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Google Australia The Almighty Buck Technology

Google Scares Aussie Banks 150

Posted by samzenpus
from the move-over-bunyip dept.
mask.of.sanity writes "Google could be the biggest threat to Australia's big four banks because of the trust online users place in it and its ability to engage with customers, banking executives say. They told an audience from the finance sector that companies like Google and PayPal are more responsive and trusted than banks, and cited emerging technology with an emphasis on online applications as a means for the smaller credit unions to challenge the position of incumbent banks. It's welcome news for Australia's credit unions: the nation's banks have taken turns in being the first to lift interest rates above the official reserve bank rate, with others collectively following suit, leading some to speculate they are in collusion."
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Google Scares Aussie Banks

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  • by mr_mischief (456295) on Monday November 08, 2010 @04:21AM (#34159726) Journal

    Perhaps there's some cause and effect going on there. Companies that are more responsive to customer demands and concerns are, in my experience, more trusted by the customers. Perhaps the banks have already figured out how to compete and just don't realize it yet because being competitive cuts into profit margins.

    • by Nursie (632944) on Monday November 08, 2010 @04:29AM (#34159752)

      Yeah, I'm about ready to jump ship at the moment. I applied for a credit card with ANZ a week and a half ago. They tried to call me the next day and I missed it. Since then I try to call back every day or two, to find out what they wanted, but every time I get put on hold and I'm afraid my patience runs out after 15 minutes of that. I've been to the local branch too, but all they can do is phone the credit card folks and wait on hold with me.

      I don't actually need your credit card enough for me to put up with that nonsense, thanks.

    • by Barefoot Monkey (1657313) on Monday November 08, 2010 @05:48AM (#34159936)

      Perhaps there's some cause and effect going on there. Companies that are more responsive to customer demands and concerns are, in my experience, more trusted by the customers. Perhaps the banks have already figured out how to compete and just don't realize it yet because being competitive cuts into profit margins.

      Being uncompetitive is far more profitable until competition comes and ruins everything.

      • That's the exact truth in too many markets. And that's what leads to uncompetitive companies being anticompetitive companies. They'd rather play the scared victim than return the threat by actually following the trends in the market.

      • by Zeek40 (1017978)
        That's exactly what I thought. Why the hell are the four biggest banks so in bed with each other that they're having meetings to determine which of their other competitors is a threat? What is wrong with the govermnent oversight of the Australian financial industry that those banks have the balls to come right out and state that they're worried Google and Paypal are going to steal the market that they've divided up amongst themselves?
    • by Anonymous Coward on Monday November 08, 2010 @06:37AM (#34160106)

      Perhaps there's some cause and effect going on there. Companies that are more responsive to customer demands and concerns are, in my experience, more trusted by the customers. Perhaps the banks have already figured out how to compete and just don't realize it yet because being competitive cuts into profit margins.

      You have to wonder just how bad these Australian banks are when PayPal is "more responsive and trusted".

      PAYPAL?!?!?! "more responsive and trusted"!!?!?!

      Is dealing with these banks like handing your money over to the first meth fiend you can find laying in a ditch?

      • Paypal may be bad but the fact that they're still better than the majority is deeply depressing.

        If they were subject to any kind of law other than their ToS and couldn't confiscate your money on a whim paypal would be even further ahead.

        • by Yvanhoe (564877) on Monday November 08, 2010 @09:35AM (#34160684) Journal
          I also used to complain a lot about paypal and the ridiculous fees they impose to some transfers and then I compared to what banks offers. It was in 2009. These banks apparently STILL DON'T KNOW THAT INTERNET EXISTS. Paypal may have exaggerated fees, but regular banks have blatant racketing schemes (that you have to sign for 4 years minimum). It is actually that bad and Paypal IS very competitive compared to the usual bank sharks.
      • by TapeCutter (624760) * on Monday November 08, 2010 @09:11AM (#34160558) Journal
        From an Aussie POV the claims sound like absolute bullshit to me. People might use PayPal to transfer a few bucks over the net but they're not going to put their life savings into it. Who the fuck do you call if there's a problem with PayPal, where are their bricks and mortar branches? The big four may be arrogant, slow and greedy but they are big because most Aussie's know they are the safest bet going.
        • by Bigjeff5 (1143585)

          Who the fuck do you call if there's a problem with PayPal, where are their bricks and mortar branches?

