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Ebay buys PayPal 181

Posted by CmdrTaco
from the i-think-ebaby.com-should-sell-children dept.
mdahlman was among several readers who submitted the story that eBay has bought Paypal in a deal worth $1.5B in stock. The article is mostly numbers and money related stuff, but it also briefly mentions some of the controversy surrounding eBay.
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Ebay buys PayPal

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  • In this case.... (Score:3, Interesting)

    by stevenbee (227371) on Monday July 08, 2002 @09:28AM (#3841050)
    Consolidation might not be a bad idea. Particularly since the excellent escrow service Tradenable went belly-up,
    I have noticed the one sketchy part about the whole Ebay experience has be the payment path. Perhaps now it
    will be better integrated.

    • by eyegor (148503)
      Having something like bidpay or paypal better integrated into E-bay would be nice, but Paypal needs to REALLY clean up their act. I use them when I can, but they won't let you have full access unless you "validate" yourself by giving them your checking account information. Which is SO NOT going to happen.

      They already have my credit card info and that should be enough. My losses are limited if some bozo breaks into my Paypal account and pays for something with my credit card.

      If they have my checking account info, they could potentially wipe me out and I have little to no recourse at that point.
      • by Anonymous Coward
        I hate Paypal. I will never give checking account or bank account info away.

        It's too bad people are stupid. If nobody would agree to give their bank account information out then paypal would be forced to go bankrupt or change their policy.

        Paypal is not FDIC insured and has already had incidents where bank account information was leaked and customers suffered without any recourse.
      • Someone DID break into my Paypal account and tried to clean me out ($12,000US). You may have limited liability with the card, but it is still a HUGE pain to deal with. Worst part is that it seems that the cracker sent my money to others to pay for something. When Paypal pulled the money back, I got accusing emails for "backing out" of the transactions and that I needed to send $3000 to them ASAP.
  • Who else can see paypal becoming a "have money sent to you, but only be allowed to be spent on ebay" type of service?

    I get my pay from germany with paypal, if they change it to you can only use your paypal money to pay for ebay stuff, ebay will gain, but we will all be stuffed.

    Is it really that unrealistic?
    • by Washizu (220337) <bengarvey.comcast@net> on Monday July 08, 2002 @09:33AM (#3841095) Homepage
      Who else can see paypal becoming a "have money sent to you, but only be allowed to be spent on ebay" type of service?

      I do not. If paypal becomes the universal standard for person to person financial transactions online, they stand to make much more money than if they only sold "ebay bucks."
      • I've been wondering why PayPal hasn't taken the leadership role in online micropayments. I suppose some websites have dontation boxes where you can toss them 25 cents or a dollar, where that almost works like micropayments, but I'd really like to see someone start to use micropayments to keep some sites alive.
      • Who else can see paypal becoming a "have money sent to you, but only be allowed to be spent on ebay" type of service?

        I do not. If paypal becomes the universal standard for person to person financial transactions online, they stand to make much more money than if they only sold "ebay bucks."

        This, however, does appear to raise a conflict of interest prospects. Now eBay would stand to make money from:

        Listing fee

        Final sale price

        Payment (and whatever fees they dig up for that)

        In effect controlling the entire transaction (unless you choose to pay via check or money order.) I prefer using PayPal for international purchases, as it keeps conversion, etc. simple and offers some protections against fraud.

        I'm very disturbed at their cavalier attitude about changing key pages, without warning or period of online evaluation. Expect the same devil-may-care attitude with respect to how PayPal works.

    • Exactly. What about the other merchants who accept PayPal?

      My wife's online business, for example, accepts PayPal for people who don't have credit cards (they can do an EFT from a checking acct to PayPal, and PayPal EFT's to her). If this is no longer an attractive option, she's going to have to go to "credit cards only, or mail us a money order."

      For us, this is A Bad Thing(tm).

      Dejaffa
      dbrowne at sewingcentral . com
    • "I get my pay from germany with paypal, if they change it to you can only use your paypal money to pay for ebay stuff, ebay will gain, but we will all be stuffed."

      If they did pull something like this, it would obviously annoy a lot of people. In that case, I would expect another 'replacement service' from another company to spring up with a different name but similar functionality, and perhaps fewer problems [paypalwarning.com]*.

      *Note to reader: I have heard your story about how PayPalWarning.com is crap and you have used PayPal without problems for $thousands of transactions. Don't reiterate, please.

      • "I get my pay from germany with paypal, if they change it to you can only use your paypal money to pay for ebay stuff, ebay will gain, but we will all be stuffed."
        If they did pull something like this, it would obviously annoy a lot of people. In that case, I would expect another 'replacement service' from another company to spring up with a different name but similar functionality, and perhaps fewer problems*.

        This has already happened. Richard Stallman, shortly after the story broke, announced the creation of GnuPal [gnu.org], citing the need for an free (free to use, anyway) payment system. It will be deployed using the DotGNU [gnu.org] web services platform.
        • "This has already happened. Richard Stallman, shortly after the story broke, announced the creation of GnuPal, citing the need for an free (free to use, anyway) payment system. It will be deployed using the DotGNU web services platform."

          Thank you for this information!! I hope the service becomes mainstream.

      • There already are other similar services, my favourite being nochex.com - its UK based but I imagine that Americans can still use it.

