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Why I am always on the lookout for a PayPal alternative

144 points by yashg 13y ago

dcc1 13y ago
Whats the complaining about for fucks sake! Our company had 7000 euro frozen for 6 months while those skullheads were deciding whether to give us our money and not telling us why they are doing this Then they proceeded to close my personal account simply because I was the company director Thats for a 6-7 year old or so hosting company that has always been in profit Maybe more Indians like the above guy start using bitcoin, the world would be a fucking better place without Paypal
- aneth4 13y ago
  I guess you won't complain when I cut off one of your arms, since some other guy lost all four limbs in a car accident... Unfortunately, even if he accepted bitcoin, probably less than a tenth of a percent of customers would pay with bitcoin. I agree though, that would be better.
digitalengineer 13y ago
Why does PayPal have such enormous power? What's stopping other initiatives from getting enough traction?
- patio11 13y ago
  Essentially, because Paypal has the best anti-fraud measures in the world, by a factor of lots. Every payment processor in the world is in a four way footrace: their opponents are organized crime, individual scammers, and their local government (who will want to shut them down to prevent scams and moneylaundering). The prize for second place is your business imploding.
- lenazegher 13y ago
  > Why does PayPal have such enormous power? What's stopping other initiatives from getting enough traction? They have a huge amount of inertia because the average guy of the street has heard of them and can trust them to some degree. Trying to get people to sign up with a new, unknown payment processor during checkout will have a strong negative effect on your conversion rates.
  - digitalengineer 13y ago
    Sounds like a trust-issue. Perhaps that's it? Startups often fee they don't have do spend money on marketing. But a trust-issue is a good problem to have, branding can take care of that. First thing to do is convert 'trust -> faith & confidence'. "...there is also growing evidence that increasing numbers of people today are unwilling to engage in social or economic contracts based on trust. Globalization has arguably contributed to a loss of social connectedness in many developed and undeveloped nations by disrupting traditional employment patterns, and people who have seen their social networks disrupted may be reluctant to trust others. Meanwhile the traditional family has been under assault by other social changes, and young people may find it difficult to even learn to trust. For many people, relationships based on faith or confidence may feel more comfortable than those based on trust. Source (2005): http://www.brandchannel.com/features_effect.asp?pf_id=263 http://www.brandchannel.com/features_effect.asp?pf_id=263
- davidw 13y ago
  http://en.wikipedia.org/wiki/Network_effect http://en.wikipedia.org/wiki/Network_effect
- mtgx 13y ago
  Google blew it with Checkout a long time ago, and they mostly gave up on it until a year or so ago when they launched Wallet. But they wasted 5 years on by not even moving the needle in the payment processing market. Not having Checkout/Wallet as a popular payment system has also been (and still is) a major obstacle in getting people to buy apps and content from the Play Store. If Checkout accounts were as popular as iTunes or Amazon accounts at least, things would've gone a lot more smoothly, and I'm sure more merchants would've preferred it over Paypal, too.
  - digitalengineer 13y ago
    Agreed. I'm sure people would trust/have faith in Google to do 'purchase and checkout' right. No idea why they can't seem to get it right. Even if it was just for their Play Store...
- markokocic 13y ago
  Because PayPal is the only one that actually works in 150+ countries worldwide. No service offering US or US+CA+UK only service could compete with PayPal effectively, even if it were 1000 times better in technical, UX or business terms, because something that works with a lot of pain is still infinitely better than someone that doesn't support your country.
- yashg 13y ago
  Someone needs to ask this question to the likes of Stripe. Why is their fabulous service limited only to US/UK? Is it laws? Is it fraud? What prevents them from extending their service to other countries?
- smackfu 13y ago
  Mainly because the "simple" act of a user in one country transferring money to a user in another country, where both users deal in their native currency, is incredibly complicated. Currency conversions, banking laws, high fraud risk, etc.
enrmarc 13y ago
Does anyone know a good alternative to PayPal?
- jeltz 13y ago
  Depends on which market you target. In Russia and some of the other former soviet countries there is WebMoney which has low fees (0.8% for transactions, unknown for withdrawals from WebMoney) and as far as I know does not screw over its customers as much. In Sweden there is Klarna for letting ordinary people pay with invoice. In many countries there are options where you can use your internet bank to pay. And if it is credit card payments you wish to receive it is worth looking into a getting an account at a payment processor.
coob 13y ago
Does anyone have a good background on why PayPal is not subject to the same regulations as banks? Is it because they don't lend?
- lambada 13y ago
