Stories PayPal Told Me; Would You Believe??
26 November 2013
“I have you surrounded by the entire mounted 17th Bengal Lancers.”
“I don’t believe you.”
“Would you believe the First Bengal Lancers?”
“No.” Khan (Bill Dana)
“How about Gunga Din on a donkey?” Faversham (Don Adams)
Recently in a 72 hour time frame, various associates had their online sites hit by multiple "PayPal shoppers".
The typical modus operandi was:
- Direct email contact.
- Made a 25% or so offer on a product, with free shipping.
- And/Or the buyer tells the shop, if they had PayPal the buyer would have bought the item.
- Buyer gives one or more reasons why the shop should carry PayPal.
The commonality was the sites did not offer PayPal.
Years back one enterprising individual, unrelated to this site, moved off eBay and setup two online shops with no name connection to their eBay store. Both sites had mostly the same products. Both were setup with merchant accounts to accept major credit cards. One had Google Checkout as an additional payment option, the other had PayPal as an additional checkout option.
The site without PayPal was hit by "PayPal shoppers", the other site was not. Nothing unusual there, but a few days later a purchase was made from the shop hosting PayPal. The owner figuratively scratched her head; something was familiar with the item purchased.
- It was one of the items fingered by a "PayPal shopper".
- Direct checkout. Paid full price. Paid full shipping.
- Same IP address.
- Payment was not through PayPal. Something about Karl Malden.
Moving along, and just what were the pithy PayPal pitches spread by the "PayPal shoppers"?
"Life is pain, Highness. Anyone who says differently is selling something."
Man in Black/Wesley, Princess Bride (1987)
'Most shops accept PayPal.' ("PayPal shopper" paraphrased)
In the United States (U.S.), False.
The actual answer to what most United States shops do not accept is surprising:
According to the Forbes 16 August 2013 article, "Why Don't More Small Businesses Accept Credit Cards":
To restate, ‘most U.S. shops do not accept PayPal, or any form of credit.’
In the United Kingdom (U.K.), False.
According to the Tamebay 13 November 2013 article "PayPal: SMEs that don't take cards are missing out on £800m", this is what PayPal says about credit acceptance in the U.K.:
- “A PayPal survey”
- “The research says that just over a third (36%) of the businesses surveyed currently accept card payments”
To restate, According To PayPal ‘most U.K. shops do not accept PayPal, or any form of credit.’
On the other hand if you happen to be a seller who only accepts PayPal, be aware of this tip from Community Merchants USA:
“69% of consumers aged 18-34
58% of consumers aged 35-44
say they will only shop at businesses that take multiple forms of payment"
PayPal exclusivity has a price.
What about the rest of Planet Earth?
As whether PayPal is most used by the rest of the planet, read the next section.
“Don’t leave home without it.”
Roger Daltrey, American Express (1985)
'PayPal is the most used form of credit.' ("PayPal shopper" paraphrased)
'PayPal is the most popular form of credit.' ("PayPal shopper" paraphrased)
World wide, False.
PayPal public relations provides these statistics:
- Q1 2012 - "net Total Payment Volume" "$34 billion", "555 million transactions"
- Q2 2012 - "net Total Payment Volume" "$34 billion", "565 million transactions"
- Q3 2012 - "net Total Payment Volume" "$35 billion", "589 million transactions"
- Q4 2012 - "net Total Payment Volume" "$41.5 billion", "692 million transactions"
The 2012 total net Total Payment Volume is $144.5 billion", or as PayPal put it "PayPal’s net Total Payment Volume for 2012, the total value of transactions, was $145 billion”.
The 2012 total transaction count was 2,401 million.
Impressive, but let's put this in global context.
This is their 2012 view of the competition:
- “We may face increasing competition from emerging players in the payment space, many of which are non-financial institution networks that have departed from the more traditional business model. The emergence of these potentially competitive networks has primarily been via the online channel with a focus on eCommerce and/or mobile technologies. PayPal, Google and Isis are examples.”
To understand this corporate equivalent of a yawn, let’s insert the appropriate PayPal amounts in the Visa competition chart:
Payment Total Cards/Accounts
Visa $4,018 81.6 2,128 million
MasterCard $2,693 46.3 1,158 million
American Express $884 5.9 102 million
PayPal $145 2.4 110 million
Discover $122 2.1 62 million
JCB $179 1.6 79 million
Diners Club $27 0.2 6 million
For the moment, it appears PayPal is a footnote to Number 1 Visa. Or PayPal is considered part of the MasterCard network. After all, take a look at the logo on your PayPal credit/debit card. It’s not PayPal or eBay. It is MasterCard.
Or for some of you, Wells Fargo.
As PayPal put it about credit card networks:
- “PayPal does not directly access payment card networks, such as Visa and MasterCard”
- “While the regulations adopted by the Federal Reserve Board in June 2011 do not treat PayPal as a “payment card network,” future changes to those regulations or to PayPal’s business could potentially cause PayPal to be treated as a payment card network”
- “PayPal is dependent on the processing companies and banks that link PayPal to the payment card and bank clearing networks to process transactions.”
'PayPal is the safest …' ("PayPal shopper" paraphrased)
As of 23 November 2013 PayPal said:
“PayPal's industry-leading loss rate is less than 0.5%.”
As of 26 November 2013 PayPal said:
“PayPal maintained a very low loss rate of 0.30% or approximately one third of 1%.”
In 2000 the fraud rates for Visa and MasterCard were:
- “From eMarketer of November 2000 we learn that Visa and MasterCard report overall rates of credit card fraudulent transactions of 0.08% and 0.09% respectively.”
The paragraph continues with:
- “As far as e-commerce credit card transactions are concerned, eMarketer from January 2001 reports tht of 60,320,000 online B2C transactions in 1999, only 18,600 (i.e. 0.03%) were fraudulent.”
Better numbers than 2013 PayPal, but definitely old statistics.
Moving to 2013, The Wall Street Journal 11 March 2013 article "Visa Says Big Data Identifies Billions of Dollars in Fraud" states:
- “Visa’s fraud detection efforts moved into the digital world 20 years ago”
- “6 cents out of every $100 in transactions are believed to be fraudulent.”
That’s a 0.06% fraud rate for Visa, versus PayPal’s "0.5%" err "0.30%".
“What’s Love Got To Do With It”
“PayPal. The world’s most-loved way to pay and get paid.” PayPal
When PayPal shows the cold statistics proving the claim, we’ll mark it true.
"What is love" was the most searched phrase on Google in 2012"
Then again, “love” is unquantifiable. Let’s do something TONGUE-IN-CHEEK IRREVERANT.
Here’s a Google search using “love”. These are the numbers:
“love paypal” - About 447,000,000 results
* Excludes the nomenclature visa as in passport related.
Winner 'most loved', Visa.
Okay. Let’s try this:
'PayPal. The world’s least-despised way to pay and get paid.'
Doing a Google search using “hate”, these are the numbers:
“hate paypal” - About 14,100,000 results
“hate mastercard” - About 6,650,000 results