        The big benefit for me is that they accept Switch and Solo cards which are very common in the UK but have very poor support outside (for instance, I don't think Paypal support them - its Visa or Mastercard only there). Also you can get a Solo card from the age of 16 whereas I'm pretty sure that you have to be 18 to get something which can be used on paypal.
    • Who else can see paypal becoming a "have money sent to you, but only be allowed to be spent on ebay" type of service?

      It'll never happen. The whole point of selling something on Ebay is to trade something that you have no use for to get money in return. If you can't get your money out of the system then you either won't sell your items on Ebay or you will use a different payment system (like money order). This will hurt Ebay, so it makes no sense for them to change it.

      What I can see happening is having Billpoint and Paypal merged into the leading online micropayment solution. I can see Ebay integrating Billpoint/Paypal more thoroughly into the "Ebay experience". You'll probably see more Ebay merchants accepting these payment systems, and with any luck you might actually see Ebay branch out into escrow services for merchants and customers (since Ebay runs the risk of being caught holding the bag in instances of fraud).
  • Maybe..... (Score:5, Funny)

    by Lord_Slepnir (585350) on Monday July 08, 2002 @09:28AM (#3841054) Journal
    Maybe they're just tring to set a record for the largest sale on their own auction site. You too could own paypal. Bids start at 1 billion, 2 billion dollar reserve.
  • Did they pay using Paypal?

  • by Anonymous Coward
    eBay had long had the "Billpoint" payment option, but very few people used it--instead, PayPal became very popular. Although it wasn't as easy to set up as Billpoint, it didn't have any silly fees (at least not from when it began) and just worked better.

    So I find it funny that this happens now :)
  • controversy (Score:1, Insightful)

    by AlgUSF (238240)
    Controversy over eBay? How about the controversy over Pay Pal (the Gestapo of the 21st century).
    • Re:controversy (Score:2, Informative)

      by larry bagina (561269)
      from the article:

      PayPal is a tad controversial - it's got jaw-dropping Ts&Cs and it's not very friendly to people outside the US. Also, there are occasional foul-ups, and several states want much closer scrutiny - if PayPal.looks like a bank and it acts like a bank, then it should regulated like a bank.

      In fact, the article doesn't mention any ebay controversy. Expect this comment to be modded down and the story silently edited...
    • That was the point I was trying to get at, is that PayPal is much more controversial than eBay. I guess the submitter should have RTFA. :-)
    • eBay points to the market opportunities presented by the rest of PayPal's business, but post-acquisition, PayPal's non-eBay turnover may well fall. Its new owner intends to phase out business with gambling sites - 'regulatory uncertainty' is the rationale.

      As bad as PayPal can be, it is probably better than having an account directly with an online casino.

  • by iONiUM (530420)
    It was only a matter of time before this happened. PayPal was being used in a lot of places, but most people I know started off using it for Ebay. So why not take it..
    Wouldn't surprise me if we see "EBay Passport" not too far in the future, or some service along those lines...
    • Re:Well.. (Score:1, Funny)

      by Anonymous Coward
      "EBay Passport"? What about PayPalladium?
  • by Ilan Volow (539597) on Monday July 08, 2002 @09:36AM (#3841118) Homepage
    Ebay took the "Buy now" option. I'd have always figured they would have opted for a fierce bidding war with billg@microsoft.com. Assuming Paypal is guaranteed against DOA, the sellers of Paypal should get positive feedback.
  • by fritter (27792) on Monday July 08, 2002 @09:39AM (#3841133)
    It turns out they just fell for some Finnish guy's scam (never send $1.5B of stock to a P.O. box!). He claimed he was selling PayPal "for a friend", but oddly became angry upon suggestion of sending it C.O.D. Unfortunately, due to their toothless fraud protection policies, it looks like they're just gonna have to suck it up and take the loss.

    Better luck next time, eBay! They probably should have bought PayPal through an escrow service...

  • Maybe I'm reading some other article at the given link, but I don't see any mention of controversy surrounding ebay.
  • Does this mean when I make a claim on my E-bay insurance I work through paypal? :-)
  • by stere0 (526823) <slashdotmail.stereo@lu> on Monday July 08, 2002 @09:41AM (#3841152) Homepage

    Ebay's business model is almost perfect: no warehouse, few employees with average qualifications, buildings can be in the middle of nowhere, no suppliers, no stocks, customers take care of themselves. Paypal, on the other hand, requires more customer care - I could be wrong on that but I suppose it does.

    I'm going to play silly here. What do they really gain? Is Paypal that profitable or are they just going to push Paypal users towards spending their dollars on ebay?

    • by MrP- (45616)
      "Paypal, on the other hand, requires more customer care"

      Tell that to the previous owners!
    • ...few employees with average qualifications...

      Show me a "few employees with average qualifications" that can keep a server farm running under the load the ebay normally sees.

    • by swb (14022)
      I'm going to play silly here. What do they really gain?

      More money? An auction produces revenue at the sale (Ebay already gets in on this), at the financial transaction (Paypal, post office for money orders, banks, etc) and for shipping.

      I'm guessing that they want to control as many of the possible ebay transaction revenue points as possible. Paypal makes sense from that perspective.

