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Comment by patio11 | Hacker News Reader

The amount of horror stories about Paypal significantly outnumber the horror stories about regular banks or credit card companies.

I surmise this is because you're a techy and you talk to people who run businesses online on a regular basis. If you spent a lot of time on, e.g., credit card discussion boards (they exist), or spoke to "regular people" about their payment issues on a regular basis, I suspect you would come to the opposite conclusion in a hurry.

Paypal is not a scam which achieves profitability by freezing accounts. That is crazy talk.

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You are right I'm a techy, I talk to people who run online businesses, they use PayPal and other methods. PayPal is by far the biggest problem when it comes to payment solutions. Also I'm from Europe, which means I talk to people who use the common solutions in Europe to deal with payments, which is direct bank transfers or an online alternative provided by banks (such as iDeal in Holland). While our banks don't require as much documentation as PayPal sometimes requires, you also don't have to threaten them with lawsuits to get your money (I've seen that happen). They even have an chief escalation officer who jumps in in case clients threaten them with lawsuits.

PayPal doesn't have the right to just freeze money for periods of 180 days without providing sufficient methods for their customers to quickly resolve the issues. 180 days for freezing all money for one suspicious transaction is absolutely ridiculous. I don't claim PayPal achieves profitability by freezing accounts, I do claim they regularly screw their own customers with questionable account balance freezes.

Banks in Europe are tightly controlled. You have no idea what it's like in the US.

Imagine a system where…

1. You pay a 20% fee to withdraw money from an ATM that doesn't belong to your bank.

2. The bank puts thru a charge they shouldn't, you run out of cash, and you get whacked with a $35 fee.

3. The bank charges you a monthly fee after that - another $35 fee.

4. The bank shuts off your card because you're in another city, meanwhile you're lost in the dark, and alone, and out of money, and can't get a cab.

And on and on and on…

Not to mention outright defrauding.

1. It's a 20% fee when you request $10, or a 2% fee if you request $100.

2. Overdraft fees are disallowed by law and are opt-in now.

4. Also, it's not typically the banks that cancel cards, it's the processing network that does.

Most problems people have with banks are user-error, plain and simple. When you misuse a computer program, you waste time. When you misuse a bank, they charge you money.

re #2: Overdraft fees are only opt-in for certain classes of transactions, namely ATM and non-recurring debit transactions.

Checks, ACH transfers, and recurring debit transactions can still generate overdraft fees without an opt-in consent.

re #4: The networks pulls the trigger, but the standing orders come from the issuing institutions. Fraud detection is often used as a differentiation feature by the networks to attract bank customers, the networks themselves don't have a direct incentive to prevent fraudulent transactions beyond this: they don't stand to take a loss.

The most I paid was $6.50 to withdraw - $2 on my bank's end and $4.50 on the end of the usurious ATM.

That kind of thing is illegal in other countries.

Even a 2% fee is usurious. That right there sucks up any potential interest gain you'd ever have.

In Austria, all ATMs are free, on both ends.

The biggest problem with the North American banking system is the reliance on the antiquated cheque system. In the EU I can send money to any other EU bank account quickly with little or no fee. You can pay bills and send money - and no need for an intermediatary like paypal. The inherently insecure concept of letting others pull money out of your account don't exist. Pushing money also reduces the whole range of service fees relating to bounced cheques and insufficient funds.

It's not crazy talk. I had a terrible experience with PayPal six months ago. I didn't believe all the horror stories and opened an account with them. They decided there was a problem and froze my account - but they neglected to tell me and continued accepting deposits, the freeze only applied to withdrawals. It was extremely difficult to recover my money.

The point is, there are no rules, there is no transparency. Their decisions are entirely arbitrary and you are at their mercy. Never again.

Paypal is not a scam which achieves profitability by freezing accounts. That is crazy talk.

I don't know that Paypal ever achieved profitability. They raised a whole lot of capital, and then when it looked like they might fold, eBay stepped in to make sure they didn't. Paypal's lack of profitability was legendary when I was in online payments, since they were the Microsoft of the industry.

They have achieved profitability, in dump truck loads. In the beginning, they didn't take any fees and so were burning through cash at a terrific rate, now it's around 3%, which is well above the CC processing fees for them, and miles higher than the bank ACH fees on those transactions.

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