          From what others are saying, the brick and mortar branches just call the home office and sit on hold like everyone else.

          Other than sharing the misery of waiting on hold, it doesn't sound like an improvement over PayPal to me.

          • The brick and mortar branches' non-teller employees seem good at providing information; I haven't had any major problems to work through, and I don't want to rely on what I've overheard form bits of other peoples' conversations.

          • "the brick and mortar branches just call the home office and sit on hold like everyone else."

            I think that claim is utter bullshit, I've never expereinced it with any of the big 4 banks since I left HS 35yrs ago.
      • by gknoy (899301)

        Trusted isn't the same as Trustworthy. It may just be that Paypal works as expected for so many people, and is so convenient, that many users forget (or disregard the risk implied by) the horror stories.

        • It's easy for people to overrate the actual concern that stems from vivid rare events like the PayPal horror stories.

    • by mjwx (966435)

      "Responsive and Trusted" does not mean in any way shape or form that PayPal and similar services are in any way responsive or trustworthy. All this story indicates is that they are _more_ trustworthy then they big four banks.

      Some banks have effectively shut down operations outside of normal business hours making it difficult to impossible for some Australians to get to an actual bank, fees are hidden and slanted towards the banks favour to the point of outright fraud in some cases and the only method of app

      • by drsmithy (35869)

        It's next to impossible to find a credit (or debit) card that will not charge a minimum of 2% on top for foreign currency transactions.

        Just a point that there's nothing unusual at all about Australian banks doing this, and certainly all the banks I've ever used while living abroad did exactly the same thing (though the exact amount obviously varies).

        I was fortunate enough back in the day to get a Wizard Credit Card, however, which has no additional fees or charges - nor exchange rate padding - for forei

        • by mjwx (966435)

          Just a point that there's nothing unusual at all about Australian banks doing this

          Never said there was anything unusual about it, in fact as we both pointed out it's quiet "usual".

          As I was trying to point out, this is how Australian banks like to rip people off. Not only do they take 2% of a transaction when it's completed in a foreign currency (we are one of the _few_ nations where this is done, let alone the norm) but you also pay a $4 flat fee for using a visa cash advance and possibly a $2 fee for

          • Re: (Score:3, Interesting)

            by drsmithy (35869)

            Never said there was anything unusual about it, in fact as we both pointed out it's quiet "usual".

            I think you might be reading my comment with the wrong inflection. When I wrote it, I was trying to point out it's not unusual for banks to do this everywhere, not just Australia.

            As I was trying to point out, this is how Australian banks like to rip people off. Not only do they take 2% of a transaction when it's completed in a foreign currency (we are one of the _few_ nations where this is done, let alone

          • Re: (Score:3, Informative)

            by Bill Barth (49178)
            It's 3% on my Citibank card here in the US. That's the normal rate for US-based banks for foreign transactions, BTW.
            • That's also what my Chase card hit me with the one time I bought something form Canada.
              (They probably made some money on the exchange rate as well, but so does PayPal)

      • I use Savings and loans credit uion in .au, low fees and good interest rates, electronic transfers and internet banking 24/7.

      • I didn't say anything about anyone being absolutely responsive and trusted. I specifically said "more responsive to customer demands are, in my experience, more trusted by customers".

        Notice the utter lack of superlatives.

  • Simple but true (for the moment) ;P
  • Not supprising (Score:5, Insightful)

    by XMode (252740) on Monday November 08, 2010 @04:22AM (#34159730)

    When you put up fees and interest rates well above the RBAs increase, make up some excuse about not having enough income and then post profits in the billions of dollars, people tend not to trust what you say.

    • Re: (Score:2, Informative)

      by John Saffran (1763678)
      Agree entirely .. the really stupid thing about it all is that the only reason they do so is to pad the balance sheet and meet the unrealistic expectation that profits must go up each year. Anything less is a failure.

      Because the big four banks are already so large, it’s impossible for them collectively to grow at a faster rate than the overall economy. For one bank to enjoy higher growth means that they have to market share off the other three, and the big banks appear deeply reluctant to do this.

      It’s clear from recent comments made by the banks that they’re dissatisfied with the rate at which their lending is growing. And this is backed by recent statistics from the Reserve Bank which show that while total bank lending for housing is relatively strong, (rising by 0.6 per cent in August to reach a level that’s 8.1 per cent higher than a year earlier), total business lending actually fell by 0.4 per cent in the month (and was down 4 per cent from a year earlier).