      Paypal, on the other hand, requires more customer care - I could be wrong on that but I suppose it does.

      Outsource it to Amex or some bank. Paypal accounts aren't much more complicated than credit cards in terms of financial sophistication. Ebay can run Paypals servers and everything else can be handled on an outsourced basis by someone else.
  • Bye Bye Billpoint (Score:5, Insightful)

    by asv108 (141455) <alex@phatauNETBSDdio.org minus bsd> on Monday July 08, 2002 @09:42AM (#3841160) Homepage Journal
    From the WSJ:

    EBay agreed to buy PayPal, a popular payment service, in a stock-swap transaction valued at $1.5 billion. EBay, which separately reported stronger-than-expected earnings, will phase out its in-house Billpoint unit.

    I'm sure billpoint wont be missed until paypal fees are raised due to lack of competition.

    • UGH! Billpoint always got my payments right. PayPal screwed me like 3 times. They double billed me, and their customer service didn't give a rats arse. I hope eBay fixes that. What's going to happen to the Jacoby and Myers suit now?
    • I'm sure billpoint wont be missed until paypal fees are raised due to lack of competition. ... which will be shortly after billpoint closes shop.

      This whole thing stinks.
    • by wideangle (169366) on Monday July 08, 2002 @11:52AM (#3842446) Homepage
      What will happen to eBay Payments (Billpoint) users? [ebay.com]

      "eBay Payments (Billpoint) will continue to function as a provider of online payment services until the acquisition is finalized around year-end 2002. At that time we plan to phase out eBay Payments (Billpoint) as we integrate PayPal into our platform. Since a majority of eBay Payments (Billpoint) users already use PayPal too, the transition will be quite simple for them. For eBay Payments (Billpoint) users who have never used PayPal, we will work closely with them to make sure that the transition happens in the most user-friendly way possible."

      FAQ [ebay.com]
      Original announcement [ebay.com]
      Discussion #1 [ebay.com]
      Discussion #2 [ebay.com]
      • Selected commentary [ebay.com]:

        "Hopefully they will replace the paypal [employees] with the nice eBay people." -pictureman1

        "Not sure how I feel about this one. I think I'm leaning towards not happy here. Billpoint has been so easy to use/accept." -luvs-to-read-2

        "Will PayPal change and put in place security for sellers against chargebacks as Billpoint has? Will PayPal demand now that everyone be verified and charge a fee to everyone thereby forcing it to be a business type venue as it should be? Will PayPal now quit freezing folks accounts and tying up there funds on a whim without just cause?" -ishipfree.biz

  • by SuperDuG (134989) <be.eclec@tk> on Monday July 08, 2002 @09:44AM (#3841182) Homepage Journal
    Granted these are two of the largest companies on the net now in terms of the average joe knowing about them. AOL, EBay, and Paypal are as common as the internet, heck I even read an article about how they were on the internet. EBay has all the junk you could ever want to get, but their security is seriously lacking. While you don't have to use your credit card to bid, the accounts aren't exactly secure. Password compromising is actually very easy. How many times have you heard a story to the tune of, "A hacker broke into joe schmoo's ebay account and started bidding on the weirdest things the other day. It's a shame, now he's a deadbeat bidder."

    PayPal, while secure, isn't exactly cheap. While it's quick and secure, if you use credit cards and direct deposit. The fees for transfering funds are outrageous. I think PayPal starts to make up for it through the services they provide that are similar to any other bank. Still not to happy with the chunk of MY check that they take.

    Why would ebay do this? Simple, that way they control every part of the bidding experience, from the post, to the bid, to the buy ... I see them maybe trying to buy fedex next. I mean why not, let's plaster EBay on everything!!

    • Password compromising is actually very easy. How many times have you heard a story to the tune of, "A hacker broke into joe schmoo's ebay account and started bidding on the weirdest things the other day. It's a shame, now he's a deadbeat bidder."

      I've never heard this, ever. And your claim about it being easy to get passwords.. do you have any backup on that?

      The fees for transfering funds are outrageous.

      Which fees are you refering to here? Paypal have great fees, it's just acouple of percent, no? Maybe I'm confused what you mean here.
      • I've never heard this, ever. And your claim about it being easy to get passwords.. do you have any backup on that?

        Sure I do ... but do I have to justify my post to you ... nope.

        But for sheer arguments sake I will go ahead and just give you an overview. EBay used to have the login setup that if you logged in wrong 3 times that you would be given the option to retreive a lost/forgotten password. So while this may not seem like a bad thing, I don't know the exact details (seeing as I'm not an ebay hax0r) but the link to verify a change to a password isn't random at all and I guess can be easily accessed without actually hijacking the email. Then once that page is loaded ebay just lets ya change the password to anything you want to change it to.

        It has happened to me once, and I was very angry. I managed to actually dig up EBay's phone number and give them all call to tell them how angry I really was. They agreed that there was a security problem and said they'd fix it, have they? I don't know, I don't use EBay anymore.

        Which fees are you refering to here? Paypal have great fees, it's just acouple of percent, no? Maybe I'm confused what you mean here.

        The fee where a $300 check had $24 of it shaved off the top to transfer. That's the fee I'm talking about. I would love to be the middleman on these deals. No actual work just taking money. PayPal relies on EBay for business, I know that they have some online stores and online donation setups, but a large majority of their traffic still comes from EBay and other auction sites. They've got some heavy percentages that aren't just right there in the open for ya to know what they are.

