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You would think so, and that was their original business plan — just make money off the float. Instead they ended up charging fees (30¢ + %3) to get to profitab

• tedunangst 16y ago
  I don't think the original business plan included credit card payments. You only ever put "real" money into your account, and in order to use the service you basically had to keep enough in there for them to float it. Adding credit card payments changed that. Notice that paypal still doesn't charge fees for payments that come straight from a bank account.
  • blasdel 16y ago
    In almost all circumstances, the recipient of a Paypal payment gets the 30¢ + %n cut taken out, even if the money came directly from a bank account. Paypal is also set up to avoid making credit card transactions at all costs — you need one to sign up (as effectively overdraft protection), but payments always debit from the bank account first. If you have a pro account and embed/link it to customers, they can have the option to pay directly with a credit card, but only if they don't have a paypal.com cookie. There is only one way to reliably avoid the fees — you have to explicitly make the payment as an 'eCheck' which only takes out the 30¢, but Paypal will take at least a week to clear the funds.