      Faced with weak lending growth, the big banks will only be able to continue to report increases in their profits year after year if they are able to maintain – and, preferably build – their interest margins.

      But this means that the banks are inevitably on a collision course with the rest of the community.

      http://www.businessspectator.com.au/bs.nsf/Article/CBAs-bold-move-may-backfire-pd20101103-ATSKH?OpenDocument [businessspectator.com.au]

    • Re: (Score:3, Informative)

      by Anonymous Coward

      The fact that Aussie banks are extremely profitable is a good thing. It means the person running it knows something about business. That profit is a handy buffer if/when default rates go up, and it also means that your super is kicking along nicely (because almost certainly you have some in banks, probably 25% or so).

      And the financing costs aren't imagined, they are real. The actual increase as been about 1.7 percent or so, and they've reclaimed about 1.4 percent through going above and out of sync with the

      • by TubeSteak (669689)

        The fact that Aussie banks are extremely profitable is a good thing. It means the person running it knows something about business

        In a competitive market, there's no such thing as "extremely profitable."
        Competition is supposed to drive profits down from "extremely" to "normal."

    • Re: (Score:3, Insightful)

      by MojoMagic (669271)
      Not just profits of 'Billions of Dollars', but RECORD profits year after year... During a financial crisis no less.

      People aren't upset about the banks making a profit (that's what they're there for). They're upset because the banks continue to make huge profits and then hike fee/rates/etc all the while complaining that "It's getting more expensive to operate in this industry".

      Boo hoo!
      • Re: (Score:2, Insightful)

        Retail lending is only a small part of the business. And the cash rate targets set by the RBA don't reflect the capital costs of raising money internationally (where a fairly large amount of Australian debt is financed from).

        Of particular note is that that the record profit made by Westpac of ~AU$6billion was on assets of ~AU$700billion. Which is a fairly terrible margin. Also Westpac has the worst debt to deposit ratio of any of the big 4 (aka it is most at risk). Maybe they'll keep some of that cash on ha

        • by quenda (644621)

          the record profit made by Westpac of ~AU$6billion was on assets of ~AU$700billion. Which is a fairly terrible margin.

          It would be if it was their assets, but that number is depositors assets. Perhaps they fail to distinguish.

  • Physical access (Score:4, Insightful)

    by MichaelSmith (789609) on Monday November 08, 2010 @04:34AM (#34159766) Homepage Journal

    With most Australian banks I can walk into a branch to address issues with my account. There are plenty of examples of people dealing with paypal and google where something goes wrong (say their account is suspended) and there is absolutely nothing they can do to make contact and fix the issue.

    I don't think Australian banks should worry until their competition set up "bricks and mortar" premises.

    • Walk up into Paypal HQ and be all like "Yo, gimme my account back!"
      • by daid303 (843777)

        Walk up into Paypal HQ and be all like "Yo, gimme my account back!"

        If that won't work, try again but bring a shotgun with you.

    • Re: (Score:3, Interesting)

      by John Saffran (1763678)
      There'll always be people who prefer walking into a building to do their banking, but for the rest it's entirely possible to have a non-physical bank.

      To take the example of ING, they used to rely purely on online and phone banking (ie. no physical branches period) but have now added the post office network for physical needs and rely on other bank's ATMs for physical money withdrawal. Of course an online bank would need to have excellent reliability on their online systems and excellent customer service
    • by jimicus (737525)

      I don't know about Aussie banks but in the UK, "walking into a branch" to address issues is about as effective as "walking into a tree". You almost invariably find yourself face-to-face with a mindless drone who can do no more than what computer says.

      So if you need help with something and computer says no, so does drone.

      The only effective thing I've found is to write a letter. These normally go to the few people left in the bank who can still read and write, and they're generally quite helpful.

      • Re:Physical access (Score:4, Informative)

        by MichaelSmith (789609) on Monday November 08, 2010 @06:36AM (#34160100) Homepage Journal

        I don't know about Aussie banks but in the UK, "walking into a branch" to address issues is about as effective as "walking into a tree". You almost invariably find yourself face-to-face with a mindless drone who can do no more than what computer says.