        • ...but the link to verify a change to a password isn't random at all...

          Hm, I checked this process out. Granted, I can't say whether or not the link URL is cryptographically secure, but I don't see any easily-identifiable pattern. Nor do I see any reason they wouldn't have a relatively secure "change password" URL generated, as it's simple to do (and a company of this size isn't going to cut corners like that, or we'd all have heard of this problem by now).

          The fee where a $300 check had $24 of it shaved off the top to transfer.

          I'm paid regularly via PayPal for contract work, and I've worked it out to be about 2.95% on average for me. A $600 paycheck cuts less than $18, which isn't bad in my opinion. Note that the fee appears to be the same whether my employer uses a credit card or funds already in PayPal to send (we've done it both ways), and both of us have "Business" accounts w/PayPal.

          I'd have to see some evidence to support your theory on eBay's password change. Perhaps a link to a news story or article? Would that be too much to ask?
    • PayPal, while secure, isn't exactly cheap. While it's quick and secure, if you use credit cards and direct deposit. The fees for transfering funds are outrageous. I think PayPal starts to make up for it through the services they provide that are similar to any other bank.

      They don't tell you this in big bold unambiguous neon letters, but Paypal is not a bank. If they were a bank they would be regulated like a bank. They would have to adhere to reasonable consumer protection laws. They would be better equipped to handle fraud, and the accountholders would also be insured. As it stands now, Paypal is just a company that shuffles money around for you...sometimes.

      If you've ever read the T&C's [paypal.com] you'll see that they have a great deal of freedom to do whatever they want with your paypal account and any bank/credit card accounts that are associated with it. If you've ever read Paypalsucks [paypalsucks.com] (you can also get to it at www.nopaypal.com [nopaypal.com] if your firewall is picky) you can see that they often do just that. If you have $1000 in your Paypal account and someone disputes a $10 charge from your account Paypal will confiscate all of the money in your account, no questions asked (and no due process given, either). Do you think that a bank could get away with that? It is a very dangerous misconception that Paypal is a bank, one that Paypal tried very hard not to undermine.
  • Brave New World (Score:1, Interesting)

    by MarvinMouse (323641)
    Kinda strange how E-bay is transforming the internet economy. They are the only company that has realized that when dealing with the consumers on the internet, you have to let them choose their own prices, or you have to let them have very low prices.

    By getting paypal, it sets E-bay up to handle all of their transactions reasonably smoothly (I haven't had problems, but I do hope that the problems other people have had are being resolved.) As well, it might open up the opportunity for E-bay to start selling even more select items, and basically control the simplest internet money transaction service that will be used by most small companies.

    (I hate to use analogies from games, but this is a good one.) In the game Civ:CTP, there is a world bank wonder, through which all transactions made in the world are processed. It is a terrific idea if it can be made secure and easy to use. E-bay right now, since it owns such a large auction site, and now one of the better internet payment companies, has the potential to be this internet world bank. By allowing any company to process payments through a simple central server with a few administration and hardware fees.

    Just some interesting ramblings. :-)
  • BayPal, ePay? (Score:5, Insightful)

    by cybermace5 (446439) <g.ryan@macetech.com> on Monday July 08, 2002 @09:45AM (#3841186) Homepage Journal
    This is an interesting development. I really don't think we should be worried about some kind of monopoly appearing here, since the success of eBay depends on hundreds of thousands of sellers.

    We've seen a few moves like this on eBay's part. This is another way that eBay is trying to shield itself from being slaughtered in the current economy.

    First, you have eBay beginning to offer benefits for sellers over a certain income margin, which should encourage sellers to stay with eBay, which increases eBay's financial security. Then, you have eBay buying PayPal. PayPal is one of the most influential external factors to the success of eBay; if PayPal went under, many sellers and buyers would have more difficulty making transactions.

    This also allows eBay to begin attacking the single factor that keeps many people from buying at online auctions: fraud. Before now, eBay did not have any ability to track fraudulent users, or take any action against them if they used PayPal. Now, they have the ability to go after and probably halt fraud for the most part.

    Overall, this looks like a very intelligent business move, and one that should help continue eBay's pattern of success.

    • by pgrote (68235)
      It is the domination of an industry. Period. There are no viable alternatives to either.

      eBay has 85% of the market.

      PayPal has almost the same numbers.

      What you get is one company that can control everything in the process of selling goods auction style online. Fees are raised, people who don't play the game get squeezed out.

      Yahoo has seen the light and has stopped their auction services in every country except America. Where do the send the traffic? eBay of course.

      I like eBay and I like PayPal. I don't like the combination. eBay has shown a historical record of squeezing out the little guy. They will continue this with PayPal who already has draconian methods of handling customer service.

      This is a monopoly of an industry pure and simple. The only thing left for ebay to buy is a delivery company and it will be complete.

