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Paypal is a long-time client of my consulting firm, and several of their trust and security people are good friends. They are not stupid or malicious. Unlike th

by secalex 14y ago

Paypal is a long-time client of my consulting firm, and several of their trust and security people are good friends. They are not stupid or malicious. Unlike the author, they are cognizant of a basic truth about the Internet: In any situation involving money, every loophole or mechanism for scamming people will eventually be discovered and then exploited to an extent you never believed possible. Just as the Internet has massively changed the basic economics of almost every industry, it has greatly reduced the risk and costs of widespread fraud to a level that would make Charles Ponzi cry with joy into his spaghetti. There are teams of extremely intelligent and motivated people who spend their entire working careers figuring out ways to rip off Paypal (and Amazon, eBay, Google, Baidu, Bitcoin merchants, etc...) If a top tier company that deals with money on the Internet is problematic for a certain transaction, then you can be sure that is due to a real problem in the past that resembles that transaction. Pydanny believes that Paypal's actions are without basis, so he has clearly identified a market inefficiency that is ripe for "disruption". I think pydanny should take this opportunity to pitch his payments startup, PyPal, to pg and several other top-tier angels/VCs. Make sure to include a slide on fraud and loss prevention, and clearly outline the policy that will differentiate you from Paypal: "The developer community is critical for the success of PyPal. In a situation where a PyPal account identified only by a Yahoo email address and with limited transaction history receives hundreds of thousands of dollars in deposits for a service that will not be delivered for months, we will not freeze that account under any circumstances. Especially if they self-identify as a Python developer." Let me know how the pitch meetings go.

triplesec 14y ago
This is the best counterargument I've seen, and you're right, professional fraud is a huge problem. However, it's trivial for such a huge company to be a LOT better at z. customer service and b. dealing with highly-publicised and repeated problems for entirely public and transparent small-medium sized events. They will lose their monopoly. It's up to them how much they lose.
derefr 14y ago
At its heart, though, this isn't a service problem; it's a customer service and UX problem. Imagine that instead of the current Paypal interface, you had the following: > Instead of having one email address to accept all payments, you created a new sub-account for each event/product/other "stream of payments" that you want to send/receive. > Creating a "receive payments" sub-account pops up a wizard, that asks you what these payments are expected to be relating to--a product you sell, a subscription service, an event, donations, etc. > If you pick "one-time event"--the fraud department is called down to verify you and your business up-front. It all gets explained in the interface, your sub-account just will be in a "verifying" state for a few days/weeks, you'll get phone calls and have to submit paperwork to make it "active." Meanwhile, the rest of your account continues to work and none of your other payments get frozen. > This is on top of the fraud detection that already happens. If you suddenly receive $50k, no matter what the sub-account said it was for, then sure, pause that sub-account and have the fraud guys take a look. But if they pull up the account and the payment pattern exactly matches what they themselves already OKed you to do up-front--then turn right around and unpause it. ... Now, this all already happens with Paypal! Big corporations know what to do to make Paypal work like this--create a new Paypal account for each venture, get Paypal on the phone yourself and submit all the paperwork and get them to OK it before you declare it safe to start using that account, etc. But none of this is obvious to the average small-business owner who may have never used an online payment system before. They just use one account for everything, get popular for whatever reason, accept a bunch of payments or donations all at once, and get their entire funding stream suddenly frozen while Paypal does due diligence that should have happened at the beginning of the process, not right when the money is needed most.

by secalex 14y ago

triplesec 14y ago

This is the best counterargument I've seen, and you're right, professional fraud is a huge problem. However, it's trivial for such a huge company to be a LOT better at z. customer service and b. dealing with highly-publicised and repeated problems for entirely public and transparent small-medium sized events. They will lose their monopoly. It's up to them how much they lose.

derefr 14y ago

At its heart, though, this isn't a service problem; it's a customer service and UX problem. Imagine that instead of the current Paypal interface, you had the following: > Instead of having one email address to accept all payments, you created a new sub-account for each event/product/other "stream of payments" that you want to send/receive. > Creating a "receive payments" sub-account pops up a wizard, that asks you what these payments are expected to be relating to--a product you sell, a subscription service, an event, donations, etc. > If you pick "one-time event"--the fraud department is called down to verify you and your business up-front. It all gets explained in the interface, your sub-account just will be in a "verifying" state for a few days/weeks, you'll get phone calls and have to submit paperwork to make it "active." Meanwhile, the rest of your account continues to work and none of your other payments get frozen. > This is on top of the fraud detection that already happens. If you suddenly receive $50k, no matter what the sub-account said it was for, then sure, pause that sub-account and have the fraud guys take a look. But if they pull up the account and the payment pattern exactly matches what they themselves already OKed you to do up-front--then turn right around and unpause it. ... Now, this all already happens with Paypal! Big corporations know what to do to make Paypal work like this--create a new Paypal account for each venture, get Paypal on the phone yourself and submit all the paperwork and get them to OK it before you declare it safe to start using that account, etc. But none of this is obvious to the average small-business owner who may have never used an online payment system before. They just use one account for everything, get popular for whatever reason, accept a bunch of payments or donations all at once, and get their entire funding stream suddenly frozen while Paypal does due diligence that should have happened at the beginning of the process, not right when the money is needed most.