        Definitely not with the commonwealth bank here in .au. The people who work there know their jobs are hanging by a thread and go out of their way to be helpful. One branch I go to has a triage person near the front door who gets the gist of your requirements then forwards you to second level people. The last person I dealt with finished the exchange by asking me to rate their performance. It looked like a standard part of the process. I have never known a bank employee to be less than completely helpful. They are about 1000 times better than the web site.

        • My exprience with the NAB is similar but some people just like to piss and moan about banks the same way they like to piss and moan about taxes.
    • by pelrun (25021)

      Careful about tarring both Google and Paypal with the same brush here - Paypal has a long and gruesome history of being extremely quick to freeze accounts and confiscate funds and extremely (or impossibly) slow to release them, though here in Oz it's less prevalent because they're forced to *actually be a bank*. I don't think Google has been nearly as nasty in their similar role.

    • by mjwx (966435)

      With most Australian banks I can walk into a branch to address issues with my account.

      Seeing as NAB (National Australia Bank) doesn't have a branch open on a Saturday within cooee of where I live (15 minutes from a CBD) and CBA's (Commonwealth Bank of Australia) list of fees and charges are ridiculous compared to NAB's. It not that easy.

      If I do take time from work in order to go to a bank all I'll get is a form to fill out. Tellers are handy for opening accounts, deposits, withdrawals and most other ac

    • by drinkypoo (153816)

      With most Australian banks I can walk into a branch to address issues with my account.

      I don't know if things are substantially better in .au, maybe your institutions are still afraid of you crims, much more scary than failed puritans I think. But seriously, being able to walk into a bank doesn't necessarily help you. When I was being dinged with intentional unfair overdrafts by Wells Fargo, which was playing these games with failing to clear deposits until a check came through on purpose more than ten years ago and never got said boo to about it, I could walk into the bank and complain until

      • the local bank tellers aren't really like that (even though I'm a frequent visitor), but a counter guy at the local pizza shop - please be quite, I just want my slice. (I admit I fed into that by chatting with him in the past; have you pretty much ignored the tellers' small talk)

        Haven't checked the CUs

        I am tempted to agree that some of the 'who lives, who dies' decisions made during the financial mess seemed arbitrary

    • You just found it!

      Can you imagine going into a mall to a Google Store to fix settings on your gmail, try out Something In Beta(tm), get a 10 second really weird search result printed out for you in some nifty way ...

      • Google sent a letter (on paper!) to my wife's business. It had a real letterhead with the google logo on it. They were trying to sell advertising. It was the first physical "google" thing I ever saw and it caused a moment of cognitive dissonance. Very strange.

  • by SpazmodeusG (1334705) on Monday November 08, 2010 @04:45AM (#34159790)

    Australia's online banking systems are actually really good. Better than anything I've seen in the USA.

    Now before any fellow Australians mod me down for saying that let me just say I've spent some time in the US. We really do have it good compared to what I've seen of their systems. In the US if you want to view the full history of your online banking you have to seriously pay a fee. Americans actually think it's normal to not be able to download the past years account transaction history with a few clicks without paying for it. You can't download PDFs or CSVs of an account via the online banking systems i used in the USA. Direct deposit to other accounts isn't nearly as easy as it is here either - I'm sure i'm not the only one who buys goods from Australian websites via Australian Direct Deposit rather than a credit card or paypal service.

    Disclaimer: Most of my experience has been with Combank but i know the other Aussie banks are similar - the online banking systems here are pretty damn good. Now if only the home loan rates were a bit more reasonable here in Australia (currently pushing over 7% and rising).

    • by Ihmhi (1206036)

      American here.

      This is not true for all banks. We have hundreds of banks and at least a dozen "large" ones, all with differing policies on things like your transaction history.

      Most banks offer at least 3 months - 1 year of your account(s) history through their online database. This is for a free checking account from my experience. Beyond that you can only get the document in paper and you have to pay for it.

      Granted, this may seem like they're nickel-and-diming their customers, but banks generally make money

      • ANZ's electronic statements get stored for 7 years. While its not as good as the direct transaction history (3 month max), thats still pretty good.
        Oh and the 3 month max also applies to exporting to a large variety of formats including csv.

      • Re: (Score:3, Informative)

        by cyssero (1554429)

        American here.

        Most banks offer at least 3 months - 1 year of your account(s) history through their online database. This is for a free checking account from my experience. Beyond that you can only get the document in paper and you have to pay for it.