      One of the chief metrics used to determine a monopoly is viable competition. On this web we use it all the time to look at Microsoft. Here it applies as well. Is there a viable alternative to eBay. No. Is there a viable alternative to PayPal. No.
      • NoChex.co.uk? (Score:2, Informative)

        by MrFredBloggs (529276)
        Yeah, I know, it's for the UK only. But I only live in the UK...
      • Maybe they could buy FedEx next? They can come at your house, get the box, package it and send it on the same day. Now that would be nice.
      • This is a monopoly of an industry pure and simple.
        Auction sites work best if there is a monopoly, i.e. only one marketplace.
      • One of the chief metrics used to determine a monopoly is viable competition.

        Ahh... but one of the other metrics is the barrier to entry for the market. Office applications and operating systems have a massive barrier. In online auctions, any trusted site can open an auction to chip niche markets away from eBay. With some luck, it will hit mainstream and take a bite out.

        • Well said, the existence of eBay doesn't actively prevent others from doing the same thing. As far as I know, eBay keeps its share of the market through keeping the buyers and sellers happy.

          Microsoft hasn't prevented other operating systems from meeting some success, but they actively try to set up barriers for competition. Not by improving product quality, but by subsidizing proprietary hardware and commandeering standards.
      • Yahoo has seen the light and has stopped their auction services in every country except America.

        Not true. At least in Denmark, yahoo are still running auctions. The volume, of course, still being much less than that of eBay.
      • Is there a viable alternative to eBay

        Yes. Check out ePier [epier.com].
      • "Squeezing out the little guy" is GOOD if the little guy is inefficient. People bitch about Wal-mart putting Mom & Pop stores out of business. BFD! Their prices were higher and their selection sucked, why SHOULDN'T they go under?

        Yes it's possible that fees will go up. It's also likely that fees SHOULD go up. Paypal's fees have been rising anyway, not because of market power but because they needed to adjust their business model to include (gasp!) profitability. I should also point out that I've been using Paypal for years and never paid them a red cent, so long as you use bank transfers there are no fees.

        Plus, people can always go back to using money orders and personal checks, and finding junk through local classifieds. The fact that they don't PROVES that they prefer eBay and Paypal, at whatever price they happen to pay. The only price that's "too high" is the one you pass on.
      • Yahoo has seen the light and has stopped their auction services in every country except America. Where do the send the traffic? eBay of course.

        Yahoo Japan still runs auctions at http://auctions.yahoo.co.jp/ [yahoo.co.jp].

        Ironically, eBay has shut its doors in Japan [ebay.com]. They link people to an auction site called http://www.bidders.co.jp [bidders.co.jp].

      • by brunes69 (86786)

        Is there a viable alternative to PayPal? Yes. Its called the USPS, Canada Post, or whatever. Anyone who actually TRUSTS PayPal with their money is seriously derranged. I personally have been screwed to the tune of 60 dollars by them, and I wouldn't touch their service with a 10 foot pole. Thousands of others have simmiar stories. Just do a google search on PayPal fraud.

    • Re:BayPal, ePay? (Score:3, Interesting)

      if PayPal went under, many sellers and buyers would have more difficulty making transactions.

      Mostly the sellers, I'd bet. Most buyers would be quite happy if they could pay by check, or better yet, by credit card directly. There's more protection for the buyer, and no unnecessary middlemen (like PayPal). Presumably the problem is on the sellers' end. Most of them probably aren't set up to take credit cards, and I'm guessing that it's relatively hard to keep track of payments by check. That's why so many sellers only accept PayPal and/or BillPoint.
  • More info... (Score:3, Informative)

    by scrm (185355) on Monday July 08, 2002 @09:45AM (#3841191) Homepage
    ... here [cnn.com] and here [marketwatch.com].
  • ...Pay pal did not just put itself up for auction on Ebay?

    After all, Ebay is usually know for getting top dollar for useless stuff...prolly could have gotten 3+ billion.
  • Was it really worth 1.5b to ebay to purchase paypal for their current market segment? Seems to me that they are now (with Paypal) in a much better position to attract some of the small-med sized vendors/manufacturers who can't afford a full dedicated ecom site or want more exposure, and push their product through ebay, not having to worry about setting up separate billing systems for each vendor, simply a paypal account.
  • by tps12 (105590) on Monday July 08, 2002 @09:49AM (#3841215) Homepage Journal
    Asked about the deal, an Ebay spokesperson described PayPal's management as "A++++++++++", calling them "VERY RESPONSIVE" and noting that they "WOULD DEFINITLY BUY FROM AGAIN." PayPal's feedback rating is 1283.
  • by linuxislandsucks (461335) on Monday July 08, 2002 @09:50AM (#3841233) Homepage Journal
    You guys missed it..sure eBay got PayPal all of it..

    But look at who partnered with PayPal and invested in Paypal before the eBay transaction..

    Wells Fargo..

    PayPal is going to be pushed as the online pay site for all online transactions by Wells fargo..

    eBay just wants to make sure they have a full handled on that leader..

  • It is me, but of all the companies who could have bought PayPal, this is the one I'm the most confortable with. I mean, even tought Ebay is in it for money (after all, you don't buy something at 1.5 billion for fun... or maybe you do, I don't know, I'm not that rich... yet :-p), this is one of the less contreversial takeover/merger that happened in the last few months. They complement each other perfectly, one providing a service, the other the most popular the way to pay on that service.