  In the EU they are regulated as a (Luxembourg) bank. I assume you're talking about in the US?
- nolok 13y ago
  Paypal is a bank in the EU
- petercooper 13y ago
  In the US, it's supposedly because they don't accept and hold deposits. That is, you can't give PayPal $1m of your money to hold, you can only use it to make business transactions. The FDIC also justified this in a hearing on the matter by saying: "PayPal does not physically handle or hold funds placed into the PayPal service"
ppradhan 13y ago
not exactly a paypal alternative but if more devs outside the US could use reasonable companies like stripe, braintree etc for CC processing we would. until good CC processing companies go worldwide, what are the choices? just an idea, but I wonder if it is legally possible for an american company to provide the services of a payment collector on behalf of non-US devs. people could integrate stripe's API to pay to this company and they could handle wiring money worldwide for a small reasonable fee. Even in countries like Australia CC processing is expensive and potentially restrictive to small startups and devs. Some kind of company in the US that takes payment on your behalf and wires it worldwide with reasonable charges would be a boon to countless devs and startups all over the world. That or bitcoin takes off and everyone just starts using it. Until then, Paypal is your payment buddy albeit a dodgy one that rips you off every chance it gets. Thus their immense power. EDIT: Also worth pointing out that the guy above is being given a hard time by his country's laws and it's banking system - not just Paypal.
drmr 13y ago
Perhaps offer a variety of payment options to your customers and add a small fee to the methods that give you problems (like PayPal). This will give feed-back to the customers about the convenience of these payment options and will give them an incentive to use a different method. (people love discounts)
RyanZAG 13y ago
Can't really see how this is Paypal's fault directly - this is just Paypal bowing to regulations - and if they didn't, they'd be in serious trouble. Chargebacks are a requirement by law. No keeping money out of a bank in India is Indian law. The two of these terrible laws fit together to create an awful experience, I agree, but the solution is to fix the laws. Any competitor to Paypal would be forced to do the exact same thing in India.
- n3rdy 13y ago
  He isn't complaining about the chargeback policy. He's complaining that paypal double dips on the currency conversion, even if the money never reaches his bank account. Paypal could just send the USD directly to his bank, and the bank would convert the currency before crediting his account, so it is an unnecessary burden and loss of money for him.
- kamaal 13y ago
  >>No keeping money out of a bank in India is Indian law. And for a very good reason. Tax evasion is very common in India. In fact the most generally know thing is, if taxes are not deducted at the source of the transaction they won't be paid ever. Big money people are a little different, they are small in number to monitor and their transactions can be traced out easily. But small to medium scale traders and business hardly pay taxes. Some even pride in doing so. The best case I've seen among these guys is paying some thing like paying 5% of the taxes they are supposed to pay. I've asked a few people why they don't pay, and the answer comes simple. If they pay the right taxes once, given the business growth they have to pay a little more next year. So they use every trick in the book to pay as little or nothing at all. Now if they are allowed to freely park money in places where it can't be traced easily(like these) they will have a field day. May be if citizens show a little responsibility and do what they are honestly supposed they will get laws that trust each other. Until then if the government has policies to curb fraud you shouldn't look too surprised. After all, laws are optimized for the common case.
  - markokocic 13y ago
    Just to be clear, paying little or no taxes is only government fail to collect them. It has nothing to do with responsibilities. There is no law in the world that forces anyone to maximize tax that it has to pay, so everyone has a right to pay as little tax as legally allowed.
saurik 13y ago
In case anyone is wondering where the numbers come from, PayPal charges a 4% overhead to convert money to rupees on demand as part of an immediate transaction (such as a withdrawal). When the money was returned, he was given the more lenient "convert balance between currencies" conversion rate of 2.5%. I point this out, as the author of this article seems to equate them as PayPal's "pathetic conversion rate". The chargeback, of course, is a cost of doing business: if anything, PayPal's chargeback rates are actually quite low (as they have such an extensive system for handling disputes internally) and as a seller of pure digital goods I've been amazed that I often win true chargebacks that are marked "unauthorized charge" (which really shouldn't happen: its really just buyer fraud) as PayPal argues the case on my behalf and can demonstrate "the user really paid for this". What sucks, of course, is that the user got double-whammied on the currency conversion, but I really hesitate to blame PayPal for this... if anything, I blame the Indian banking system, which has decided to put in place the laws that state