and those guys, but Johnson & Johnson, Sears, etc, all of them, every last one, because when it comes to networks and hardware, large and mid-cap corporations have acquired a raging case of delusional thinking over the last ten years: they think they can pay Hyundai prices and get Ferrari’s.

They get these systems at the most rock bottom price they can, cut every corner and every last cent to the bone, put the system out there without enough internal or external support, and then run them balls to the wall 24/7 like Speed Racer until many glitch and some crash, and then act shocked. Even though the department heads and corp officers were probably told that that’s exactly what might happen. One can almost picture the self-absorbed 0.1 percenter CEO of a dogfood company announcing to his or her cronies at a luxury retreat “We’ll save millions for our bonuses by buying a couple of notches below what the IT vender configured for us and tweak it into play internally, but we’ll make it all work just as good and probably better, because we’re so super bad ass at making dogfood …” And every one nods and applauds his super genius.

 

 

 

 

 

 

 

 

 

 

 

 

 

21 comments

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  1. 1
    Lofty

    I think the trouble with paypal is that it’s set up for purchase of goods where a guarantee to pay up soonish is good enough to get by on. Many ebay sellers I buy from post the same day I hit the paypal button. And if I sell with paypal I usually spend the account balance on further goods so don’t need to transfer the cash.
    As for delaying payment to you, they probably make money on that amount by playing on the stock market with it, I can’t imagine them missing a trick.

  2. 2
    Stephen "DarkSyde" Andrew

    There’s a few things Paypal does well. For example being able to send money by email is incredibly handy. The HUGE problem and what I think will be their eventual doom, there’s a few things they do terrible and that a competitor could easily capitalize on. It shouldn’t take a week to send money to myself in the most useful form possible, in my registered local branch supported checking account where all my bills and thouands of ATMs around the world and all my auto debits are all linked up. That is where everyone usually wants their money to go, doing anything but making that transfer as smooth and quick as possible is a terrible mistake and needless risk for Paypal.

  3. 3
    F [i'm not here, i'm gone]

    PayPal has a bit of an history of just being plain asshats, never mind their quality of service (or lack thereof). They’re still in business because they got in early and have somewhat of a monopoly position, and haven’t quite done the crash and burn or fade into irrelevance yet.

  4. 4
    Gregory in Seattle

    “There’s no other financial institution…”

    And therein lies the main bundle of issues: legally, Paypal is not a financial institution. It is not under the same rules and obligations that a bank, credit union or credit card issuer must observe, and can do pretty much what they want.

  5. 5
    Stephen "DarkSyde" Andrew

    Yeah I think so too. But they could be awesome, they could be the biggest bank on earth, do all kinds of related stuff, maybe even compete with local checking accounts one day. But they’re not going to get there anywhere near that if people feel they’re a pain in the ass when it comes to withdrawals. That’s the one thing you absolutely cannot fuck up or play games with, ever, if you are the business of managing someone else’s money. That means you have to have good comprehensive customer service, and like F said, they suck at it. It’s terrible, a lot of those CSRs have the same sneering IT attitude, on top of the usual over crowded queues and tedious annoying voice menus that online companies excel at.

    To whit, too often Internet companies skimp big time on service, figure our product out yourself is their attitude, many dont have any service excet for tickets or help FAQs. Bad idea when your business is holding other peoples money. Sure, a competitor only works if everyone uses them, and Paypal got the early drop, but it’s inevitable that that will happen, Paypal has bent over backwards to leave themselves totally vulnerable.

  6. 6
    Neil Rickert

    The problem for paypal, is that they are probably the most “phished” business that exists. So the delays might be to give time to see whether this is a phish transfer.

  7. 7
    khms

    The interesting question is, WHY isn’t there a competitor? It’s not as if there aren’t financial institutions enough who could do it.

    For that matter, PayPal IS a bank:

    ” From July 2007, PayPal has operated across the European Union as a Luxembourg-based bank.”

    https://en.wikipedia.org/wiki/Paypal

  8. 8
    Deen

    Sure, a competitor only works if everyone uses them, and Paypal got the early drop, but it’s inevitable that that will happen, Paypal has bent over backwards to leave themselves totally vulnerable.

    Not sure about the inevitability. I don’t think a startup could get enough capital while it is unsure what regulations will apply to the business. Other than that, setting up such a service with the required security can’t be cheap. And of course, there’s always the possibility that a startup will be bought up by PayPal before they can become much of a competitor.

    On the other hand, if an already big party would move into the market, such as an existing large consumer bank, that’s a different matter entirely. Wasn’t Amazon planning on offering some sort of PayPal-like service too?

