Problem with PayPal

The Problem With PayPal

Many of the payment service's users are dissatisfied, but alternatives are few.

ASK KRIS SLEVENS what he thinks of PayPal, and you won't hear too many friendly words. Slevens, who used PayPal to accept payments for his Web hosting firm, HostMerit, in Berkeley Heights, New Jersey, was one of thousands of merchants caught when the online payment company's site was sporadically unavailable for nearly a week last October.

PayPal officials blamed the problem on a faulty software upgrade; it locked some customers out of their accounts and scotched a number of transactions (go to find.pcworld.com/45774 for details).

As if losing potential clients and revenue weren't enough, PayPal's system failure also caused Slevens to lose out on a used car he had planned to purchase that week. For four days, he was unable to access his PayPal debit/ATM account, despite dozens of calls to customer support. By the time he did access his funds, the seller's deadline had passed.
ONCE BURNED

THE EXPERIENCE PROMPTED Slevens to sign on with several alternative payment services to avoid being burned again. "I've used PayPal as my main payment processor since I started my business, and it's often had random glitches here and there," he says, "But this shows that it's not a bank. With all the money that runs through its servers, it needs a disaster recovery plan, system backups, and better communication with customers. Basically, [PayPal] needs to reassure me of why I should let my business depend on it."

It's a reasonable request, especially for users like Slevens whose livelihood depends on the system's integrity. But even casual PayPal users might understandably be feeling a little wary these days. Last fall's system outage happened on the heels of a class-action lawsuit settlement in which PayPal--while denying any wrongdoing--agreed to pay more than $9 million to customers who felt that the company had unfairly and improperly restricted their accounts. (PayPal, which attributed the account restrictions to fraud prevention measures, reports that it has changed its procedures.)
SHOW ME THE MONEY

PAYPAL SPOKESPERSON Amanda Pires admits that the site had "intermittent issues" in October. "We know that these issues caused an inconvenience to our customers, and for that we apologize,"

Problems notwithstanding, PayPal sets the standard when it comes to person-to-person online payments. The company, which was acquired by EBay in 2002, boasts over 56 million accounts and processes more than 27 million transactions a month. About 70 percent of PayPal's total payment volume comes from auctions, most of them on EBay.One of its few major competitors. Yahoo's PayDirect, shut down its servers last November due to a lack of users.

And frankly, if you're just trying to send a quick 50 bucks to some stranger in St. Louis who's selling vintage baseball cards, PayPal fits the bill perfectly: It's a fast, easy way to send cash to someone you don't know without compromising your personal information.

Basically, it works like this: The buyer goes to the PayPal site (or to a site with PayPal integration, such as EBay) and enters the seller's e-mail address and the amount to pay. The seller receives the email message, goes to PayPal, and collects the payment in his or her PayPal account.

PayPal solves a simple but important problem in online commerce, by allowing people to exchange money electronically rather than having to rely on writing checks, according to Penny Gillespie, a senior analyst at Forrester Research.

While PayPal may sometimes act like a bank, it isn't. The company itself is "subject to very strict consumer policies and regulations, but it's licensed as a money transmitter, not a bank," Pires says.

Though money transmittal services such as PayPal are regulated in many states, they're considered "nonbank financial institutions" and aren't FDIC insured, which means that their customers aren't covered by federal banking protections. That's important for consumers to understand before they enter into a service agreement with a money transmitter, according to Jeffrey Taft, a partner at the Washington. D.C.-based law firm of Mayer, Brown, Rowe, and Maw, who specializes in consumer financial services. "Because banks are subject to so many rules, regulations, and disclosures, they're much more accountable for consumer complaints. Consumers should understand that their transactions on a service such as PayPal are largely governed by their agreement with PayPal, and there's no omnibus regulator overseeing the company's activities,"

Many PayPal competitors have closed, but a few are left. BidPay (www.bidpay, com), for example, a subsidiary of Western Union, is intended only for online auctions. It lets buyers complete transactions by direct deposit into a seller's checking account or by money order.

Another option is IKobo (www.ikobo.com), a general-purpose money transfer service that operates in over 170 countries. Buyers and sellers send and receive money by using an I-Kard--a special, reloadable Visa debit card issued by the IKobo company; users can access their cash via participating ATM machines.

Chances are that your online payments will go through without a hitch. But just in case, here are a few tips:

• Look for specific information on error and conflict resolution to learn how the service handles disputes. Review the company's policy on fraud prevention, too.

• Avoid leaving large sums in any money transfer service account.

• Try to limit your use of money transfer services like PayPal to smaller purchases (transactions under $500 or so). Consider an escrow service for larger purchases.

• When possible, use a credit card for purchases to protect yourself against fraud or unauthorized charges.

• Finally, diversify. If you run an online business, consider using more than one payment service. If you're a buyer, use PayPal or another service when that method makes sense, but don't forget that sometimes even a good old-fashioned paper check may be a better option.









