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Weekly reminder to not associate vital business / personal accounts with PayPal. They can't be trusted with your finances.

by sekai 4y ago

mysterydip 4y ago
What are the good alternatives for vital business/personal accounts?
- mikrotikker 4y ago
  In NZ we can transfer money willy nilly between different bank accounts. Hell even to aussie accoubts i dont think its too hard. Could start with getting that implemented.
  - eythian 4y ago
    This is normal in the SEPA zone too. Within some countries (at least the Netherlands) there are apps that make it easier, but all they're basically doing is putting the transfer behind a slightly more convenient link that doesn't require typing in an account number.
    - seppel 4y ago
      The problem with SEPA is that is does not work at night or over the weekend and even during normal business hours it might take a day for the money to arrive (depending on some specifics of the banks involved). This is fine for many use cases, but totally different from the paypal experience.
greggsy 4y ago
I’ve never thought about it until SVB collapse, but I wonder how they address the risk of a liquidity crisis? Do they hold assets other than their customer’s deposits? Are they even a bank?
- wongarsu 4y ago
  Their European branch, PayPal Luxemburg, has a European banking license. The US company maintains that they are not a bank. So it kind of depends on where you are, or which arm of PayPal we are talking about. I don't think they do any fractional reserve banking though (at least they didn't two decades ago), so there shouldn't be any liquidity risk. All dollars in deposits should be backed by real dollars.
- themoonisachees 4y ago
  Paypal has fought very hard not to be classed as a bank (which comes with regulations and certifications). As far as I know, paypal doesn't do fractional reserve banking (because it's not a bank and that would be illegal), it just collects a fee on the seller's side for each transaction, so everyone pulling out all of their money at once would probably not be that disastrous, supposedly they do have that money just sitting in an account. It would be disastrous to paypal as a business, and they would probably use fine print to keep that money, but out of greed, not out of lack of liquidity.
- cowl 4y ago
  Why would they have liquidity Crisis? Are you picturing Paypal customers holding in Paypal considerable Balances? 99% of the customers use it only as an Intermediary. Money goes in : Money-Fee goes out. Unless they are doing scetchy things in the meantime there is no risk of liquidity here. Maybe I'm mistaken and nowdays People are keeping huge Balances in Paypal but that has not been the case in the past afaik.
hot_gril 4y ago
This seems like a common thing across all payment processors, though. People know the pain of dealing with Stripe too, especially for C2C. Pretty sure government pressure is behind it all, with KYC being the tip of the iceberg.

Weekly reminder to not associate vital business / personal accounts with PayPal. They can't be trusted with your finances.

by sekai 4y ago

Weekly reminder to not associate vital business / personal accounts with PayPal. They can't be trusted with your finances.

mysterydip 4y ago

What are the good alternatives for vital business/personal accounts?

mikrotikker 4y ago
In NZ we can transfer money willy nilly between different bank accounts. Hell even to aussie accoubts i dont think its too hard. Could start with getting that implemented.
- eythian 4y ago
  This is normal in the SEPA zone too. Within some countries (at least the Netherlands) there are apps that make it easier, but all they're basically doing is putting the transfer behind a slightly more convenient link that doesn't require typing in an account number.
  - seppel 4y ago
    The problem with SEPA is that is does not work at night or over the weekend and even during normal business hours it might take a day for the money to arrive (depending on some specifics of the banks involved). This is fine for many use cases, but totally different from the paypal experience.

greggsy 4y ago

I’ve never thought about it until SVB collapse, but I wonder how they address the risk of a liquidity crisis? Do they hold assets other than their customer’s deposits? Are they even a bank?

wongarsu 4y ago
Their European branch, PayPal Luxemburg, has a European banking license. The US company maintains that they are not a bank. So it kind of depends on where you are, or which arm of PayPal we are talking about. I don't think they do any fractional reserve banking though (at least they didn't two decades ago), so there shouldn't be any liquidity risk. All dollars in deposits should be backed by real dollars.
themoonisachees 4y ago
Paypal has fought very hard not to be classed as a bank (which comes with regulations and certifications). As far as I know, paypal doesn't do fractional reserve banking (because it's not a bank and that would be illegal), it just collects a fee on the seller's side for each transaction, so everyone pulling out all of their money at once would probably not be that disastrous, supposedly they do have that money just sitting in an account. It would be disastrous to paypal as a business, and they would probably use fine print to keep that money, but out of greed, not out of lack of liquidity.
cowl 4y ago
Why would they have liquidity Crisis? Are you picturing Paypal customers holding in Paypal considerable Balances? 99% of the customers use it only as an Intermediary. Money goes in : Money-Fee goes out. Unless they are doing scetchy things in the meantime there is no risk of liquidity here. Maybe I'm mistaken and nowdays People are keeping huge Balances in Paypal but that has not been the case in the past afaik.

hot_gril 4y ago

This seems like a common thing across all payment processors, though. People know the pain of dealing with Stripe too, especially for C2C. Pretty sure government pressure is behind it all, with KYC being the tip of the iceberg.