you aren't allowed to hold balances with your credit card processor; the result of this is that your balance in India has to be forced out of your PayPal account every day, even though that money could be charged-back at any time. As for the money being credited back the first time and not the second, that's quite common: he didn't realize that fee existed the first time, so the customer support people there "let him slide" and credited everything back; however, the second time he really should have known that was going to happen... no one, to be clear, is forcing him to use PayPal; in fact, his country really doesn't want him to be using PayPal, and he's doing so anyway. If he were in a country that didn't have laws making it difficult to use PayPal, he wouldn't be having such a difficult time doing so. Thankfully, this person does seem to understand that RBI is at least somewhat of a problem here: he even wrote an even angrier message about RBI making it nearly impossible for him to buy things from people online using PayPal. http://www.yash.info/blog/index.php/entrepreneurship/reserve-bank-of-india-and-its-senseless-policies http://www.yash.info/blog/index.php/entrepreneurship/reserve... What I find ironic about this other article is that in this piece on PayPal he's angry that he can't just let his Indian bank handle things for him, but in his other article he's slamming the Indian banks and wishing he could use PayPal. > Every time I spend $$ for something where I could have used my PayPal balance I have to give a cut to some worthless Indian bank for using the credit card! To be clear: if he were in some other country, he'd be allowed to store a balance at PayPal in relation to his outstanding chargeback risk. Additionally, he'd be able to store his balances in his native currency. If he wanted to convert the currencies back/forth, he'd be able to do so on his own schedule and be able to do it to his outstanding balance (as opposed to while immediately moving funds), giving the flexibility to get the 2.5% rate (which really isn't that bad) for all conversions. In fact, he'd probably not have to do the conversions at all, as he could sell the software in his native currency and have the buyers do the conversion from whatever currency they have, rather than doing it from dollars on his end. PayPal really does go to great lengths to make this stuff work and generally work well, but everyone is being screwed here by RBI's policies (which, to be clear, might have some underlying good reason I just don't understand because I'm not privy to India's political requirements): I mean, let's put it this way... he's still using PayPal, and yet he hates it that much? PayPal's not doing that badly here...
jusben1369 13y ago
What would you do if PayPal wasn't in India?
- kalleboo 13y ago
  I imagine he'd have to use a domestic merchant account, and post his prices in INR instead of USD. He'd lose customers who don't understand non-USD prices or think it looks scammy.
  - yashg 13y ago
    Yes. When I say the price is $29, people expect to see $29 on their credit card statement. $28.xxx will make them suspicious. There's a reason why Apple rounds prices on App store to nearest .99 in local currencies so people pay exactly what they see.
superflit 13y ago
Easier solution: Have a US based paypal account. Yes it works way better, it is not a safe haven from chargeback but the service and US laws are more stable. More stable = the laws does not change so much as the non-english countries. Maybe it is the common law, I do not know. But there is a reason the whole bank system power is in common law powers.
- arbuge 13y ago
  Wouldn't you need a US bank account & US taxpayer ID to make that happen? Good luck getting those from India in the wake of the Patriot Act, etc.
  - yashg 13y ago
    Not that difficult. People are already doing it and I too am seriously considering it. http://blog.freshdesk.com/how-to-incorporate-a-us-corporation-from-outs/#.UYjmScqT7cO http://blog.freshdesk.com/how-to-incorporate-a-us-corporatio...
  - superflit 13y ago
    If you REALLY understand what the Patriot Act is about... You will see it is easy and doable. No need to break the rules, it is Common Law, follow the rule and they WILL have to give an account.
codeduck 13y ago
I work in currency conversion, and honestly the conversion rates here do not look bad for an ad-hoc, small value transaction. The spread between buy and sell rates is how traders make profits. If there was no spread, or the spread was small, traders would need to take a proportion of the conversion as a fee. Some banks and third parties do this - they offer a really wide spread, and then take a proportion over and above that. Also, Paypal may not itself be interfacing with the currency markets, but may rather be using a third party intermediary to perform the actual currency trades.
- yashg 13y ago
  I have $200 of yours with me. I initiate the process of giving the $200 to you, like I take out my wallet. Then I stop before I actually give the money to you, I put my wallet back and then I tell you "Hey you know what now I owe you only $180!" This is what it looks like - http://i.imgur.com/GIaP5O2.png http://i.imgur.com/GIaP5O2.png Does that look right?
  - codeduck 13y ago