Sources:
How to obey on eBay. (2005, June 11). Economist, Retrieved December 1, 2008, from Academic Search Premier database.

Hof, R. (2003, August 18). THE eBAY ECONOMY. Business Week, Retrieved December 1, 2008, from Academic Search Premier database.

Time Management

I feel that I need to make more time on focusing on my paper. I feel that I need to maybe use a few days of the week for a few hours to write my paper. I always tend to find myself researching or writing the paper all at once in multiple hours. I don't think that is a good idea because my brain is so busy and it could only take so much at once. I think this weekend I am really going to look over things and make sure I have everything up to date and hopefully organized. I will try to put it in order and most likely I will be messing around with the ordering and format of it. I will most likely have some errors but they can be corrected. Since the first draft is due in a couple weeks, I feel that I really need to hop on the bandwagon, because I do not want to stay up all night stressing about a paper that is due within' the next day or hours. I do not want to procrastinate on this paper because it has to be a certain length and I do not want to take the responsibility of trying to come up with 12 pages the day before it's due. That would deff. not be a good paper.

Overall, I need to set a certain amount of time either each day or how many times a week and how many hours I should work on my paper.

A Topical Outline

For the most part I feel like I have made a pretty good decision on my topic. Considering it is eBay, and many people do not know everything about it, I believe that I made a good decision about my topic. There are a little minor ends about if I still want to include a certain part of to the paper. For example, I am still undecided if I want to include a topic that falls under the eBay category. I know for sure that I will be including eBay it's self in my topic and PayPal. eBay owns PayPal and they both work together successfully.

I think that I would write and explain what eBay and PayPal is and go into detail about the good and bad things. What people use it for. Why it's a good thing to use. etc... Same for PayPal. I would also explain that PayPal is not just for eBay, it could be for anything such as sending money and money transfers. After explaining all of that I think I would go into talking about my personal experience about the companies. Or perhaps maybe tell a good/bad story about what happen. Hopefully both stories could be good?

Audience

I believe to choose my audience among the people that are into shopping and business. Perhaps along young adults to the mid 30's ish. I feel that this would be a great audience because I know that many young adults shop and buy things on eBay. I know that many students such as young adults are able to find good deals on school textbooks and other useful things they may need. I also think that people up until the mid 30's could used this too. I know many adults have their own business on here or they sell things for extra money to help out their family. I don't want to say this is for everyone because it's not. A lot of the older crowd and young crowd do not know much about this because I feel that they don't either understand computers or maybe they just don't understand all the terms and conditions that eBay provides.

Personal vs. More Third Person

The more and more I think about this paper, I feel that I will be writing about both Personal and Third Person. I feel that my topic has to use both because I could explain both about the topic and my personal experience. I feel that I will have more of my personal experience because I have used eBay for 4 years and have learned a lot throughout the years. I also feel that I could explain and explain about the topic non stop. I feel that writing both personal and third person views would be great in my paper. It would make more sense. It would help others understand what eBay really is and how it operates.

In Class Self-Assessment

1. Amount of research/sources?
I have been doing some research and looking up some sources to use for my paper. I feel like everything is going pretty smooth. My biggest concern is how do I put things all together. I do not want to jump to one topic to another. I do not know how I should put it all together and make sense. Also, majority of the things I have researched, I already know and there is very little information/things that I would be able to research about. I feel that I may have to dig into an area where I completely know nothing and I could explain it in my paper? I have also looked up some sources about my paper, some of it I already know and other information I don't. I am not sure about the information I don't know would be a great idea to go into detail.

2. Notes taken on sources
I honestly haven't been taking much notes. My notes are more of jotting down things as I go along with the paper or what I want to write about.

3. Decision making
For the most part I feel like I have made a pretty good decision on my topic. Considering it is eBay, and many people do not know everything about it, I believe that I made a good decision about my topic. There are a little minor ends about if I still want to include a certain part of to the paper. For example, I am still undecided if I want to include a topic that falls under the eBay category.

4. Readiness to write
I feel that for the most part, I am not 100% ready to write quit yet, only because I am still undecided and need help on what order I should put all of my ideas in all at once. Other then that, I believe that I could just write along everything. I also feel that my paper is not going to be long enough of it might be too long. I haven't typed out everything yet, so I am still not sure.

Reporting Fraud with eBay and PayPal should be Easy

This article focuses on the problems caused by phishing e-mail messages from PayPal Inc. An Internet user who, by trying to do a good turn for PayPal, ended up spending several minutes of his time trying to figure out how to report a phishing e-mail message. PayPal was injured by the phishing scam in three ways. First, the phishers fraudulently took PayPal's name and masqueraded as a legitimate recipient, and likely succeeded in fooling at least a few unsuspecting users. The second cut was that PayPal incurred insurance costs when the phishers succeeded. And finally, the company churned up unearned ill will on the part of a good Samaritan who felt unnecessarily burdened by PayPal's fraud-reporting system.