At 01:04 AM 10/1/02 +0900, you wrote:
>On Sat, 28 Sep 2002, James Santagata wrote:
>
> > And unlike the hassle and hurdles you have to jump through to get a
> > traditional MOTO account, even if you are a big company, you can set
> > these accounts up immediately.
> > ...
> > These are more focused
> > on person-to-person accounts but also used by small businesses or even
> > larger businesses that are new to e-commerce.
>
>There's a reason that a PayPal account is much easier to get than a
>credit card merchant account: PayPal dumps the risk on the buyer and
>seller. Worse yet, not only do they reserve the right to completely
>freeze your account at any time, keeping any money in it, but their
>customer support is terrible. They've explicitly stated that their
>strategy is to pretty much ignore complaints and hope that those who
>have problems will just go away. (They reckon that the cost of providing
>support is higher than the cost of just losing the customer.)
>
>I can't imagine any serious business using PayPal, unless they're
>blithely unaware of what they're getting into.
It's true that Paypal has had some problems but please don't confuse
one company's problems with the utility such a service offers and the
pain points that it solves for business and consumers. Paypal/paypal
-type businesses provide a needed and valuable service
I've personally participated in close to 200 Paypal transactions (as both a
buyer
and seller) and haven't had a problem other than sometimes I've
had people who wanted to make a purchase but weren't able to sign up for
a Paypal account. The two times I had to call Paypal on some issues, they
answered right away.
Now that the web and Paypal-type services has let any Joe open an
ecommerce site, the average Joe is finding out about a lot of things that
they never concerned themselves with -- like credit card fraud, chargebacks
and such. Supposedly, those things only happened to "big businesses".
Besides using companies like Paypal or iBill it is true that you can
get your own merchant account. But guess what? Having
your own merchant account doesn't mean that you are "protected" when someone
buys something from you - not from chargebacks or fraud. A lot of
first-time merchants
think they are safe once they get a credit card number -- that is until
they put
their shingle out in the real world.
Even if you get your own merchant account, you have all
the risk because unless you get a physical swipe of the
card (that is no MOTO --> Mail-order-telephone-order/web stuff)
and a signature any customer can easily dispute that charge.
And they can do it months out from when the charges occurred --
so you better keep good records as well.
Oh yeah, even a physical swipe and a signature doesn't eliminate
the merchants risk, it only mitigates it because you can still get
chargebacks -- my one friend who is in a physical retail business has
experienced
this numerous times before. Another person I know is a prominent tax attorney
who stopped taking any credit cards because he was tired of getting hosed
on chargebacks.
I've also talked about this in detail with my VP Marketing who was one of
the first employees at Cybersource (way back when the company was a 1
room office above a barbershop before it was spun out off beyond.com
and before beyond.com transformed from software.net).
What spurred beyond.com to create cybersource was that they found
that having a merchant account did nothing to stop chargebacks. They
were being eaten alive. So a merchant account by itself is generally
no guarantee to stop chargebacks.
It may be different in other countries, but in the US it's the
merchant is usually left holding the bag in these cases so
going direct.
> > The existence of viable 3rd party payment systems are
> > critical to any e-commerce ecosystem....
>
>Indeed; but they already exist: credit cards. But see my previous
>message about the problems with payment size here.
A credit card by itself isn't a ecosystem. If it were you wouldn't
see iBill CCBill, Paypal let alone Cybesource. A credit card by itself,
especially in a MOTO environment is an invitation to have your
business bled to death by one fraudulent transaction after another.
James Santagata
A U D I E N C E T R A X
Monetize your Media (tm)
http://www.audiencetrax.com
Received on Mon Sep 30 23:47:52 2002