    Paypal has $200 of mine with them. According to the rules governing financial institutions in the country in which I reside and from which I have registered for their services, ther are required (by law, as a condition of their continued right to offer a payment service in that country) to pay that $200 into my account by close of business today. My account is for Rupees, not USD. Because of the way the Banking system works, that currency must be exchanged so that it can reflect in my account. This exchange is performed at the current market rate, plus some surcharge of fees levied by Paypal's liquidity provider to perform the currency conversion, and by Paypal in order to cover the SWIFT interbank charges plus any backoffice administration they need to do to verify my identity. There are additional verifications they need to perform on the US side; for e.g. that my bank account is not on a Interpol, NSA, FBI, CIA or INS watch list. That money is then sent, likely via the SWIFT interbank network, which levies a charge. Those funds arrive at my bank, where my bank levies a charge. The money reflects in my account, and I see that 'Paypal' have given me a terrible exchange rate. They haven't. They've likely given me a reasonable rate, because it is not in their interests to charge punitive exchange rates as it will drive customers to competitors. My point is that there is a whole different level of processing and infrastructure hidden behind Paypal's facade that you are not privy to; all of it has people performing tasks to move the currency from a US account to a Indian account, and all of that requires a modicum of human oversight because of incredibly strict financial fraud controls. Trust me when I say that the small markup Paypal is charging you is nothing compared to the level of bureaucracy you would run into were you to try to perform the above exchange manually.
stblack 13y ago
@yashg FYI your blog prevents zooming on tablets and small devices; could not read.
- yashg 13y ago
  Yeah, need to change the theme...
  - stblack 13y ago
    Just remove the < meta name="viewport" ... > line.
csomar 13y ago
So, I'm an asshole if I purchase your product and decide later to do a chargeback (you don't even have a chargeback policy or a policy at all). Apparently, you are not the nicest person to deal with on earth, and you are complaining about PayPal because your country laws are complicated? Also, exchange rates are indicative. There is always a middle men when you are exchaging currencies, and he makes money by charging that rate.
- jusben1369 13y ago
  I wonder if you're confusing refund for chargeback. Chargebacks are often used by people who a) use the product for a while, b) decide they want their money back, c) know the vendor won't return their money as there's no real reason to so d) call up their credit card company instead, dispute the charge, get their money back and see the vendor lose that sale + get hit with a $25 chargeback fee.
  - itsybitsycoder 13y ago
    That's a bit one-sided, don't you think? They're also often used when companies fail to provide the product/service that was paid for, or when the charge was unauthorized. That's what it's there for. The author doesn't say why the chargeback was made so I'm not sure why we're assuming it was fraudulent. The software site promises a lot of features and it's entirely possible that the buyer required one that didn't work as advertised. It's also possible that the credit card used was stolen, which would make the original buyer, not the person doing the chargeback, the "asshole".
lgarciaac 13y ago
dont use it ... end
Jhsto 13y ago
Today I received an email to dispute my authority by sending in them a proof of my indentity, address and statement of my bank or credit card. What I found rather obnoxious was that they had records of my credit cards which I had deleted from their system years ago. The email clearly listed all the last four digits of all credit cards I had ever had on them, even though I currently have no more than one linked to my account. Top of that my account is linked to a profile of some Chinese personel, even though I'm Finnish, leaves me without words to say.
utunga 13y ago
It's this kind of bullshit from paypal and the banks generally that is providing wind beneath the wings of alternative payment systems which charge the true (much lower) cost of international money transfer... Great! Bring on a bitcoin future.
philhippus 13y ago
Enough with this nonsense. Take the plunge and start using Bitcoin. Whatever risks and uncertainty Bitcoin may have for vendors is miniscule compared to the daily fleecing handed down by the likes of Paypal.
skadamat 13y ago
Venmo.com that is all
- daxelrod 13y ago
  Venmo is doing what PayPal started off doing: mobile payments between users. PayPal, in this lament, however, is acting as a payment processor for someone selling something. Venmo doesn't seem to do that.
BuddhaSource 13y ago
We used PayPay for our product http://justmigrate.com http://justmigrate.com It is a night mare if someone asks for refund after auto withdrawal and never change PAN details unless you are okay with 7 days downtime. You missed another important point, we also got few users from India and thanks to RBI regulations using paypal we cannot accept payments from another Indian. Well just offered them free migration. Also if you are targeting consumers in US they are little more confident paying with PayPal vs asking for credit card details. This is an important point, always keep PayPal as an alternate when accepting payments from US market.