    I don't think tought that Paypal will only work with eBay now. As someone else pointed out, eBay will make a lot more money keeping Paypal as it is right now then making it eBay-centric, tought I'm sure that we'll soon see an option in your eBay account to get a PayPal account, no harm in that.
  • I just spent the weekend with some friends from The Netherlands, and they said that PayPal was increasingly popular back home. So, I'm a little suprised to hear non-US users complain.

    I'd be curious to get a sense about how you feel about PayPal and *your* country.

    (fwiw, I care because I use it to sell my software [turnstyle.com], and I've got lots of international users)

  • by patmandu (247443) on Monday July 08, 2002 @10:00AM (#3841293)
    Now that eBay will control PayPal, this could be a better incentive to keep deadbeat buyers/sellers out of the pool. At least now there may be some real reasons to NOT play dirty and expect to pull it off. I know it's still pretty simple to clean out a bank account and move on, but for those who don't, bank account numbers (and the info associated with them) afford a simple way to track bad eggs as they switch emails and attempt to become 'repeat offenders.'

    This is, of course, assuming eBay intends to wield this newly-acquired power for good and not evil...and based on both companies' past behavior, I wouldn't bet on it.

    eBayPal? PayBay? Payola?
  • by Anonymous Coward
    God, you'd think some idiot could have found a more informative article to link to than the stupid Register tabloid news.

    ----
    EBay to Buy Online Payment Firm PayPal for $1.51 Billion

    SAN JOSE, Calif. -- EBay Inc. (EBAY) said it has agreed to acquire online payment company PayPal Inc. (PYPL) for about $1.51 billion in stock.
    The online auctioneer also said Monday that second-quarter revenue came in above its own previous estimates, thanks to 48% growth in its U.S. business and even better growth in international operations, where business more than doubled.

    EBay and PayPal already have a close association, with PayPal getting about 60% of its business from the eBay site. The rest of PayPal's business is with small merchants, who present a potential new audience for eBay. Likewise, eBay said, its 46 million users represent a growth opportunity for PayPal.

    PayPal, based in Mountain View, Calif., will continue to operate as an independent brand after the transaction closes. PayPal serves businesses and consumers in the U.S. and 37 other countries, enabling users with e-mail capabilities to make payments to each other or to merchants via the Internet.

    EBay said, however, it will phase out PayPal's gaming business because of what it described as an uncertain regulatory environment.

    PayPal will still offer its Web Accept product, which allows independent online merchants to accept payment directly at their Web sites.

    EBay plans to phase out its Billpoint unit after the transaction closes. Seeking to compete with PayPal, eBay in February paid about $43.5 million to acquire the roughly one-third stake in Billpoint it didn't already own from Wells Fargo & Co. (WFC).

    EBay expects the PayPal deal to close around the end of 2002.

    Under terms of the agreement announced Monday, eBay will swap 0.39 of its shares for each of PayPal's approximately 64 million shares outstanding. Based on eBay's price of $60.55 on the Nasdaq Stock Market at the close of trading Friday, the deal values each PayPal share at $23.61, an 18% premium to PayPal's Nasdaq-traded price of $20 on Friday.

    EBay said the estimated $1.5 billion price tag includes about $18 million in acquisition costs.

    EBay expects the purchase to dilute earnings because of $13 million in quarterly charges for stock-based compensation and amortization of intangible assets.

    For the second quarter, eBay said it will report net income of $54.3 million, or 19 cents a share, on consolidated net revenue of about $266 million. The company previously estimated revenue in the range of $260 to $265 million.

    EBay plans to report full second-quarter results July 18.

    -Judy Bocklage; Dow Jones Newswires; 609-520-7811
  • According to the article on zdnet, pay pal will continue to live as a seperate standalone service, while thier current system will be replaced with pay pal. So all of thoses using pay pal outside of ebay don't need to worry.
  • actually, i see this working the other way: eBay will start using Pay Pal financial structure to engage in currency speculation and transfers...

    GBP10,000 in cold hard British currency! Bid Now!
    Kuwaiti Dinars 50,000 going fast!

  • Raise your hand if you're surprised.

    Anyone?

    Bueller?
  • by mraymer (516227) <mraymer AT centurytel DOT net> on Monday July 08, 2002 @10:10AM (#3841371) Homepage Journal
    ...or does corporate America somewhat resemble a game of Pac-Man?
  • by totallygeek (263191) <sellis@totallygeek.com> on Monday July 08, 2002 @10:10AM (#3841373) Homepage
    I didn't even get to catch that auction.

  • 1.5B in paypall stock -- Original box, reciept. (Sold by they same folks selling empty PS2 boxes last year)
  • Only yesterday, I was doing an EBay purchase, and noticing that PayPal had gotten slightly more clever at circumventing EBay's attempts to steer buyers to Billpoint. I guess they won that battle!
  • I'm sure that for far less than $1.5 billion, they could have set up a company that does everything that PayPal does, but without PayPal's reputation for treading mightly close to the borderline between incomptence and plain old criminality?