        To put it into perspective - the Commonwealth Bank of Australia offer 7 years of statements online for free - even on fee-free accounts. They also allow you to search for previous transactions freely. They probably charge to print out a copy and send it to you, but with online statements going back that far and the ability to export to PDF and CSV - most people easily avoid the fee.

      • Yeah that's still not exactly great by Australian banking standards. I just checked and went back 7 years on my statement history without any hassle on my net banking. I'd be pissed if there was a 1 year or 3 month limit.

        Overdraft fees used to be an issue here but many Australian banks scrapped them after one did it and the rest followed.
        http://www.abc.net.au/news/stories/2009/07/29/2639350.htm [abc.net.au]

        So we have it pretty good here in some ways. The home loan rates being through the roof is the main issue though.

    • Re: (Score:3, Interesting)

      by metrix007 (200091)

      Nah. I'm Australian and have a current account with ANZ and CUA, and used to have an account with Suncorp. In the US I have been with BoA and Chase. I can have transaction history for any period I choose, for free, and if I go into a branch the fee might be $2 or so, same as in Aus.

      The main area the US is behind almost every other country in is direct deposit. I can't easily send money to someone elses account. Most countries have some equivilant of our BSB/account number setup, but not the US. Hell, they s

    • by kramulous (977841)

      Ahh but you can't download a years history.

      Since going debt free and actually earning interest rather than paying it (as well as share market), I have made a big mistake. I forgot (got sloppy) and stopped recording every bank transaction, credit card transaction and high interest savings account transaction I ever make. I have an issue with an energy company that I corrected in January but because another action has happened, the computer systems didn't register the original error. Now I have to prove it

    • by drinkypoo (153816)

      Americans actually think it's normal to not be able to download the past years account transaction history with a few clicks without paying for it.

      It's worse than that, less than a month ago I suggested that we should pass a law stating that the banks would have to permit this — I made the point that it's your data, after all. I got down-modded and called a commie. People seemed to think that it would be somehow arduous to store a few kB per customer on something web-facing. These are the fuckers who are stealing our money and taking it out of the country as fast as they can. And then there's the bailouts... No sympathy for the bankers.

    • by drsmithy (35869)

      Australia's online banking systems are actually really good. Better than anything I've seen in the USA.

      Australia's banking systems are so far ahead of America's it's not even funny - and that's before even getting into the absolutely bonkers US credit system.

    • Aussie here, totally agree the online banking is pretty good but historically speaking, (last 30yrs), a 7% home loan is relatively cheap. If there is one thing I would change it would be to ban all fees, let them compete on interest rates alone, it would make it easy for the consumer to compare and would eliminate the main source of disputes and complaints.
    • by Greyfox (87712)
      The big name brand banks know they can get away with just about anything, and they usually try. I switched to a credit union about a decade ago and have been quite happy with them. I haven't seen any of the shenanigans that the big banks are known for, and they have branches all around the area with quick and easy customer support.

      Given that PayPal isn't regulated, I'd be inclined to trust even a national name-brand bank over them. I trust local credit unions a lot more than that, though.

    • What American bank were you using and in what year? All the ones I've used have offered all the online services (other than free transactions between banks) including viewing old account transactions and statements in PDF format and viewing scanned copies of checks that you have written and have been cashed against your account. They also mostly all offer online bill pay so you don't have to mail the checks yourself, even to just a friends address if you owe them some money for a bachelor party or somethin

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      Aussie in the US here,
      There's an amazing amount of culture shock with things that you wouldn't even think would be done differently.

      The reason why Direct Deposit is virtually unheard of in the US is because their banks are really lacking in account security.
      So much so that all you need is the account number, because the banks assume that only the account holder knows the account number.
      As such, no one gives out their account number, so direct deposit isn't plausible, and they look at you like you're insane

    • by Bigjeff5 (1143585)

      We really do have it good compared to what I've seen of their systems. In the US if you want to view the full history of your online banking you have to seriously pay a fee.

      Uh.. Born and raised in America here, and I've never heard of this. I'm not sure how far I can go back, but I must assume it's the full history. I've done more than a year at once before. No fee at all. All but my yearly statements come in through my email, too.

      You can't download PDFs or CSVs of an account via the online banking systems i used in the USA.

      No PDFs, but PDFs aren't very useful. I can download my account history in MS Money format, three different Quicken formats, two QuickBooks formats, and good 'ole CSV.