144 points by yashg 13y ago

dcc1 13y ago

Whats the complaining about for fucks sake! Our company had 7000 euro frozen for 6 months while those skullheads were deciding whether to give us our money and not telling us why they are doing this Then they proceeded to close my personal account simply because I was the company director Thats for a 6-7 year old or so hosting company that has always been in profit Maybe more Indians like the above guy start using bitcoin, the world would be a fucking better place without Paypal

aneth4 13y ago
I guess you won't complain when I cut off one of your arms, since some other guy lost all four limbs in a car accident... Unfortunately, even if he accepted bitcoin, probably less than a tenth of a percent of customers would pay with bitcoin. I agree though, that would be better.

digitalengineer 13y ago

Why does PayPal have such enormous power? What's stopping other initiatives from getting enough traction?

patio11 13y ago
Essentially, because Paypal has the best anti-fraud measures in the world, by a factor of lots. Every payment processor in the world is in a four way footrace: their opponents are organized crime, individual scammers, and their local government (who will want to shut them down to prevent scams and moneylaundering). The prize for second place is your business imploding.
lenazegher 13y ago
> Why does PayPal have such enormous power? What's stopping other initiatives from getting enough traction? They have a huge amount of inertia because the average guy of the street has heard of them and can trust them to some degree. Trying to get people to sign up with a new, unknown payment processor during checkout will have a strong negative effect on your conversion rates.
- digitalengineer 13y ago
  Sounds like a trust-issue. Perhaps that's it? Startups often fee they don't have do spend money on marketing. But a trust-issue is a good problem to have, branding can take care of that. First thing to do is convert 'trust -> faith & confidence'. "...there is also growing evidence that increasing numbers of people today are unwilling to engage in social or economic contracts based on trust. Globalization has arguably contributed to a loss of social connectedness in many developed and undeveloped nations by disrupting traditional employment patterns, and people who have seen their social networks disrupted may be reluctant to trust others. Meanwhile the traditional family has been under assault by other social changes, and young people may find it difficult to even learn to trust. For many people, relationships based on faith or confidence may feel more comfortable than those based on trust. Source (2005): http://www.brandchannel.com/features_effect.asp?pf_id=263 http://www.brandchannel.com/features_effect.asp?pf_id=263
davidw 13y ago
http://en.wikipedia.org/wiki/Network_effect http://en.wikipedia.org/wiki/Network_effect
mtgx 13y ago
Google blew it with Checkout a long time ago, and they mostly gave up on it until a year or so ago when they launched Wallet. But they wasted 5 years on by not even moving the needle in the payment processing market. Not having Checkout/Wallet as a popular payment system has also been (and still is) a major obstacle in getting people to buy apps and content from the Play Store. If Checkout accounts were as popular as iTunes or Amazon accounts at least, things would've gone a lot more smoothly, and I'm sure more merchants would've preferred it over Paypal, too.
- digitalengineer 13y ago
  Agreed. I'm sure people would trust/have faith in Google to do 'purchase and checkout' right. No idea why they can't seem to get it right. Even if it was just for their Play Store...
markokocic 13y ago
Because PayPal is the only one that actually works in 150+ countries worldwide. No service offering US or US+CA+UK only service could compete with PayPal effectively, even if it were 1000 times better in technical, UX or business terms, because something that works with a lot of pain is still infinitely better than someone that doesn't support your country.
yashg 13y ago
Someone needs to ask this question to the likes of Stripe. Why is their fabulous service limited only to US/UK? Is it laws? Is it fraud? What prevents them from extending their service to other countries?
smackfu 13y ago
Mainly because the "simple" act of a user in one country transferring money to a user in another country, where both users deal in their native currency, is incredibly complicated. Currency conversions, banking laws, high fraud risk, etc.

enrmarc 13y ago

Does anyone know a good alternative to PayPal?

jeltz 13y ago
Depends on which market you target. In Russia and some of the other former soviet countries there is WebMoney which has low fees (0.8% for transactions, unknown for withdrawals from WebMoney) and as far as I know does not screw over its customers as much. In Sweden there is Klarna for letting ordinary people pay with invoice. In many countries there are options where you can use your internet bank to pay. And if it is credit card payments you wish to receive it is worth looking into a getting an account at a payment processor.

coob 13y ago

Does anyone have a good background on why PayPal is not subject to the same regulations as banks? Is it because they don't lend?

