4 ms·

Short-term Profit Taking vs. Long-term Value Creation: The Future of PayPal

38 points by nikunjk 13y ago

ForHackernews 13y ago
PayPal is so terrible. The sooner Stripe (or anyone) kills them, the better.
com2kid 13y ago
It is amusing to read an article proclaiming PayPal's advances into the mobile space. Stripe seems to dominate in this area. Card readers hooked up to iPhones and iPads are everywhere. Around the world a multitude of other mobile payment solutions have taken hold. PayPal? Well they have managed to ruin their reputation. Heck their entire customer experience is spammy and creepy, with constant requests to have direct access to my bank account. IMHO PayPal also lost the opportunity to become the micropayment processor on the web. It is funny that it is possible to do with technologies like dogecoin what PayPal disallows purely through its high fees.
- secabeen 13y ago
  It's not Paypal that's generating the high fees. That's the credit card processors. Paypal is happy to perform totally free payments for transactions that are funded by low-cost sources (bank accounts/ETFs and Paypal balances) and which need no fraud protection. The problem is that the credit card processors take 2+% of every transaction, and no company can succeed if they eat that cost. This is particularly so because saavy cardholders will engage in airline mileage and points arbitrage if you don't pass on that cost. Are any of the Paypal competitors offering services that don't include credit card fees, either on the merchants or the customers? Paypal is making those fees visible, but they're not imposing them.
  - toomuchtodo 13y ago
    > Paypal is happy to perform totally free payments for transactions that are funded by low-cost sources (bank accounts/ETFs and Paypal balances) and which need no fraud protection. Doesn't Paypal still take a fee if you pay for a commercial good or service and use your bank account? And its still the same as the CC processor fee? > Are any of the Paypal competitors offering services that don't include credit card fees, either on the merchants or the customers? Paypal is making those fees visible, but they're not imposing them. Dwolla, but they're in a grey area of sorts.
    - secabeen 13y ago
      Late response here, but you are correct that paypal always takes a fee for commercial transactions disclosed to paypal. Their argument would probably be that they require commercial transactions to have fraud protection. That said, there are areas where very small businesses use fee-free Paypal for commercial payments by disguising them as personal payments. (Used camera gear is where I've personally seen it)
- yuhong 13y ago
  I think this was why David Marcus was hired in the first place.
jotm 13y ago
Oh, God, a Visa-owned Paypal... They'd ruin it in less than a year. Paypal is the best option for small and medium size online transactions at the moment. Amazon, Google, Apple, and Square all want to own the payments space, and Paypal is still the only one that actually works worldwide.
- sdrothrock 13y ago
  > Paypal is still the only one that actually works worldwide. Speaking someone in Japan, it's pretty hard to effectively use Paypal here because it requires (requires!) a credit card. Also, nobody uses it here, so there's no point in jumping through the banking rigamarole to get a working Japanese Paypal account. I think Paypal never took off here because it's amazingly easy to just send someone (anyone) money very quickly from an ATM as long as you have an account number.
  - calbear81 13y ago
    Does PayPal require a credit card to use in Japan? It works fine with bank accounts and credit card is an option (with a fee).
    - sdrothrock 13y ago
      I could have sworn the last time I tried (I admit that this was half a decade ago) that I decided it was unusable because it required a credit card to do anything and I couldn't get one as a low-salaried foreigner on a short-term visa. I've been using my US PayPal account all this time -- which actually works better since everything I use it for is in the US.
IBM 13y ago
I find it amusing how VCs and other Silicon Valley types are rushing to the aid of one of their own now that a perceived interloper is around. Characterizing activist investors as "short-term" and "vultures" is the go-to card by management trying to fight off an activist. Carl Ichan is even easier to demonize. However, these claims don't stand up to scrutiny. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291577 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291577
- product50 13y ago
  I agree with you. Especially considering that Carl Icahn has such an excellent track record of building great companies in which he has invested for long term. Just read about Carl Icahn first before commenting.
  - IBM 13y ago
    Sure, the business he's built is an incredibly successful fund. From IEP's quarterly results: >An investment in IEP stock made at the beginning of 2000 has increased by approximately 1,500%, or an average annual return of 22%, through October 31, 2013. But perhaps more compelling is that since April 1, 2009, when the economic recovery started: 1) an investment in IEP stock resulted in a total return of 347%, or an average annual return of 39%, through October 31, 2013, and 2) IEP’s indicative net asset value has increased during this period by 282%, or an average annual return of 35%, through September 30, 2013. Or is that not a real business in your eyes?
- melindajb 13y ago
  Reid Hoffman would be a notable exception to your generalization, though. He's one of the more long term oriented, value added investors out there, and I doubt any good founder would turn his money down so blithely.
Cless 13y ago
> So, what conditions will best help PayPal continue to grow its user base, increase revenues, and bolster its profit margins on a consistent and ongoing basis? Well, on the last two: freeze all user accounts, confiscate the funds contained within, make charges of $5000 to each credit card holder, and justify it by linking to your terms of use. You know, PayPal.