    Does anyone have any theories as to why Ebay want to be tarnished with PayPal's reputation rather that setting up the alternative to paypal that people want?
    • by happystink (204158) on Monday July 08, 2002 @10:44AM (#3841735)
      Because it would take them far more than 1.5 billion to gain the market dominance that Paypal has, and because Paypal only has a bad rep among a small percentage of internet users who reside on boards like this. Any huge company is going to have unhappy users, any huge financial one even moreso, just because you find a dozen unhappy stories (or one sides thereof) at paypalsucks doesn't mean the company is the sham it's portrayed as there.
    • Because to 90% of the population, PayPal doesn't have a bad reputation. It's just within the active trader / nerd universe that PayPal is the evil empire.

      nlh
  • by Guppy06 (410832) on Monday July 08, 2002 @10:24AM (#3841495)
    I trust PayPal about as far as I can throw them, but I like BillPoints just about the same. I always found it rather interesting that they can take money out of my checking account "instantly," but it takes 3-4 days to put money into it (allowing them to earn interest off of mymoney). Of course, there's also PayPal's social engineering attcks ("We can e-mail your buyers when your auctions end automatically, update your PayPal logo to a "Pay Now" button, all you have to do is give us your eBay password...")

    To be honest I'm not really sure what to make of this development. In my auctions I've been flip-flopping between accepting one or the other depending on what price I think it will go for (PayPal is a little cheaper for auctions over $15.00), but either way I still feel like I'm getting ripped off from their per-dollar fees. Heck, at this point I'd rather my buyers mail me a personal check instead, and I'm getting to the point where I'm considering to offer my buyers a refund of the $1.27 if they just mail me a money order instead...

    Will this make things on eBay more smooth? Will PayPal's fees for e-checks more resemble BillPoint's? Will they now start charging a "deposit fee" just as BillPoint does? Will eBay start throwing around their monopoly power at my expense? Will there ever be a new competitor to them? Will this prevent PayPal and eBay from passing the blame back and forth if there is a problem with a transaction? Will BillPoint's fees drop?

    And, most importantly, does anybody else know of a current competitor to both of these people I could switch to?
    • does anybody else know of a current competitor to both of these people I could switch to?

      Yeah, It's called Canada [canada.com].

      It may be really fricken cold here, but if there's anything worth mentioning whenever paypal comes up, it's that we no longer need escrow services up here (as of just last week) We are now in control of our own transactions.. person to person. I don't mean for this to be flaimbait at all.. but our banking is light years ahead [canada.com] of the Americans... just last week.. I payed for my dinner with my bank card (via Interac) AT my table at the restaurant thanks to a nifty little wireless device the waiters carry around with them.

      But back to online transactions, this was BIG news here last week... the introduction of the Canadian banks offering person to person online transactions. I thought it was very newsworthy... a Major technological development.. yea yea.. I submitted the story and it was rejected... and yes.. I actually am very bitter about it.

      Anyways, it's too bad that paypal is still your only option. Cut out the middleman!! Tell your bank you want to do it like the Canadians! :P
      • "Yeah, It's called Canada"

        That's all well and good, but I have international customers and my bank doesn't charge me anything when I make a deposit in a foreign currencies, including Canadian dollars. How much would it cost you to deposit a US personal check? I bet it's not very pretty...

        "I payed for my dinner with my bank card (via Interac) AT my table at the restaurant thanks to a nifty little wireless device the waiters carry around with them."

        Oh yeah, that's what I need. My debit card number broadcast over radio frequencies.

        From one of your linked sites:

        "The banks will watch to see what kind of response there is over the summer months and each will set up their own pricing structure. The fee will likely be between $1 and $1.50 per electronic transfer,"

        For about the equivalent of those rates in Yankee dollars I could sign up with, for example, USPS Payment Services [usps.com] which not only allows me to e-mail people money, but they also tie their "Pay@Delivery" service into Priority Mail with Delivery Confirmation so that the seller doesn't get payment until the package gets delivered. Oh, and it's also one of those BillPay services where they'll mail a cashier's check out to a payee if they need to.

        "along the lines of what you pay to make an automated teller withdrawal at a bank machine that belongs to a bank where you don't do business. "

        Heh heh... except my bank will pay another bank's ATM fees, up to $1.50 US.

        I like my bank just the way it is, thankyouverymuch.
    • Of course, there's also PayPal's social engineering attcks ("We can e-mail your buyers when your auctions end automatically, update your PayPal logo to a "Pay Now" button, all you have to do is give us your eBay password...")

      PayPal can't do near as much damage to you with your eBay password as they could with your payment information. If you give them your credit card number or checking account info, it's ridiculous to balk at them getting your eBay password.
  • i can see this being a step in the right direction. with all the problems revolving around paypal, i hope that ebay can resolve it making it a service that's more responsive to complaints. i only hope that they don't make it an ebay only thing. think of the revenue they'd gain if they keep it open to everyone!
  • by Quixote (154172) on Monday July 08, 2002 @11:11AM (#3842064) Homepage Journal
    It was only a matter of time before Ebay's BillPoint would have pulled the rug from under PayPal's feet. EBay should have stuck with BillPoint, offering their customers incentives to switch to BillPoint. Eventually, they would have made inroads into PayPal's marketshare. It would have taken a year or two, but in the end it would have been much cheaper than $1.5b that they spent.
    • Yeah, they should've pulled a microsoft: Give away the Billpoint services for free up to, say, $100, and 1% or 2% after that. Essential "dump" the CC services, and call the loss a "customer service" expense. Suck away all the revenue from paypal, and if they don't go out of business in a year or two, then buy 'em while they're on the ropes (at a bargain price, of course).
  • PayPal's Issues (Score:5, Interesting)

    by BitGeek (19506) on Monday July 08, 2002 @11:28AM (#3842270) Homepage


    I thought the people upset with Paypal were a small minority until I tried to use the service. I sold a friend something. PayPal screwed it up. The amount of the transaction was $5. But they managed to take the money from my friends credit card, claim they never took it, charge my friends account for it, giving it a negative balance, and reverse the charge on my account.