      Direct deposit to other accounts isn't nearly as easy as it is here either.

      I don't get this, all the depositor needs is the bank account and routing numb

    • by Cimexus (1355033) on Monday November 08, 2010 @06:04PM (#34166960)

      Australian and American dual citizen here with multiple bank accounts in both countries.

      You are right. The banking SYSTEMS in Australia are light years ahead of those in the US:

      - In Australia you can send money via online banking, for free, to any other Australian bank account (direct deposit). All you need to know is the account number. It's how I paid my rent and some bills for many years. It's not instant but typically the delay is only 1 day for an account at the same bank and 2-3 days for any other bank.

      - In Australia you can pay virtually any bill with Bpay. There's no real equivalent in the US. Sure there are a couple of similar systems I've come across ... but they are each completely unrelated to the other, have no interoperability, and virtually noone uses them. You end up having to sign up to several of these systems just to pay a single bill. What makes Bpay work in Australia is the fact that it's THE bill payment system, and EVERYONE uses it.

      - EFTPOS in Australia (i.e. payment via debit card + PIN): much more widely accepted in Australia than the US. Even someone sitting in a temporary stall on a street corner accepts EFTPOS in Australia, whereas in the US it's really only medium to large stores, in my experience. And many won't let you do 'cash out' (i.e. pay for a $50 item with a $100 debit, and get the remaining $50 in cash, avoiding a trip to an ATM).

      - Due to the above, cheques/checks have gone the way of the dodo in Australia many years ago. I had never SEEN a check in my life before I started living in the US. My parents got rid of their checkbook in the 80s. But in the US they are still very common, and in some areas, almost ubiquitous (I see people using them at supermarket checkouts for God's sake!). It's ridiculously antiquated but Americans seem to love them.

      BUT ... Aussie banks do make ridiculous profits and the focus of this article is more that they have higher fees than in most countries, and tend to nickel and dime you any chance they get. Which is very true. The big four banks certainly could use some more competition. But it's not like they have none - there are plenty of smaller banks and credit unions that are competitive in Australia. But the downside of that of course is that their ATM network is far smaller. I think that's why most people stay with the big four in Australia - free ATMs everywhere you go. Whereas if you sign up with, say, Bankwest or Bendigo or something, you really have to plan ahead when you want to take cash out. Case in point: I am in Canberra quite a bit and I have a Bankwest account. The nearest Bankwest ATM is in Wollongong (lol). Sure I can use Commonwealth ATMs for free for cash withdrawal, but for anything else (e.g. changing my PIN, deposits etc) I have to travel a looonnng way ;)

      Oh and PS, as an Australian, I will NEVER trust PAYPAL with any significant amount of money. They have twice frozen my account for no reason other than the fact that I had logins from different countries within a day or two of each other (did you know that there are these things called PLANES?). Once I can understand. But it took a week to get it unfrozen and I even told them explicitly on the phone that I was a dual citizen and flipped between the US and Australia all the time. And they STILL locked my account for the same reason less than a month later! Argh. PAYPAL are scum.

  • This article doesn't even make sense.

    If Google got up and said we are going to offer a savings account, for me, that would be very difficult and confronting

    Yeah, well, if Google said they were going to offer a used car service, that'd probably be difficult and confronting for a whole bunch of used car salesmen. There appear to be no plans in that direction, and it's an industry that makes absolutely no sense for Google to get into.

    Moreover, comparing banks to PayPal is disingenuous. They don't do nearly the same things. PayPal is a transaction broker. They compete with VISA and MasterCard, if anyone. They don't offer invest

    • Re:What? (Score:4, Informative)

      by nospam007 (722110) * on Monday November 08, 2010 @04:59AM (#34159818)

      "PayPal is a transaction broker. "

      Paypal is a bank.

      "As of July 2007, across Europe, PayPal also operates as a Luxembourg-based bank."
      https://secure.wikimedia.org/wikipedia/en/wiki/Paypal [wikimedia.org]

      • Re:What? (Score:5, Informative)

        by rudy_wayne (414635) on Monday November 08, 2010 @05:26AM (#34159878)

        "PayPal is a transaction broker. "

        Paypal is a bank.

