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PayPal may be in trouble......

FYI

MasterCard to stop third-party transactions
Fri Apr 19, 6:29 AM ET
Andrew Backover USA TODAY
A new rule by MasterCard could crimp online commerce by stopping merchants from taking credit card payments via third parties, such as popular PayPal, USA TODAY has learned. On May 1, unless new terms are reached, Internet merchants that rely on third-party billing, most often small merchants, could miss out on sales via the USA's No. 2 online credit card. And MasterCard holders could have a harder time using their cards at many sites, including auction sites, that use PayPal and similar services, says Gartner analyst Avivah Litan. ''The promise of the Internet was that anyone could set up shop and get paid,'' she says.
''It's not a level playing field anymore if this rule goes through.'' According to MasterCard, its 15,000 card issuers won't be allowed to process credit card transactions using third-party services. Such services are most often used by small merchants because they can't afford to take credit cards. PayPal is the biggest third-party service, with about 13 million registered users. It does 240,000 transactions a day worth about $13 million -- about half of which is done via credit cards. Sellers on auction sites such as eBay and Yahoo may use PayPal to process transactions. Earlier this year, PayPal was used for about 28% of eBay transactions, Litan said. The change would not, MasterCard says, affect people who occasionally use third-party services to sell goods online -- only entities who sell goods or services ''on an ongoing basis,'' according to a MasterCard memo. The change would require those merchants to set up deals with banks so they could take MasterCard directly.
Even if the change is made, consumers could still use their MasterCards to buy goods from Web sites that deal directly with MasterCard. The reason for the change, says MasterCard spokesman Alex Lau, is to protect financial institutions and cardholders from fraud and identity theft. The change is likely aimed at porn and gaming sites that have higher occurrences of theft, Litan says. PayPal is working hard to get exempted from the change. It became the first company to
offer a viable alternative to credit cards on the Net by approaching eBay merchants who previously had to wait for checks to clear before sending out merchandise. PayPal signed the merchants up with fewer hassles and charged lower fees than banks. It uses its agreements with banks to process credit card payments for them. PayPal has been one of few Internet initial public offerings of late. Its shares closed Thursday at $24.46.
PayPal spokesman Vince Sollitto says PayPal is ''hopeful and confident'' it will come to new terms with MasterCard. Visa still accepts PayPal, as does American Express.

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tkmetz
fyneplace
40 posts
 
I found browsing this site interesting.
http://www.paypalwarning.com/
It is worth a look. And, JD, I am one of the "newbies" trying to sell an expensive item without using Paypal. All my feedback is on eBay!
jmc
2 posts
 
It makes no sense why all these small dealers (including a few here on AudioGon) who process credit-card transactions day in and day out resort to a seedy operation like PayPal It makes no sense why all these small dealers (including a few here on AudioGon), who process credit-card transactions day in and day out, resort to a seedy operation like PayPal. None of the reasons that I can think of are very confidence inspiring. It removes too many checks and balances from a system that has otherwise worked well for many, many years. PayPal, with it's gross incompetence, is inadvertantly screwing over consumers, businesses and the CC companies alike. MasterCard is probably just plain sick of getting stuck with all the complaints.

Watch the other cards follow suit. Then PayPal and the like are history.
perfectimage
406 posts
 
I love paypal and I think it really increases the number of sales in general. It allows everyone to accept credit cards.

JMC, I think the reason small dealers use paypal is because I think you can transfer money out of your checking account as if it was a credit card through paypal.
phild
603 posts
 
And Perfectimage...I'm sure the main reason that small dealers use PayPal is the huge difference in fees. There is a huge difference, isn't there?? What percentage of sales do the credit card companies charge small volume dealers? Isn't it much more than the 2%-3% that PayPal charges?? Isn't it closer to 5%-10%, depending on volume?? Any small dealer could accept credit cards directly, couldn't they...if they're willing to pay the high fees and deal with chargebacks, etc??
jstones
25 posts
 
Corelating the inputs above with my own sad experiences and thoughts I would venture to a few conclusions:
- PayPal was created and developed based on the illusion
that one could make an instantenious safe/ secured money transfer, with a click of a button. This is definitely not so, since at the click of a buton is only the withdrawal of your money from your CC or the existing funds in your PayPal account (which lay there, bringing them a hefty profit); when it comes to transfer money from a Bank account (Note: US account only, quite a hustle for the International users, most of which don't have an US account)a sluggish and (I suspect) deliberately delayed process occurs, till funds get into your PayPal account. Then, a "5 working day process" gets in effect, till the money (minus PayPal fees) get into your own Bank account. One could tranfer money from Bank to Bank on a one maximum two day basis, versus waiting sometime 10 days for the PayPal transaction to be "completed".
The Buyer got the illusion that he completed the payment when in reality he has to wait those 10 days, or so, till the Seller comence the shipment. Saves a trip to the Bank
though, which our (too) busy escuses for life cannot absorb.
But one can transfer Bank to Bank, on the Net from his own
PC. Not safe! Who guarantees that PayPal is!?
- for the above masquerade of a so called "service" PayPal
(asside from using the residual funds in their Customer
accounts to make a profit) charges 2.9% + etc. to all those
whom upgrade to the "preffered status". And we know what
constant pressure one has to comply with this status (which
give you "the right" to pay the fee..., or else
- PayPal "service" and "customer care" are a joke (basicaly inexistent and all my mail with them would support that fact. To any question/ problem that I raised I've got inept
answers, of the retarded like type, always parallel to the
question. And never, solving the problem addressed by me.
- their psyhological black mail to accept their new agreement (presented almost as a perk for PayPal customers,
so much is it said to be in their favour...)is a scandal.
Not even have bothered to read that piece of crap (knowing
that a change from such people, should logically be only the
effect of the eforts of numerous experts on "how to screw
the customer in an exemplary/ total fashion")I postponed the
acceptance with their 120 days grace period, hoping that the
reluctance of many older membersh to accept their bulshit will oblige them to give up. When less that 60 days remained
they start sending me daily reminders, on a count down basis. Paradox: spam, from a company that you provide patronage to. Past funny, it should be addressed in court.
- don't worry about their stock: enough suckers, with no
time to make Bank transfers, will continue to feed their stock;
- as for the Mastercard problem, don't worry: those good guys from MC didn't want to protect the us the Consumers, but simply to impose PayPal and the such, to comply to the normal step to issue their own MC (and others will most than probably follow) and pay the price. Ultimately we are
all aware out of whom pockets those fees are covered.
And things will be brought "back in line" or "back to normal".
BTW, if one has alternative solutions or suggestions, "speak up" please!
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