    So over this $5 transaction PayPal grabbed $15 for itself-- $5 from me, $5 from the friends bank and $5 in a charge to the friends paypal account that they have to pay to fix it.

    Then they decided this friend was committing fraud and suspended their account.

    This is totally unacceptable. This was the FIRST TRANSACTION for all of us, after we both became verified members, etc. The bank is clear that the money went to paypal, and paypal wouldn't say a peep about what went wrong.

    I wouldn't say PayPal was a fraudulent company, but in my experience, they have a %300 failure rate-- 1 transaction and they took money from three entities.

    In the end my friend and I both closed our paypal accounts and settled up face to face.

    Sheesh.
  • by presearch (214913) on Monday July 08, 2002 @11:40AM (#3842365)
    Damn! I bid $1.45 billion and ebay sniped me in the last 20 seconds.
  • I use PayPal's 'Instant Payment Notification' (IPN) feature for my software download site at Centiare [centiare.com]. Once the user's cc info is verified on PP's end, PP and I exchange a series of transmittals before the user is allowed access to my secure download center. It takes around a microsecond and is all done in PHP and shttp - it works really well.

    If you want to see it in action, go to Centiare [centiare.com]. If you have any tech questions, send me a private reply at karln@centiare.com

    Oh, before I forget:

    So, my wife wants to know why I think advertising on the Internet would be a good idea. But first, I should probably explain the family dynamic: she's an Ivy League grad and attorney while I have a UC degree and CPA certificate. Usually, she's the one who is right, so I figure I should probably listen (as if I have a choice).

    I figure it makes pretty good economic sense, since many different sites with low CPM rates still get over a million page views per day. Problem is, she replies, there's probably only around 150-200k unique visitors at any of these respective locations, each of whom is triggering around 5-7 page views per person per day.

    And besides, she continued, using the Jungean Archetype model to illustrate her point, the target audience is devoted to reason, not emotion. This, I concede, defeats one of my central tenants: applying a test to determine whether a person is Apollonian or Dionysian, left-brain or right-brain, etc. in order to assess the likelihood of purchasing my $20 cash management program.

    To be continued ...Centiare [centiare.com]

  • Microsoft

    AOL

    eBay

    Is eBay the lesser of three evils?
  • I use eBay a lot (500+ feedback) and have been mostly happy with them. They occasionally step on little guys, and their terms of service get a little creepier with every rewrite, but I still feel safe using them. They are open about technical problems, they keep the site design simple and clean, and they allow you to use your own HTML code and images in your auctions. And the fee structure has grown slowly and carefully, so it's still a good deal to sell on eBay.

    But they are still a monopoly, and ONE OF THESE DAYS, the board of directors will be sitting around, thinking about ways to "monetize", "maximize", and "synergize", and they'll do something that SCREWS everybody. I can just smell it. Any day now, I'm expecting a massive fee increase, or a rewrite in the terms of service ("thanks to our partnership with the RIAA, CD sales are no longer allowed"), or some kind of limitation on the small guys, or something...it's coming... I can feel it.

    And now by buying PayPal, they just got a little bigger, and they have just a little more control over your online auction life.....

  • by Cyberllama (113628) on Monday July 08, 2002 @03:19PM (#3844023)
    I, like many other eBay users, will only accept paypal with my auctions because like many others, I have been jilted by the poor quality of service of ebay's own service, Billpoint. While PayPal is certainly not known for being big on customer service, it has always had one thing going for it that kept it alive: It wasn't billpoint.

    Paypal's service survived until simply because, shocking as it seems given the horror stories, it was better than the eBay offered alternative. Now with eBay having snagged it, it seems unlikely that they will abstain from changing and likely ruining the service.

    Sad indeed.
  • Viewed through dot-com glasses, I have trouble seeing the sense in this purchase. Through more traditional financial analysis, I have even more trouble.

    EBay is a profitable company (strange, I know!). PayPal is not. Hell, it ain't even close (-78.7M ttm income vs. 139.6M revenue). Buying PayPal puts a serious dent in EBay's own numbers. Before the purchase, its P/E ratio was about 146 ($17B market cap divided by $117M income---I'm looking at 3/31/02 numbers). After, it will be about 448 ($17B market cap divided by $38M income). If that doesn't look bad, consider profit margin. It's currently about 14% ($117M income divided by $840M revenue). After PayPal, it drops to 4% ($38M income divided by $979M revenue). Ouch!

    EBay seemed to be one of the (very) few dot-com companies with a head on its shoulders. Now I even wonder about EBay.

    Btw, did EBay really think that PayPal would be around for *that* long? At the rate it's bleeding cash and annoying customers, I'd think it would be dead in another 3-4 years. Or, did the EBay CEO forget that sometimes it's useful to think of the long-term future of a company?

    Jason

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