lambada 13y ago
In the EU they are regulated as a (Luxembourg) bank. I assume you're talking about in the US?
nolok 13y ago
Paypal is a bank in the EU
petercooper 13y ago
In the US, it's supposedly because they don't accept and hold deposits. That is, you can't give PayPal $1m of your money to hold, you can only use it to make business transactions. The FDIC also justified this in a hearing on the matter by saying: "PayPal does not physically handle or hold funds placed into the PayPal service"

ppradhan 13y ago

not exactly a paypal alternative but if more devs outside the US could use reasonable companies like stripe, braintree etc for CC processing we would. until good CC processing companies go worldwide, what are the choices? just an idea, but I wonder if it is legally possible for an american company to provide the services of a payment collector on behalf of non-US devs. people could integrate stripe's API to pay to this company and they could handle wiring money worldwide for a small reasonable fee. Even in countries like Australia CC processing is expensive and potentially restrictive to small startups and devs. Some kind of company in the US that takes payment on your behalf and wires it worldwide with reasonable charges would be a boon to countless devs and startups all over the world. That or bitcoin takes off and everyone just starts using it. Until then, Paypal is your payment buddy albeit a dodgy one that rips you off every chance it gets. Thus their immense power. EDIT: Also worth pointing out that the guy above is being given a hard time by his country's laws and it's banking system - not just Paypal.

drmr 13y ago

Perhaps offer a variety of payment options to your customers and add a small fee to the methods that give you problems (like PayPal). This will give feed-back to the customers about the convenience of these payment options and will give them an incentive to use a different method. (people love discounts)

RyanZAG 13y ago

Can't really see how this is Paypal's fault directly - this is just Paypal bowing to regulations - and if they didn't, they'd be in serious trouble. Chargebacks are a requirement by law. No keeping money out of a bank in India is Indian law. The two of these terrible laws fit together to create an awful experience, I agree, but the solution is to fix the laws. Any competitor to Paypal would be forced to do the exact same thing in India.

n3rdy 13y ago
He isn't complaining about the chargeback policy. He's complaining that paypal double dips on the currency conversion, even if the money never reaches his bank account. Paypal could just send the USD directly to his bank, and the bank would convert the currency before crediting his account, so it is an unnecessary burden and loss of money for him.
kamaal 13y ago
>>No keeping money out of a bank in India is Indian law. And for a very good reason. Tax evasion is very common in India. In fact the most generally know thing is, if taxes are not deducted at the source of the transaction they won't be paid ever. Big money people are a little different, they are small in number to monitor and their transactions can be traced out easily. But small to medium scale traders and business hardly pay taxes. Some even pride in doing so. The best case I've seen among these guys is paying some thing like paying 5% of the taxes they are supposed to pay. I've asked a few people why they don't pay, and the answer comes simple. If they pay the right taxes once, given the business growth they have to pay a little more next year. So they use every trick in the book to pay as little or nothing at all. Now if they are allowed to freely park money in places where it can't be traced easily(like these) they will have a field day. May be if citizens show a little responsibility and do what they are honestly supposed they will get laws that trust each other. Until then if the government has policies to curb fraud you shouldn't look too surprised. After all, laws are optimized for the common case.
- markokocic 13y ago
  Just to be clear, paying little or no taxes is only government fail to collect them. It has nothing to do with responsibilities. There is no law in the world that forces anyone to maximize tax that it has to pay, so everyone has a right to pay as little tax as legally allowed.

