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View Full Version : For all you paypal haters, a new alternative soon



cuemaker
05-25-2011, 08:07 AM
http://money.cnn.com/2011/05/25/news/companies/banks_paypal_clearxchange/index.htm?eref=mrss_igoogle_business

Looks like the big banks like how much paypal is making and now want a piece of the action...

More competition is good

Lew Hartswick
05-25-2011, 08:59 AM
If that becomes wide-spread and my credit union will "join" I'd
finally consider these "on-line" auctions. :-)
...lew...

aboard_epsilon
05-25-2011, 09:03 AM
Cant see ebay allowing it ...unless they put extra charges in for using it ..you know what they are like ..don't you !

ALL THE BEST.MARKJ

Dr Stan
05-25-2011, 09:13 AM
Of course SleezeBay will attempt to block its use, but I hope it will make buying from Mom & Pop online stores easier than fighting with PayPal.

Evan
05-25-2011, 09:45 AM
eBay hasn't a chance of stopping it. The banks are far more powerful politically than PayPal. PayPal has been walking a fine line ever since it was incorporated. It argues that it isn't a bank but it makes money from the delay between receiving money and paying money. That is a major part of the income that any bank makes and PayPal does the same. The banks don't like them horning in on their favorite money maker. Delays of even minutes create a huge floating balance if you handle a high volume of transactions. That floating balance can make a lot of money.

It also is one of the features that is used to define a bank. PayPal has been fighting to avoid that designation since if they are a bank then they become subject to strict regulation.

lazlo
05-25-2011, 09:57 AM
I think this will become widespread for online payment, but Ebay doesn't have to fight them -- Ebay owns Paypal, and it's required for all Ebay listings.

Plus, Ebay just cleared a clean $1.4 Billion in profit selling Skype to Microsoft :rolleyes: , so they're going to be fat, dumb and happy for a long time...

mike os
05-25-2011, 10:22 AM
bottom line will be if it is acceptable to sellers... in whatever buisiness, & that will come down to fees and time

lazlo
05-25-2011, 10:52 AM
bottom line will be if it is acceptable to sellers... in whatever buisiness, & that will come down to fees and time

Paypal charges a 2.9% transaction fee. Same as the interchange fee the merchant pays when you pay with a Mastercard or Visa.

The fees that everyone is complaining about are the Ebay fees, not the Paypal fees.

mike os
05-25-2011, 11:12 AM
Paypal charges a 2.9% transaction fee. Same as the interchange fee the merchant pays when you pay with a Mastercard or Visa.

The fees that everyone is complaining about are the Ebay fees, not the Paypal fees.

so paypal & the banks can make money but ebay cant?... unless thinks work differently over there they both charge a % of the final fee for the transaction.

If you buy & off ebay & pay cash the seller still gets a bill for the fee, so how will this make it all better?

Mcgyver
05-25-2011, 11:37 AM
eBay hasn't a chance of stopping it. The banks are far more powerful politically than PayPal..

Ebay owns 100% of paypal. Ebay has a lot of political clout with Ebay :)


it makes money from the delay between receiving money and paying money. That is a major part of the income that any bank makes and PayPal does the same. The banks don't like them honing in on their favorite money maker. Delays of even minutes create a huge floating balance if you handle a high volume of transactions. That floating balance can make a lot of money.



Where do you get these from? In the area of transaction processing, Banks make money on the fees. Even if you are transacting a trillion dollars a year, a float of a few minutes would add a tiny amount of profit, few hundred thousand dollars.

Paypal makes money because of the high fees and minimal infrastructure - there's no branch at main and maple. Analysists do not consider what they make on the float material, maybe $10m a year by one estimate. Last year 'payments' (how papal appears on ebay statements) was 3.2B!! in revenue and 1.4 in expenses - 1.8B in profit so $10 million is a rounding error.


It also is one of the features that is used to define a bank. PayPal has been fighting to avoid that designation since if they are a bank then they become subject to strict regulation

Nope. processing transactions or acting as a deposit broker does not make a bank. The distinguishing feature is fractional reserves. If a bank has $100 in cash, it can loan out $1000. Paypal only 'loans out' (puts funds on deposit) the cash it has and is not underwriting, they are depositing in cash accounts; checking account or other cash deposits. Banks make fee money on transactions, investment banking, and all kinds of nonsense..... but the core of banking, what makes a bank a bank, is fractional reserve lending and the underwriting function. Paypal said lets forget about that core and go for the transaction fees - and worked, first mover advantage and now a captive ebay audience.

I agree Paypal has been very shrewd in making sure its not considered a bank and in doing so sidesteps federal regulation, but they don't exactly act like a bank either. Cuemaker, you are right - competition is whats missing....now all we need is a second major online auction house :D

RB211
05-25-2011, 11:46 AM
Competition is good for the consumer

lazlo
05-25-2011, 01:03 PM
so paypal & the banks can make money but ebay cant?... unless thinks work differently over there they both charge a % of the final fee for the transaction.

No. Ebay gets the insertion and final value fees. Paypal is just a clearinghouse for credit card transactions. Like any other credit card company, they charge 2.9% per transaction.

So if Ebay decided to accept Bank of America's clearXchange for payment, the seller would still pay the exact same listing fees that they are now.

Evan
05-25-2011, 01:50 PM
Nope. processing transactions or acting as a deposit broker does not make a bank. The distinguishing feature is fractional reserves.

Not according to the FDIC. The distinguishing feature that they used to decide that PayPal isn't a bank is that it isn't a deposit taking institution. However, that is still in question and the FDIC cautioned as much in 2002. The issue is what happens to a client's money between the time payment is accepted and paid. It is in sombodies account and it isn't the client anymore or the recipient. This hasn't gone to the Supreme court but it may with the banks in the picture.