38 points by nikunjk 13y ago

PayPal is so terrible. The sooner Stripe (or anyone) kills them, the better.

It is amusing to read an article proclaiming PayPal's advances into the mobile space. Stripe seems to dominate in this area. Card readers hooked up to iPhones and iPads are everywhere. Around the world a multitude of other mobile payment solutions have taken hold. PayPal? Well they have managed to ruin their reputation. Heck their entire customer experience is spammy and creepy, with constant requests to have direct access to my bank account. IMHO PayPal also lost the opportunity to become the micropayment processor on the web. It is funny that it is possible to do with technologies like dogecoin what PayPal disallows purely through its high fees.

secabeen 13y ago
It's not Paypal that's generating the high fees. That's the credit card processors. Paypal is happy to perform totally free payments for transactions that are funded by low-cost sources (bank accounts/ETFs and Paypal balances) and which need no fraud protection. The problem is that the credit card processors take 2+% of every transaction, and no company can succeed if they eat that cost. This is particularly so because saavy cardholders will engage in airline mileage and points arbitrage if you don't pass on that cost. Are any of the Paypal competitors offering services that don't include credit card fees, either on the merchants or the customers? Paypal is making those fees visible, but they're not imposing them.
- toomuchtodo 13y ago
  > Paypal is happy to perform totally free payments for transactions that are funded by low-cost sources (bank accounts/ETFs and Paypal balances) and which need no fraud protection. Doesn't Paypal still take a fee if you pay for a commercial good or service and use your bank account? And its still the same as the CC processor fee? > Are any of the Paypal competitors offering services that don't include credit card fees, either on the merchants or the customers? Paypal is making those fees visible, but they're not imposing them. Dwolla, but they're in a grey area of sorts.
  - secabeen 13y ago
    Late response here, but you are correct that paypal always takes a fee for commercial transactions disclosed to paypal. Their argument would probably be that they require commercial transactions to have fraud protection. That said, there are areas where very small businesses use fee-free Paypal for commercial payments by disguising them as personal payments. (Used camera gear is where I've personally seen it)
yuhong 13y ago
I think this was why David Marcus was hired in the first place.

jotm 13y ago

Oh, God, a Visa-owned Paypal... They'd ruin it in less than a year. Paypal is the best option for small and medium size online transactions at the moment. Amazon, Google, Apple, and Square all want to own the payments space, and Paypal is still the only one that actually works worldwide.

sdrothrock 13y ago
> Paypal is still the only one that actually works worldwide. Speaking someone in Japan, it's pretty hard to effectively use Paypal here because it requires (requires!) a credit card. Also, nobody uses it here, so there's no point in jumping through the banking rigamarole to get a working Japanese Paypal account. I think Paypal never took off here because it's amazingly easy to just send someone (anyone) money very quickly from an ATM as long as you have an account number.
- calbear81 13y ago
  Does PayPal require a credit card to use in Japan? It works fine with bank accounts and credit card is an option (with a fee).
  - sdrothrock 13y ago
    I could have sworn the last time I tried (I admit that this was half a decade ago) that I decided it was unusable because it required a credit card to do anything and I couldn't get one as a low-salaried foreigner on a short-term visa. I've been using my US PayPal account all this time -- which actually works better since everything I use it for is in the US.

IBM 13y ago

I find it amusing how VCs and other Silicon Valley types are rushing to the aid of one of their own now that a perceived interloper is around. Characterizing activist investors as "short-term" and "vultures" is the go-to card by management trying to fight off an activist. Carl Ichan is even easier to demonize. However, these claims don't stand up to scrutiny. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291577 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2291577

product50 13y ago
I agree with you. Especially considering that Carl Icahn has such an excellent track record of building great companies in which he has invested for long term. Just read about Carl Icahn first before commenting.
- IBM 13y ago
  Sure, the business he's built is an incredibly successful fund. From IEP's quarterly results: >An investment in IEP stock made at the beginning of 2000 has increased by approximately 1,500%, or an average annual return of 22%, through October 31, 2013. But perhaps more compelling is that since April 1, 2009, when the economic recovery started: 1) an investment in IEP stock resulted in a total return of 347%, or an average annual return of 39%, through October 31, 2013, and 2) IEP’s indicative net asset value has increased during this period by 282%, or an average annual return of 35%, through September 30, 2013. Or is that not a real business in your eyes?
melindajb 13y ago
Reid Hoffman would be a notable exception to your generalization, though. He's one of the more long term oriented, value added investors out there, and I doubt any good founder would turn his money down so blithely.

Cless 13y ago

> So, what conditions will best help PayPal continue to grow its user base, increase revenues, and bolster its profit margins on a consistent and ongoing basis? Well, on the last two: freeze all user accounts, confiscate the funds contained within, make charges of $5000 to each credit card holder, and justify it by linking to your terms of use. You know, PayPal.