  9. 9
    Gregory in Seattle

    @khms #7 – Ah, thanks. I had some bad experiences with PayPal back in 2004, and haven’t used them since; most of those problems were related to the fact that they were not a bank.

  10. 10
    Gregory in Seattle

    And actually, on reflection, that may be why PayPal has no competition. Its partnership with Ebay made it the 900 pound gorilla of the field; getting a bank charter — especially one incorporated in and operating under the laws of a bank haven like Luxembourg — allowed it to move into many other markets and made it much more appealing for people with… um, large amounts of cash to move outside of normal channels. The competition could not keep up.

    So now, the situation is probably along the lines of “The law gives us five business days to complete the transfer. We will take five days and milk every last penny of interest that we can. If you don’t like that, feel free to take your business to another company.”

  11. 11
    unbound

    I guess I have the wrong bank. From my experience, banks are just as bad when cashing in or transferring any significant amount of money. Any time I cash or transfer more than $100 usually means a “3 to 5 day wait”, and those are business days.

    It could very well be that Paypal to your bank account is viewed as an outsider check by the bank who will very quickly debit your account, but uses early 20th century rules when crediting your account.

  12. 12
    CaitieCat, getaway driver

    This is really interesting to me, because in fact I’ve found that PayPal consistently – and I mean every single time for me – moves money from my PayPal to my (Canadian) bank account in no more than three business days. They say to expect five bd, but it’s never taken more than three.

    Within Canada, we do have an alternative; the Interac e-mail transfer system. Interac is the agency/company that provides interbank operability: ATM networks, debit POS machines, that kind of thing. They have an e-mail transfer inter- and intra-bank system, where you don’t even have to know one another’s bank, let alone acct numbers and stuff; it’s about three clicks on the website, four if you haven’t sent to them before. The e-mail arrives within minutes, you click on the code (which looks a bit like a TinyUrl), and then choose your bank from an ever-increasing list, enter the security question answer sent separately by the sender, and drop it into the account you want. Quite thoroughly secure, or at least as secure as your e-mail. Unfortunately, Interac only works within Canada as yet, so for my foreign clients – the majority of my business as a translator – I still use PayPal.

    I’m sorry you’re having such a crap time with them, though. It would be intensely frustrating, while living hand-to-mouth as we are, to have to wait an unspecified and longer-than-expected period for money to come through. Totally get that part.

  13. 13
    daved

    Today (Monday) is also a bank holiday in the US (most banks, anyway), thus adding to any delays.

  14. 14
    CaitieCat, getaway driver

    And in Canada, daved; it’s our Thanksgiving holiday today. We harvest earlier than you lot. :)

    Well, we used to, anyway. I expect in the non-distant future, we’ll be harvesting twice a year, with the second in November or December, and neither of them winter wheat.

  15. 15
    chimera

    Hi Darksyde,

    Sorry you are having to go through this. I know how humiliating it is.

    Here in France, ALL the banks are a thousand times worse than Paypal in speed of transfer and ease of access to your money. Also, for sending money overseas, Paypal has absolutely no competitors except for Western Union which is a lot more expensive but does not require that the person who receives the money have a computer or bank account.

    I hope you get the money today.

    E.

  16. 16
    Markita Lynda—threadrupt

    How about my big Canadian bank, which thinks it’s normal to hold a certified cheque for five to seven business days?

  17. 17
    SallyStrange

    Markita Lynda – not just you. My friendly neighborhood credit union holds checks too. I truly don’t understand THAT in this day and age.

  18. 18
    Lofty

    Elon Musk: PayPal Is Screwed

  19. 19
    Stephen "DarkSyde" Andrew

    He’s exactly right, Paypal should be where all the money is, they could be huge, the dominant financial institution on earth. Instead they’re enticing me with spam emails to buy Miley Cyrus tickets in Belgium or something … even their spam is that lame and untargeted.

  20. 20
    Lofty

    even their spam is that lame and untargeted

    I doubt it. Their target market is the shallow people who buy vanity trinkets on the internet. They haven’t grasped the potential of the money transfer thing yet. Either they will or won’t. They’ll get supplanted or eventually make good, one or the other. Stasis is unlikely.
    Oh and because the weather is enticing here, I’ll do a donation, just this once.

  21. 21
    bandm

    A friend just made a thing that might be useful for you to use instead of PP – I haven’t really looked into it yet as it was just posted on FB, but check it out:

    https://squareup.com/help/en-us/article/5144-square-cash-security

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