Federal regulators' position that PayPal is not a bank boosts the company's contention that it shouldn't be regulated as one, but officials caution that theirs isn't the final word in the matter.

In an advisory letter sent last month to PayPal concerning its use of customers' funds, the Federal Deposit Insurance Corporation said it does not consider the company to be a bank or savings association because it does not accept deposits as defined by federal law, which requires institutions to have a banking charter. PayPal doesn't have a charter, thus it is not a bank, the FDIC said.

"PayPal does not physically handle or hold funds placed into the PayPal service," the FDIC said in its letter.

PayPal representatives said the FDIC opinion should help the company stave off attempts by state and federal officials to regulate its business.

"As long as we continue doing what we are doing today, we won't be subject to Federal banking laws," said PayPal Chief Executive Peter Thiel.

But an FDIC official said state officials may still conclude that the company is acting as an unauthorized bank.

"It's really a state issue," said the FDIC official. "I've been on the phone with several state regulators. I've indicated that federal law is not going to help them. They are going to have to come to their own determination under state law" about whether PayPal is acting as a bank.



http://www.zdnet.com/news/fdic-decides-paypals-no-bank/121346

Doc Nickel
05-25-2011, 02:17 PM
Looks like the big banks like how much paypal is making and now want a piece of the action...

-It's about time.

PayPal rose to power- so to speak- because it could make person-to-person payments faster than mailing a check or money order, but easier than doing a wire transfer or bank transfer. There really weren't many other options back then.

The big drawback to PayPal is that the money isn't in your bank account. If you want to add money to your PayPal account, you have to deposit it into your bank, then transfer it to PP- which can take up to three days.

Ditto to get your money back out- unless you have a PayPal debit card, it takes at least three days to get your money from PayPal.

If this new ClearX thing works, it sounds like you'd have your payment basically instantly, and almost as importantly, wouldn't need a third-party account.

And that would cut the knees out from under a big chunk of PayPal's business. Which, even as a longtime PP user, I would be happy to see.

However, eBay would still continue to restrict or discourage what they would consider "third party" payment methods- and needless to say, eBay is still huge business- and, we'd lose one of the only useful features of PayPal, the dispute resolution.

That resolution is a two-edged sword; a seller can ship a brick, send PayPal a delivery confirmation number, and they'll tell the buyer "tough luck". The buyer can also receive legit goods, claim it's "substantially not as claimed", and get his money back anyway. I've seen both happen.

Now credit-card companies have pretty good dispute resolution, but that usually boils down to "fix this issue or we'll yank your credit card account". I don't know how well that'd work with individual bank accounts.

Doc.

macona
05-25-2011, 03:20 PM
You dont need to have paypal if you are an established seller. You can then use all sorts of other options than Paypal and this new one will be included as well.

I hope my bank does this too. It will be nice to be rid of paypal.

Add: Just thought of one thing. This new service will probably only work with US based transactions, at least for now. So we will still be stuck with Paypal for international stuff.

Allan Waterfall
05-25-2011, 03:46 PM
Ditto to get your money back out- unless you have a PayPal debit card, it takes at least three days to get your money from PayPal.



Doc.I've today had paid into my paypal account 12.50 and as you say it takes 2-3 days to transfer it to my bank account.
However they very kindly informed me I could have it in 1-2 days if I paid them 5.00 for the privelege :eek:

Allan

lazlo
05-25-2011, 03:58 PM
Ditto to get your money back out- unless you have a PayPal debit card, it takes at least three days to get your money from PayPal.

Yes, but that's just standard business practice. It takes 2 - 3 days for a corporate check to clear, which is ridiculous considering the ACH system reconciles the check within minutes. But 3 days is the legal limit, so the banks hold onto it to accumulate interest. Capitalism.

By the way, Bank of America was central to the Credit Default Crisis -- I'm surprised y'all are excited over a new BoA service :)

mike os
05-25-2011, 04:19 PM
I've today had paid into my paypal account 12.50 and as you say it takes 2-3 days to transfer it to my bank account.
However they very kindly informed me I could have it in 1-2 days if I paid them 5.00 for the privelege :eek:

Allan

no different to a bank... you want instant, you pay more.

noah katz
05-25-2011, 05:04 PM
Paypal is just a clearinghouse for credit card transactions. Like any other credit card company, they charge 2.9% per transaction.

They charge it even when there's no credit card involved; I have payments taken from my bank account.

Bob G
05-26-2011, 09:55 AM
Hi All, I read all these complaints about PayPal on this site and I am wondering if PayPal is smart or I am just stupid.
I have been using PayPal for about [10] years, for more than [100] transactions both buying and selling. Maybe I am not catching them but I have never been aware of a problem with PayPal. What are some of the abuses that I should be watching for in the future?
Thank you for any help.
Bob G

jkilroy
05-26-2011, 11:55 AM
Let me see, you can DEPOST money into PayPal, you can WITHDRAW money from PayPal, they PAY INTEREST on your balance, and they issue CREDIT CARDS. If it walks like a duck, talks like a duck, and looks like a duck, its a F&^%(*& DUCK.

Evan
05-26-2011, 01:37 PM
http://ixian.ca/pics8/paypalsucks.jpg

From http://paypalsucks.com

macona
05-26-2011, 01:56 PM
Hi All, I read all these complaints about PayPal on this site and I am wondering if PayPal is smart or I am just stupid.
I have been using PayPal for about [10] years, for more than [100] transactions both buying and selling. Maybe I am not catching them but I have never been aware of a problem with PayPal. What are some of the abuses that I should be watching for in the future?
Thank you for any help.
Bob G

The main thing is if you are using it to receive funds do not keep a balance in there. As soon as money appears in your account transfer it immediately.

Sending money, it works great.