Ebay buys PayPal

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.

In this case....

[stevenbee]

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.

Smart Move for Ebay, bad for paypal people.

[nervlord1]

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?

What's ebay's interest?

[stere0]

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?

EBay and PayPal ... not my favorites

[SuperDuG]

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!!

Brave New World

[MarvinMouse]

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. :-)

Re:Great Now Paypal will be as useless as EBAY PAY

[tshoppa]

Ebay Payment is substandard.

I disagree. For Ebay payments buyers you don't have to go through the Paypal "registration" process (where they try to persuade you to upgrade to Premier where they get your bank account information), and for Ebay payment sellers you get deposit straight to your bank account without sitting around in a namby-pamby "paypal" account first.

Both systems did have strong discouraging factors for non-US buyers, but things have gotten better for both sides in the past couple of years.

Ebay payments did always have a larger seller fee than Paypal, though.

I thought the Amazon "Zshops" system was pretty cool for both buyers and sellers. The nice thing about it is that it worked for non-auction sales *and* it didn't require an extensive registration process like Paypal. But it appears to have never really become popular with users.

Bright side: eBay now has leverage on deadbeats

[patmandu]

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?

Re:Ts&Cs?

[Tranvisor]

Terms and Conditions,

Paypal's are pretty draconian.

"All your money is belong to US!"

I'm not sure what to think...

[Guppy06]

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?

Ebay shareholders got shafted

[Quixote]

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.

PayPal's Issues

[BitGeek]

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.

Re: eBay acquires PayPal in $1.5b deal

[knco]

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 [e-mail]

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]

Re:What's ebay's interest?

[swb]

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.

Re:Domination of an Industry

[djtack]

Is there a viable alternative to eBay

Yes. Check out ePier [epier.com].

Re:BayPal, ePay?

[Some Dumbass...]

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.