saurik 13y ago

In case anyone is wondering where the numbers come from, PayPal charges a 4% overhead to convert money to rupees on demand as part of an immediate transaction (such as a withdrawal). When the money was returned, he was given the more lenient "convert balance between currencies" conversion rate of 2.5%. I point this out, as the author of this article seems to equate them as PayPal's "pathetic conversion rate". The chargeback, of course, is a cost of doing business: if anything, PayPal's chargeback rates are actually quite low (as they have such an extensive system for handling disputes internally) and as a seller of pure digital goods I've been amazed that I often win true chargebacks that are marked "unauthorized charge" (which really shouldn't happen: its really just buyer fraud) as PayPal argues the case on my behalf and can demonstrate "the user really paid for this". What sucks, of course, is that the user got double-whammied on the currency conversion, but I really hesitate to blame PayPal for this... if anything, I blame the Indian banking system, which has decided to put in place the laws that state you aren't allowed to hold balances with your credit card processor; the result of this is that your balance in India has to be forced out of your PayPal account every day, even though that money could be charged-back at any time. As for the money being credited back the first time and not the second, that's quite common: he didn't realize that fee existed the first time, so the customer support people there "let him slide" and credited everything back; however, the second time he really should have known that was going to happen... no one, to be clear, is forcing him to use PayPal; in fact, his country really doesn't want him to be using PayPal, and he's doing so anyway. If he were in a country that didn't have laws making it difficult to use PayPal, he wouldn't be having such a difficult time doing so. Thankfully, this person does seem to understand that RBI is at least somewhat of a problem here: he even wrote an even angrier message about RBI making it nearly impossible for him to buy things from people online using PayPal. http://www.yash.info/blog/index.php/entrepreneurship/reserve-bank-of-india-and-its-senseless-policies http://www.yash.info/blog/index.php/entrepreneurship/reserve... What I find ironic about this other article is that in this piece on PayPal he's angry that he can't just let his Indian bank handle things for him, but in his other article he's slamming the Indian banks and wishing he could use PayPal. > Every time I spend $$ for something where I could have used my PayPal balance I have to give a cut to some worthless Indian bank for using the credit card! To be clear: if he were in some other country, he'd be allowed to store a balance at PayPal in relation to his outstanding chargeback risk. Additionally, he'd be able to store his balances in his native currency. If he wanted to convert the currencies back/forth, he'd be able to do so on his own schedule and be able to do it to his outstanding balance (as opposed to while immediately moving funds), giving the flexibility to get the 2.5% rate (which really isn't that bad) for all conversions. In fact, he'd probably not have to do the conversions at all, as he could sell the software in his native currency and have the buyers do the conversion from whatever currency they have, rather than doing it from dollars on his end. PayPal really does go to great lengths to make this stuff work and generally work well, but everyone is being screwed here by RBI's policies (which, to be clear, might have some underlying good reason I just don't understand because I'm not privy to India's political requirements): I mean, let's put it this way... he's still using PayPal, and yet he hates it that much? PayPal's not doing that badly here...

jusben1369 13y ago

What would you do if PayPal wasn't in India?

kalleboo 13y ago
I imagine he'd have to use a domestic merchant account, and post his prices in INR instead of USD. He'd lose customers who don't understand non-USD prices or think it looks scammy.
- yashg 13y ago
  Yes. When I say the price is $29, people expect to see $29 on their credit card statement. $28.xxx will make them suspicious. There's a reason why Apple rounds prices on App store to nearest .99 in local currencies so people pay exactly what they see.

superflit 13y ago

Easier solution: Have a US based paypal account. Yes it works way better, it is not a safe haven from chargeback but the service and US laws are more stable. More stable = the laws does not change so much as the non-english countries. Maybe it is the common law, I do not know. But there is a reason the whole bank system power is in common law powers.

arbuge 13y ago
Wouldn't you need a US bank account & US taxpayer ID to make that happen? Good luck getting those from India in the wake of the Patriot Act, etc.
- yashg 13y ago
  Not that difficult. People are already doing it and I too am seriously considering it. http://blog.freshdesk.com/how-to-incorporate-a-us-corporation-from-outs/#.UYjmScqT7cO http://blog.freshdesk.com/how-to-incorporate-a-us-corporatio...
- superflit 13y ago
  If you REALLY understand what the Patriot Act is about... You will see it is easy and doable. No need to break the rules, it is Common Law, follow the rule and they WILL have to give an account.

codeduck 13y ago

I work in currency conversion, and honestly the conversion rates here do not look bad for an ad-hoc, small value transaction. The spread between buy and sell rates is how traders make profits. If there was no spread, or the spread was small, traders would need to take a proportion of the conversion as a fee. Some banks and third parties do this - they offer a really wide spread, and then take a proportion over and above that. Also, Paypal may not itself be interfacing with the currency markets, but may rather be using a third party intermediary to perform the actual currency trades.