        "As of July 2007, across Europe, PayPal also operates as a Luxembourg-based bank."
        https://secure.wikimedia.org/wikipedia/en/wiki/Paypal [wikimedia.org] [wikimedia.org]

        "In the United States, PayPal is licensed as a money transmitter on a state-by-state basis. PayPal is not classified as a bank in the United States, though the company is subject to some of the rules and regulations governing the financial industry including Regulation E consumer protections and the USA PATRIOT Act."

        https://secure.wikimedia.org/wikipedia/en/wiki/Paypal [wikimedia.org]

        • by Machtyn (759119)
          Who cares what Europe and the US think! This article is about Australian banks. How does the Australian government classify Paypal?

          i.e. you're both right, Paypal is a transaction broker in one place, a bank in another place, but neither of those places is the subject of the current article. ;^)
          • by Bigjeff5 (1143585)

            True, but this is an American website, so we always frame the discussions from an American perspective.

      • by jonbryce (703250)

        I'm pretty sure they are an electronic money issuer rather than a bank, which means you get less protection, and also means they aren't allowed to take so many risks with your money.

    • There appear to be no plans in that direction, and it's an industry that makes absolutely no sense for Google to get into.

      No, I can't see any reason why a company would like to be able to see all the transcations that a person makes, online or offline. Nope, no reason for google to get into that market at all.

    • Yeah, well, if Google said they were going to offer a used car service, that'd probably be difficult and confronting for a whole bunch of used car salesmen. There appear to be no plans in that direction, and it's an industry that makes absolutely no sense for Google to get into.

      Google checkout seems to put them in the same market as paypal.

      • As PayPal, yeah. But PayPal isn't in the same market as banking. People's transaction accounts are a minuscule part of a bank's operations. There core business is more money management - loans, mortgages, investments, speculation - that's where the money is. And that's nowhere near Google's core competencies.

  • by SeaFox (739806) on Monday November 08, 2010 @05:10AM (#34159842)

    Australia's banks must be pretty bad if people trust PayPal more.

    • Re: (Score:3, Funny)

      by Ihmhi (1206036)

      Paypal: we keep your money so safe, sometimes we don't even let you touch it!

    • by drsmithy (35869)

      Australia's banks must be pretty bad if people trust PayPal more.

      Based on my experiences in Australia, the UK, Switzerland and the USA, Australian banks are _excellent_, relatively speaking.

      This is just another aspect of a recent media beat-up of the banks in Australia, spurred on by sob stories about people irresponsibly over-extended in their mortgages. Most people have no concept of how lucky they are in Australia, from a banking perspective.

  • They are BANKERS.

    Why it isn't a given that Bankers will break the law to make money? It is universally true by observation, even if we can't figure out how to prove it empirically.

  • Raise Rates? (Score:3, Interesting)

    by ikkonoishi (674762) on Monday November 08, 2010 @05:56AM (#34159958) Journal

    Is high interest bad? Doesn't that mean that they give higher returns on deposited money or is this just the interest on loans?

    I can see that if the banks can raise the interest they charge on the money they loaned out alone that collusion would be a problem since otherwise the customers would just refinance with another bank with lower rates. If they all work together the customers don't have anywhere else to go, but I would think that if they all raised rates then unless there was some legislative block on credit union type places popping up to attract customers away that they would be limited by the chance of bank runs.

    • Re:Raise Rates? (Score:5, Insightful)

      by kramulous (977841) on Monday November 08, 2010 @06:41AM (#34160126)

      I'm currently earning a 6.51% on the cash that is not invested (probably will raise another 0.25% at least in the next few weeks). So, you are right. I am earning a nice, guaranteed rate on idle cash deposits. Not as good as shares, after the biggest drop in 80 years, but a bankable rate.

      It's a predictable two edged sword ... those that are debt addicted suffer, those that are not are happy.

      • those that are debt addicted suffer, those that are not are happy.

        Everybody is 'debt addicted'. Even you, though it sounds like your vision might be too narrow to recognize it.

