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eBay’s PayPal Beta: Too Little, Too Late?

eBay’s electronic payment division PayPal is responsible for the bulk of eBay auction payments, and a new beta version is in the process of being launched. Against this backdrop is a groundswell of disgruntled Internet Marketers. Is it too little, too late?

PayPal (part of eBay’s Payments division) is one of the key pieces of the auction giants empire, powering it’s payment capability. It’s in the process of launching a revamp:

paypal beta

Although these are somewhat pleasant features to have, they’ll have to contend with a group of disgruntled Internet Marketers, particularly users of Jonathan Leger’s $7 script, which administers a mini affiliate marketing scheme through PayPal’s APIs.

Read through this thread at Jon Leger’s 7Dollar Forum and you’ll get the distinct impression that PayPal’s frontline customer service seems ill equipped to deal with the issues that Garrie Wilson, Patrick Petty and Jon himself have raised.

Is it because PayPal staff are used to dealing with auction payments and assume that the 7Dollar delivery mechanism is some type of nefarious multilevel/ponzi/pyramid scheme?

It’s not clear, though seeming to arbitraily freezing PayPal accounts certainly doesn’t seem to be a pro-customer measure.

Surely, you can hear us Internet Marketers out, PayPal?

Many of us use PayPal as a payment gateway for our smaller product launches, we contributed a fair amount of your $1.44 billion revenue last year.

paypal payments

As a payment processor, PayPal already generates income from the following revenue streams (from eBay’s financial filings):

PayPal earns revenues in the following ways.

  • First, PayPal earns transaction fees when a Business or Premier account receives a payment.
  • Second, PayPal earns a foreign exchange fee when an account holder converts a balance from one currency to another.
  • Third, PayPal may earn fees when a user withdraws money to a non-U.S. bank account,depending on the amount of the withdrawal.
  • Fourth, PayPal earns a return on certain customer balances. Finally, PayPal may earn ancillary revenues from a suite of financial products, including the PayPal-branded debit card, the PayPal-branded credit card and the PayPal Buyer Credit offering.

While PayPal can certainly determine it’s own policies without close dialogue with its non-eBay users, it’s merely a matter of time before alternatives such as Google Checkout, 2Checkout or Clickbank more aggressively market their services and expand their service offerings to meet the growing needs of Internet Marketers.

When that happens, it will certainly be interesting to watch the market develop.

10 comments on eBay’s PayPal Beta: Too Little, Too Late?

  1. Natron
    June 27, 2007 at 10:32 pm (4956 days ago)

    I have to say I was very happy with 2Checkout as a buyer. They actually called me to asked how the transactions went, with both the seller and using their system. Gave me a better felling than just throwing money over the wall the way you have to with PayPal.

    PayPal has to deal with fraud, but it seems they are not that proactive at picking it up. The standard answer is to either allow a charge back or lock the accounts involved for some undisclosed amount of time.

  2. Chris
    June 28, 2007 at 2:27 am (4956 days ago)

    Interesting article but seems to be missing one angle on the story – ebay’s own clout.

    When Google checkout came out I started to add the payment option to my ebay listings – I had only TYPED the word google in the first item’s description when the ebay page flashed up a warning that it was not an “accepted” payment procedure and listings with it mentioned would be removed and accounts may be frozen/suspended!!

    What movement is there for a free market and alternative payment processors when one of the big players effectively freezes out all competition to their ‘tame’ payment processor that brings in so much revenue to their ‘group?’

  3. Andrew Wee
    June 28, 2007 at 4:58 am (4956 days ago)

    Hi Natron,
    To give credit to PayPal, they have put payments up for “resolution” in their dispute resolution center when some buyers felt their first line of resolution was to file a dispute immediately.

    It just feels like and likely rightly so, since the bulk of eBay’s payment services is geared towards auction payment and settlement, there aren’t many staff who are geared towards the complexities of dealing with something like the 7Dollar script or payment issues outside of a winning auction bid.

    I was at an eBay Explained event, where PayPal’s Asia-Pacific head was present, I could sense that she was generally interested to help, but was not familiar with the mechanics of Internet Marketing.

    Perhaps they ought to set up a feedback panel or focus group in order to better understand the industry and see that we’re more than the make money quick/ponzi group that we ALL seem to be.

  4. Andrew Weer
    June 28, 2007 at 5:03 am (4956 days ago)

    Hi Chris,
    Missing clout?
    I thought the clue PayPal’s revenue of “$1.44 billion” would give the game away.

    I am very sure (although I haven’t looked at Google’s financials yet) that Google Checkout doesn’t come anywhere near that amount!

    I don’t think there’s really a call for a “free market”. Let’s look at the reality of it. eBay is a private marketplace, they’re not claiming to be a Nasdaq where almost anyone in the world can buy and sell shares on the exchange.

    If you’re going to play on eBay, you have to follow their rules. If you don’t like the payment processor, then leave. But eBay owns the auction market, just like Amazon owns the book market.

    You either play by the rules of the game, or you find your own alternative.

    There was a recent bout of “Google vs eBay” recently. Did you catch that post listed in my Speedlinking series?

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