posted on September 29, 2001 04:38:44 AM new
If PayPal deposits customer funds into an FDIC insured instution, then why the "fraud insurance" by Travelers, or is the security of PayPals servers and software that bad...
posted on September 29, 2001 10:00:36 PM new
I know that the FDIC only insures money once it is screened (appears as a transfer or deposit on their ledger more commonly referred to in the insustry as screened ie hitting their computer screen) to the account. I think you people are generally and abysmally failing to see the point I am making. The point is more on the macro level, not one or two accounts being held up or frozen. Yes the internet has become a tool that scheme artists use. As to the individual who was investing money and collecting his money via PayPal I can see why they froze his account. I have been involved in the finance industry all my life. Any one claiming to accept funds via a method that costs them almost 2 points off the bat raises questions in my mind, But I am sure PayPal looked into his investment program. I can assume he was not a registered or licensed securities broker or trader and he was dealing in some sort of private placement type of deal.
Back to my point, which is two fold. One, does PayPal have such a problem with security that they have to insure accounts, it would appear that way. Two, if anyone in their right mind believes for a single second that PayPal is not utilizing customer funds then they have absolutely no insight into the real workings of the finance industry. And to the people who may read this who dont grasp how banks work, and understand basics such as the money multiplier effect, and how the Federal Reserve operates I am probably talking over your heads. In your normal life and at your local federally chartered bank it does not affect you. They must adhere to banking regulations that ensure their stability. However PayPal by being the direct account holder on its customers behalf can leverage various banking instruments against the account(s). When you look at PayPal's fees, 30 cents and 2.5 percent ( I have rounded it off) you need to question How do they make money, how are the founders all billionaires. They still have to pay some fees for processing credit cards, interchange rate is 1.8% (low side for a retail merchant) which only leaves 0.6% + 30c, then you factor in employees, web hosting, the 5 dollar sign on bonus, the fact that paypal to Paypal is free... it all does not add up. I am sorry but on the fraction of what is left, there is no way they could be making THAT much money. Just think about it.. you will get it!
posted on September 30, 2001 08:13:31 AM new
financeguy-
who said paypal is making money?and who said the founders are billionaires?if they are,then it is not through paypal.
the best is to grab the IPO PROSPECTUS ,call your broker and read the fine prints,anyone who buy shares at the IPO price will see instant dilution when the employees,venture capitalists,founders shraes are included in the coumputation of book value,if there is any??
i guess there will be book value after SUCCCESSFUL IPO because it should turn the equity account into a plus.
startup costs money,some are capitalised to be expensed such as capital equipments -pc,servers,etc,but their software development,research,and marketing expenses i believe are expensed as they incur.hence the BIG LOSS they are reporting.
but the equity investor always look into the future,after this big outlay of equipments and marketing efforts,what kind of future does pappal have??
this is going to be priced into its stock price,can they leverage all that sunk cost into parlaying a profit in the future?
how much can they get out of their software and hardware setup before they have to replace them?
what about competition,all that money they have spent recruiting members,will they stay if say billpoint comes up with a more attractive arrangement with ebay?
also what about ebay as an auction venue,what happens if auction as a fad ,its days are numbered and ebay goes the route of yahoo shops or amzn zshops with billpoint payment method only??
take a look at the subcriber base,how well capitalised and commited are the sellers,yes,paypal has a directory of shops,but how many have the staying power if they dont sell any item,websites keep disappearing when the host start charging a fee for hosting.
yes,you bring up an excellent point-how could they make money when their discount rate is lower,but then who said they are making money??
eventually they will have to turn a profit and they will have to raise their rate or make this up via volume.
they said they are not using customer fund,if the customer signed up for their money market account,i dont think they can use the money as they are professionally managed and regulated,and it is not worth the risk -the rate of return is only 2.7% ??
for those who do not sign up for the money market,many withdraw the fund often.
we can pretty much assume paypal has been subsidising us since day one,just like the rest of the dotcom business with free hosting,free website,free this and free that.
you forget to mention they are also offering 1 1/2% cashback if you use their debit card(there is a catch though,to get this cashback you have to be a paypal premier/business account holder plus offering paypal as the preferred payment method on ebay) .
now they are offering visa credit card,so that could be a money maker,you dont pay your balance in full ,then interest charge kicks in and we all know how proiftable it is when customers dont pay their balance in full.
i can see the rationale of taking the company public,soon you will see their credit and debit cards being used widely,i have used my debit card at usps and supermarkets and it works fine.
paypal has been tracking this type of activity,they aint no fools,stay on top as the number one online payment provider before citibank comes in.
posted on September 30, 2001 04:45:34 PM newwhy the "fraud insurance" by Travelers, or is the security of PayPals servers and software that bad
FinanceGuy, if PayPal's servers or software was that bad do you think they'd be able to afford the premiums for Travelers insurance against fraud. I'm not sure if you have any dealing with other online payment services but you will find that some of them (C2it, MoneyZap, PayDirect, etc.) offer no protection against unauthorized access from hackers, viri, or stolen passwords.
If you have any knowledge of encryption and computer security you might recognize who Martin Hellman is (I'm betting you don't). You can find hundreds of articles about him on the internet, you can also find out what his relationship is with PayPal.
posted on September 30, 2001 05:39:29 PM new
i dont know who is martin hellman,so who is he??
months ago some of us received emails which claimed to be from paypal and asked us to click on hyperlink to get our bonus.
i did and i come to a screen which said sign in with your payapal password,which i did and then the screen went blank.
i always withdraw my fund daily so i would not know what comes after someone captured my password.
i suspect this kind of fraud is easily done by some crooks who know how paypal system works and have access to their subscriber emails,say does paypal use a lot of contract programmers??
posted on September 30, 2001 08:54:48 PM newi suspect this kind of fraud is easily done by some crooks who know how paypal system works and have access to their subscriber emails,
These frauds have no basis in inside knowledge of PayPal. Stealing passwords from a fake login screen is a trick known since the early days of timeshare. Spammers have been harvesting email addresses from eBay since shortly after eBay appeared. Combine the two and you have the contemporary fraud.
The reassuring part seems to be that very very few people were fooled.
