6 ms·

What happens when you pay PayPal $15k in fees?

105 points by cft 9y ago

ben_jones 9y ago
TLDR; don't use paypal unless your business can sustain large amounts of frozen funds, terrible customer support, and shady fees and business practices.
- Lazare 9y ago
  I'm pretty sure you shouldn't use paypal even if you can sustain that. :)
- jseliger 9y ago
  I'm baffled by the ongoing willingness to use Paypal. It's been a terrible company since seemingly forever. 116 days I wrote a comment about how terrible it is: https://news.ycombinator.com/item?id=13851855 https://news.ycombinator.com/item?id=13851855 that in turn references my own horror story, from more than a decade ago, 28 days before that: https://news.ycombinator.com/item?id=13624393 https://news.ycombinator.com/item?id=13624393.
  - RcouF1uZ4gsC 9y ago
    This is because consumers love PayPal. It means I am not giving my credit card to a potentially shady person and that I have a way to cancel the service. I also have 1 place where I can see all my subscriptions, so I don't keep subscribed to services I don't use but forgot about. In general, if there are two equivalent options and one takes PayPal and the other doesn't, I am going with the one that takes PayPal.
    - CodeWriter23 9y ago
      As a consumer, I prefer Stripe's interface. It is low friction; I enter my details one a site when making a purchase, and if I opt-in, those details are available on any site using Stripe. And protected behind SMS temp passwords.
    - watter 9y ago
      A credit card is insured. I am not sure I can say the same about the mandatory connction between Paypal and my bank account. It is much riskier to use Paypal than to give a stranger your cc number.
  - tedmc 9y ago
    Because my conversion rates go up when we use it, and down when we don't. Sure, you can add social proof, but like any platform you take your chances and plan for when they lose their mind.
    - CodeWriter23 9y ago
      Interesting. Looks like you created this account less than a day ago, just to make this lone comment.
- revmoo 9y ago
  This has been known for at least a decade. Anyone dealing with them has it coming at this point.
thedarkginger 9y ago
Who is the payment processing leader at this point for digital payments? I assume Stripe, no?
- smitty1110 9y ago
  https://www.datanyze.com/market-share/payments/ https://www.datanyze.com/market-share/payments/ That chart is for number of domains. PP is still the market leader by a huge margin. I'm sure if you looked at the number of transactions per month, Amazon might move into the top 3, but PP would still be the largest.
  - Consultant32452 9y ago
    Which one of those does all the CC processing for the big porn companies?
    - phil21 9y ago
      None. The big porn companies have direct banking relationships with (typically multiple - as banking access is typically the largest risk such a company carries) merchant banks. They will then use whatever payment processor they feel like (e.g. an authorize.net clone) or build their own, but hooked into their merchant account on the backend. These will (generally) be invisible to you, as all the API calls are done in the background and hosted by the company itself. The small porn companies typically use ccbill or epoch, although my knowledge is slightly dated in that area.
- deleted 9y ago
  [deleted]
- gnicholas 9y ago
  We've had issues with Stripe as well. For example, one of our customers forgot they were paying (happily) for a subscription to our software, and they flagged a recurring charge with their CC company. When Stripe notified us of the flag, we quickly showed them server logs showing that the customer was still actively using our software. We also provided the original purchase information and screenshot of what the user saw right before making the purchase. Stripe said we lost the dispute because we didn't provide the customer's driver's license. (What?!) We persisted and at this point contacted the customer, who readily admitted that he was still using our software and was happy to pay for it. Unfortunately, even this was not enough for Stripe, who refused to reverse their levy on us. They claimed that someone had stolen the CC from its true owner, signed up for our software, and was emailing us from a fraudulent email address. At this point, the customer (who was really nice) called their CC company several times to say that it was all a misunderstanding and that the charge was justified. But Stripe refused to accept this as proof. They might not be as bad as PayPal, but they're not saints either.
tbrock 9y ago
This company is pure scum. Without sharing the details of my personal grievances I can assure you that you are better off sending money to others securely using any other payment system on the planet.
- revmoo 9y ago
  I've literally had better luck putting cash into envelopes and mailing them standard usps than with Paypal.
URSpider94 9y ago
This is not unique to PayPal, it's standard in the credit card processing business. https://www.merchantmaverick.com/understanding-rolling-reserve-put-business/ https://www.merchantmaverick.com/understanding-rolling-reser... However, they do seem particularly aggressive in applying a reserve in this case. We are missing a lot of data here, for example the business' chargeback rate.
- joenot443 9y ago
  >It's worth noting that our chargeback rate is well under 0.1%
  - URSpider94 9y ago
    Thanks for highlighting. This does seem pretty aggressive. This does stink, but they have options. If their revenue is as large as they state, they can likely go to a bank and get a line of credit with their receivables as collateral. If they were in a B2B business, they would likely be facing Net 45 terms from their customers anyway. http://www.comcapfactoring.com/blog/line-of-credit-secured-by-accounts-receivable/ http://www.comcapfactoring.com/blog/line-of-credit-secured-b...
    - phil21 9y ago
      I'm curious if they need Paypal due to customer preference, or if they could simply accept credit cards directly. At that volume, implementing your own merchant account sounds like a much better idea than paying the absurd rates Paypal charges. However, I'm fairly certain that they would have thought of this :) I'm assuming they need to accept Paypal due to customer demand.
- deleted 9y ago
  [deleted]
- droopyEyelids 9y ago
  Chargeback rate is low, but: 1) NZ company operating out of Australia- complicated international ownership structure. 2) Industry is software. Software is a high risk product category. 3) Very quick unexpected growth in transaction volume. Another big fraud red flag. This isn't an aggressive reserve, it's a defensive one.
baybal2 9y ago
Back in my college years, the standard procedure was to have multiple accounts. Paypal guys can easily close/freeze like 10 out of 20 accs after first chargeback dispute, but to leave remaining 10 even when they were listed on the same webpage. I thank their lazyness
JoeAltmaier 9y ago
Lots of complaints about receiving money from a stolen credit card, and surprise surprise Paypal takes the money back. What, they should eat the cost of cheaters? Why? They should use their resources to get your goods back? Why? Selling stuff mail-order is risky; you get cheated sometimes. Paypal is not going to fix that for you.
petraeus 9y ago
Are we talking paypal or payflow? Because 15k in fees is virtually nothing.