        Money creates debt through its very existence. It's impossible for crippling systematic debt not to accrue. That's just how it is. It sounds like you've managed to be among the small percentage able to dance a little faster than everybody else on the shrinking number of ice cubes, but as the whole thing slides under it will have been wise to make sure you weren't too smug or Darwinian in your th

  • Aren't the banks kind of daft on this one? Trust has always been the main issue with banks since the first bank was ever set up and asked to look after your valuables/money.
  • by dugeen (1224138) on Monday November 08, 2010 @06:05AM (#34159996) Journal
    People trust Google more (if indeed they do) because they expect less from them. Google's free services promise nothing (in a legal sense) but usually deliver an acceptable service; banks have definite legal obligations which they often fail to meet. If you have to deal with Google in an IRL sense (trying to get them to fulfil their data protection obligations, for example) you'll form a different impression - you might well prefer to be on the phone to a bank's Indian call centre, staffed by people who can't understand you and couldn't help you if they could.
  • You know something is wrong when Paypal is more responsive and trusted than your own bank...
  • I trust Google... (Score:3, Informative)

    by aceofspades1217 (1267996) <aceofspades1217@g[ ]l.com ['mai' in gap]> on Monday November 08, 2010 @07:05AM (#34160214) Homepage Journal

    more than banks hands down. My family are invested in a regional bank and I just got an e-mail stating that they are ending my free checking and that if I don't deposit more money they will charge me $5 a month.

    Google may not be perfect and they screw up sometimes but they are the kind of screw ups you glance at shame on you and move on. I mean sure they were taking public wifi data but cmon' it was public data and it was just random packets so that they do location services. Heck, I have an incredibly hard time finding unsecured networks as almost all routers nudge users to security a lot more then they used to. My friend's aptartment has no internet and there are 15 wifi networks and all of them are secure.

    Anyways, how can credit unions be shamed for "collusion", they aren't even a for-profit company. Credit unions are the closest thing the banking sector has to a charity so saying they are colluding is like saying the United Way, Red Cross, and Goodwill are colluding for holding joint event.

  • by Ritz_Just_Ritz (883997) on Monday November 08, 2010 @08:53AM (#34160486)

    Those aren't words one would usually hear associated with Paypal. Their customer service is rather poor in my experience so I shiver to think what bank customer service must be like in Australia.

  • If PayPal are more trusted than the banks that makes it very clear just how bad the banks are. I wouldn't trust PayPal with toy money my nephew left down the back of the sofa.
  • People think that banks are in collusion? But... that's unpossible!

    Pfft, next they'll tell us that big oil is doing price fixing at the pumps...

  • ...if so, then banks have a very, very big problem.
  • I gotta say, if Australian banks are LESS responsive than PayPal...holy crap. I'd rather keep my money stashed up a crocodile's butt than give it to PayPal. It'd certainly be easier to get at.

  • by Animats (122034) on Monday November 08, 2010 @01:02PM (#34162598) Homepage

    The problems with PayPal are well known. PayPal should be regulated as a bank in the US, so customers have recourse to banking regulators when PayPal is holding the customer's money against the customer's will.

    Not that PayPal's competitors are better. WePay got press by putting a block of ice with money inside in front of the PayPal conference. But they have miserable customer terms [wepay.com], like PayPal:

    • You may not transfer or assign any rights or obligations you have under this Agreement without WePay's prior written consent. WePay reserves the right to transfer or assign this Agreement or any right or obligation under this Agreement at any time. That's backwards, since they have your money, and you don't have their money.
    • You agree that WePay, in its sole discretion, for any or no reason, and without penalty, may suspend or terminate your Account (or any part thereof) or your use of the WePay Services and remove and discard all or any part of your Account at any time. Discard your account? With your money in it? That's what they're saying. Banks have to immediately refund your money if they close your account.
    • IN NO EVENT SHALL WEPAY, its EMPLOYEES OR SUPPLIERS BE LIABLE FOR LOST PROFITS OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH OUR WEBSITE, OUR SERVICES, OR THIS AGREEMENT (HOWEVER ARISING, INCLUDING NEGLIGENCE), UNLESS OTHERWISE REQUIRED BY LAW. Banks can't get away with that.
    • WePay reserves the right to change, modify, add, or remove portions of this Agreement (each, a "change") at any time by posting notification to the WePay website or otherwise communicating the notification to you. That's out of line for a bank-like service.
    • Any Claim between you and us shall be resolved, upon the election of either you or us, by binding arbitration. So you can't sue them. Banks have been in trouble for that, even for credit cards, where you owe them money. Remember, WePay is a depository institution - they hold your money. You never owe them money.

    As for having a "brick and mortar" location, when I run WePay.com through SiteTruth, it reports the address of a house in San Jose [sitetruth.com]. That's the address they gave the U.S. Securities and Exchange Commission as their place of business.

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