yashg 13y ago
I have $200 of yours with me. I initiate the process of giving the $200 to you, like I take out my wallet. Then I stop before I actually give the money to you, I put my wallet back and then I tell you "Hey you know what now I owe you only $180!" This is what it looks like - http://i.imgur.com/GIaP5O2.png http://i.imgur.com/GIaP5O2.png Does that look right?
- codeduck 13y ago
  Paypal has $200 of mine with them. According to the rules governing financial institutions in the country in which I reside and from which I have registered for their services, ther are required (by law, as a condition of their continued right to offer a payment service in that country) to pay that $200 into my account by close of business today. My account is for Rupees, not USD. Because of the way the Banking system works, that currency must be exchanged so that it can reflect in my account. This exchange is performed at the current market rate, plus some surcharge of fees levied by Paypal's liquidity provider to perform the currency conversion, and by Paypal in order to cover the SWIFT interbank charges plus any backoffice administration they need to do to verify my identity. There are additional verifications they need to perform on the US side; for e.g. that my bank account is not on a Interpol, NSA, FBI, CIA or INS watch list. That money is then sent, likely via the SWIFT interbank network, which levies a charge. Those funds arrive at my bank, where my bank levies a charge. The money reflects in my account, and I see that 'Paypal' have given me a terrible exchange rate. They haven't. They've likely given me a reasonable rate, because it is not in their interests to charge punitive exchange rates as it will drive customers to competitors. My point is that there is a whole different level of processing and infrastructure hidden behind Paypal's facade that you are not privy to; all of it has people performing tasks to move the currency from a US account to a Indian account, and all of that requires a modicum of human oversight because of incredibly strict financial fraud controls. Trust me when I say that the small markup Paypal is charging you is nothing compared to the level of bureaucracy you would run into were you to try to perform the above exchange manually.

stblack 13y ago

@yashg FYI your blog prevents zooming on tablets and small devices; could not read.

yashg 13y ago
Yeah, need to change the theme...
- stblack 13y ago
  Just remove the < meta name="viewport" ... > line.

csomar 13y ago

So, I'm an asshole if I purchase your product and decide later to do a chargeback (you don't even have a chargeback policy or a policy at all). Apparently, you are not the nicest person to deal with on earth, and you are complaining about PayPal because your country laws are complicated? Also, exchange rates are indicative. There is always a middle men when you are exchaging currencies, and he makes money by charging that rate.

jusben1369 13y ago
I wonder if you're confusing refund for chargeback. Chargebacks are often used by people who a) use the product for a while, b) decide they want their money back, c) know the vendor won't return their money as there's no real reason to so d) call up their credit card company instead, dispute the charge, get their money back and see the vendor lose that sale + get hit with a $25 chargeback fee.
- itsybitsycoder 13y ago
  That's a bit one-sided, don't you think? They're also often used when companies fail to provide the product/service that was paid for, or when the charge was unauthorized. That's what it's there for. The author doesn't say why the chargeback was made so I'm not sure why we're assuming it was fraudulent. The software site promises a lot of features and it's entirely possible that the buyer required one that didn't work as advertised. It's also possible that the credit card used was stolen, which would make the original buyer, not the person doing the chargeback, the "asshole".

lgarciaac 13y ago

dont use it ... end

Jhsto 13y ago

Today I received an email to dispute my authority by sending in them a proof of my indentity, address and statement of my bank or credit card. What I found rather obnoxious was that they had records of my credit cards which I had deleted from their system years ago. The email clearly listed all the last four digits of all credit cards I had ever had on them, even though I currently have no more than one linked to my account. Top of that my account is linked to a profile of some Chinese personel, even though I'm Finnish, leaves me without words to say.

utunga 13y ago

It's this kind of bullshit from paypal and the banks generally that is providing wind beneath the wings of alternative payment systems which charge the true (much lower) cost of international money transfer... Great! Bring on a bitcoin future.

philhippus 13y ago

Enough with this nonsense. Take the plunge and start using Bitcoin. Whatever risks and uncertainty Bitcoin may have for vendors is miniscule compared to the daily fleecing handed down by the likes of Paypal.

skadamat 13y ago

Venmo.com that is all

daxelrod 13y ago
Venmo is doing what PayPal started off doing: mobile payments between users. PayPal, in this lament, however, is acting as a payment processor for someone selling something. Venmo doesn't seem to do that.

BuddhaSource 13y ago

We used PayPay for our product http://justmigrate.com http://justmigrate.com It is a night mare if someone asks for refund after auto withdrawal and never change PAN details unless you are okay with 7 days downtime. You missed another important point, we also got few users from India and thanks to RBI regulations using paypal we cannot accept payments from another Indian. Well just offered them free migration. Also if you are targeting consumers in US they are little more confident paying with PayPal vs asking for credit card details. This is an important point, always keep PayPal as an alternate when accepting payments from US market.