105 points by cft 9y ago

TLDR; don't use paypal unless your business can sustain large amounts of frozen funds, terrible customer support, and shady fees and business practices.

Lazare 9y ago
I'm pretty sure you shouldn't use paypal even if you can sustain that. :)
jseliger 9y ago
I'm baffled by the ongoing willingness to use Paypal. It's been a terrible company since seemingly forever. 116 days I wrote a comment about how terrible it is: https://news.ycombinator.com/item?id=13851855 https://news.ycombinator.com/item?id=13851855 that in turn references my own horror story, from more than a decade ago, 28 days before that: https://news.ycombinator.com/item?id=13624393 https://news.ycombinator.com/item?id=13624393.
- RcouF1uZ4gsC 9y ago
  This is because consumers love PayPal. It means I am not giving my credit card to a potentially shady person and that I have a way to cancel the service. I also have 1 place where I can see all my subscriptions, so I don't keep subscribed to services I don't use but forgot about. In general, if there are two equivalent options and one takes PayPal and the other doesn't, I am going with the one that takes PayPal.
  - CodeWriter23 9y ago
    As a consumer, I prefer Stripe's interface. It is low friction; I enter my details one a site when making a purchase, and if I opt-in, those details are available on any site using Stripe. And protected behind SMS temp passwords.
  - watter 9y ago
    A credit card is insured. I am not sure I can say the same about the mandatory connction between Paypal and my bank account. It is much riskier to use Paypal than to give a stranger your cc number.
- tedmc 9y ago
  Because my conversion rates go up when we use it, and down when we don't. Sure, you can add social proof, but like any platform you take your chances and plan for when they lose their mind.
  - CodeWriter23 9y ago
    Interesting. Looks like you created this account less than a day ago, just to make this lone comment.
revmoo 9y ago
This has been known for at least a decade. Anyone dealing with them has it coming at this point.

thedarkginger 9y ago

Who is the payment processing leader at this point for digital payments? I assume Stripe, no?

smitty1110 9y ago
https://www.datanyze.com/market-share/payments/ https://www.datanyze.com/market-share/payments/ That chart is for number of domains. PP is still the market leader by a huge margin. I'm sure if you looked at the number of transactions per month, Amazon might move into the top 3, but PP would still be the largest.
- Consultant32452 9y ago
  Which one of those does all the CC processing for the big porn companies?
  - phil21 9y ago
    None. The big porn companies have direct banking relationships with (typically multiple - as banking access is typically the largest risk such a company carries) merchant banks. They will then use whatever payment processor they feel like (e.g. an authorize.net clone) or build their own, but hooked into their merchant account on the backend. These will (generally) be invisible to you, as all the API calls are done in the background and hosted by the company itself. The small porn companies typically use ccbill or epoch, although my knowledge is slightly dated in that area.
deleted 9y ago
[deleted]
gnicholas 9y ago
We've had issues with Stripe as well. For example, one of our customers forgot they were paying (happily) for a subscription to our software, and they flagged a recurring charge with their CC company. When Stripe notified us of the flag, we quickly showed them server logs showing that the customer was still actively using our software. We also provided the original purchase information and screenshot of what the user saw right before making the purchase. Stripe said we lost the dispute because we didn't provide the customer's driver's license. (What?!) We persisted and at this point contacted the customer, who readily admitted that he was still using our software and was happy to pay for it. Unfortunately, even this was not enough for Stripe, who refused to reverse their levy on us. They claimed that someone had stolen the CC from its true owner, signed up for our software, and was emailing us from a fraudulent email address. At this point, the customer (who was really nice) called their CC company several times to say that it was all a misunderstanding and that the charge was justified. But Stripe refused to accept this as proof. They might not be as bad as PayPal, but they're not saints either.

tbrock 9y ago

This company is pure scum. Without sharing the details of my personal grievances I can assure you that you are better off sending money to others securely using any other payment system on the planet.

revmoo 9y ago
I've literally had better luck putting cash into envelopes and mailing them standard usps than with Paypal.

URSpider94 9y ago

This is not unique to PayPal, it's standard in the credit card processing business. https://www.merchantmaverick.com/understanding-rolling-reserve-put-business/ https://www.merchantmaverick.com/understanding-rolling-reser... However, they do seem particularly aggressive in applying a reserve in this case. We are missing a lot of data here, for example the business' chargeback rate.

joenot443 9y ago
>It's worth noting that our chargeback rate is well under 0.1%
- URSpider94 9y ago
  Thanks for highlighting. This does seem pretty aggressive. This does stink, but they have options. If their revenue is as large as they state, they can likely go to a bank and get a line of credit with their receivables as collateral. If they were in a B2B business, they would likely be facing Net 45 terms from their customers anyway. http://www.comcapfactoring.com/blog/line-of-credit-secured-by-accounts-receivable/ http://www.comcapfactoring.com/blog/line-of-credit-secured-b...
  - phil21 9y ago
    I'm curious if they need Paypal due to customer preference, or if they could simply accept credit cards directly. At that volume, implementing your own merchant account sounds like a much better idea than paying the absurd rates Paypal charges. However, I'm fairly certain that they would have thought of this :) I'm assuming they need to accept Paypal due to customer demand.
deleted 9y ago
[deleted]
droopyEyelids 9y ago
Chargeback rate is low, but: 1) NZ company operating out of Australia- complicated international ownership structure. 2) Industry is software. Software is a high risk product category. 3) Very quick unexpected growth in transaction volume. Another big fraud red flag. This isn't an aggressive reserve, it's a defensive one.

baybal2 9y ago

Back in my college years, the standard procedure was to have multiple accounts. Paypal guys can easily close/freeze like 10 out of 20 accs after first chargeback dispute, but to leave remaining 10 even when they were listed on the same webpage. I thank their lazyness

JoeAltmaier 9y ago

Lots of complaints about receiving money from a stolen credit card, and surprise surprise Paypal takes the money back. What, they should eat the cost of cheaters? Why? They should use their resources to get your goods back? Why? Selling stuff mail-order is risky; you get cheated sometimes. Paypal is not going to fix that for you.

petraeus 9y ago

Are we talking paypal or payflow? Because 15k in fees is virtually nothing.