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  1. #1

    Default PreyPal: The New Way To Pay In-Store

    11 March 2012
    Revised 11 May 2012

    This “Business Insider” graph clearly shows that since John Donahoe took the helm, notwithstanding his efforts to attract “national brands” to the site, the only sign of any organic growth at eBay has been coming from PayPal, and that too will atrophy when Visa’s “professional” online gateway, V.me, and MasterCard’s online Digital Wallet finally arrive. (Funny how the blue-coloured Marketplace bit is starting to look like a beached whale.) And, what then about Donahoe’s latest batch of off-eBay PreyPal products? These new PreyPal “clunkers” can only be more delusions that he must have collected on his many trips with Alice down the rabbit hole.—Dream on John …

    PayPal: “The New Way To Pay In-Store”

    To hear the way The Home Depot’s Steve Holmes spins this “PayPal at Home Depot” story, you have to know that not only is eBay paying the total cost of the rollout of this clunky PayPal product (and any other rollouts elsewhere) but, in addition, is effectively paying Home Depot an ongoing fee for the opportunity to do so.

    The article to which these initial comments are directed, “Checking out with PayPal at The Home Depot” and which quote the following remarks from Home Depot’s Steve Holmes and PayPal’s Anuj Nayar, can be found on the AuctionBytes Blog at:

    “The Home Depot has just finished deploying PayPal as a payment method at all of its almost 2,000 U.S. stores, according to The Home Depot spokesperson Steve Holmes. But it’s a little early to report on customer acceptance and adoption since it’s a fresh deployment, he said.”

    But, but, but, what about the results of the test period? Mr Holmes also omits the most important material aspect of this deployment; apparently, the total cost (and how much more?) of this rollout and the promotion thereof has been borne by eBay. And why would Home Depot otherwise consider rolling out to all its stores before they had even evaluated the test unless eBay is indeed footing the bill? It would defy belief. Undoubtedly the “eBafia Don” has liberally “greased” this Home Depot rollout to help give it the appearance of success. Watch for the press releases in this regard from the eBay Dept of Spin; even the possibility of a PreyPal IPO.—Dream on John Queeg-Donahoe …
    “… when I was testing this out, a [Home Depot] checkout person came over and said she had never seen anyone try the PayPal checkout yet. (in Daley City… Part of original pilot)”—in blogger’s additional comments to the below-linked article on Mobile Payments at: http://mobilepayments.wordpress.com/...it-make-money/
    “funny you should mention paypal in home depot philip, i was just in there yesterday and noticed a sign for it at the checkout. i asked the cashier if anyone had used it yet and she said no.”—eBay forum comment, 12 March.
    “Manager at the local Home Depot said that PayPal checkout has only been used twice, failed both times, and the angry customers abandoned their shopping carts and stormed out of the store.”—auctionbytes.com blog, 20 April. http://blog.ecommercebytes.com/cgi-b....html#comments
    “What sold the Home Depot on PayPal? ‘PayPal offers speed, convenience and a lower transaction cost over traditional networks,’”

    Where is the “speed” or “convenience”? Is PreyPal automatically transferring collected funds to the Home Depot’s real bank account the following business day? And, I wonder how that lower transaction cost is being achieved seeing as PreyPal is little more than a clumsy middleman, not dynamically linked into the banks’ payment systems, and that the majority of buyers’ funds will be sourced from buyers’ traditional credit card accounts?

    And, Steve, did Donahoe mention that the PreyPal system offers no nominal-fee EFTPOS “debit” transaction, only the, more expensive for the merchant, “credit” transaction. Oh, he forgot to mention that, did he?

    “The Home Depot does not disclose terms for any of its agreements and said he could only confirm that it was less than other traditional networks.”

    Does Mr Holmes not understand that PreyPal operates as no more than a parasitic middleman clinging precariously onto the back of those very same “traditional networks”? I suspect that this whole exercise is going to be a very expensive “loss leader” for eBay who will undoubtedly be subsidizing the cost ad infinitum to make it look a success. And who will be carrying the fraud risk? Not likely Home Depot I would think, so that will make it an even more expensive exercise for eBay. Yuk!

    “Holmes said the PayPal payment option ‘fits in well with our focus on improving the checkout experience for all of our customers.’”

    Improving the checkout experience? This is, of course, an utterly absurd statement. A PreyPal “mobile” POS transaction is not an improvement over a Visa/MasterCard transaction, in any way shape or form. Man, these guys have been at the Kool-Aid again.

    “The Home Depot provided store associates with handheld devices so they could scan each item in a customer’s shopping cart and provide them with a card they could swipe when they reached the register, speeding checkout time.”

    What? You mean to say there are all these Home Depot employees wandering about pre-scanning stuff each time a customer puts something in their trolley, or are they just attending to people already standing in the queues which are too long because there aren’t enough checkouts? And, yet another “card” to swipe, where?

    “Holmes said it was difficult to discuss the resources required to deploy PayPal’s POS solution …”

    Ah, come on Steve, it’s “difficult to discuss the resources” because you don’t know how much it is costing because eBay is footing the bill, and, in all probability, eBay would have had to further pay Home Depot to let them install their clunky system. Let’s face it Steve, you would not have otherwise touched this clunky PreyPal operation with a forty-foot pole, would you? Regardless, the PreyPal system is clunky and it is Home Depot that will ultimately finish up with egg on its face while the “Pain from Bain” will simply carry on waving his mobile about and continue on muttering about UFO sightings over San Jose.

    “[Holmes is] not aware of any target adoption rate, but said the company would be watching adoption closely.”

    Well, seeing as this roll out has undoubtedly cost Home Depot nothing, if it does not work, Home Depot can simply throw all that, paid for by eBay, POS promotional signage in the skip. And, surely, any “watching adoption” would normally be measured during the test period. So, the test has been sort of done but we don’t really know what the result was, but we’ve rolled it out to all stores anyway. Indeed, the logic of this decision making process sounds precisely like what we have come to expect from any eBay-managed operation. …

    “Already The Home Depot has heard from customers who have forgotten to bring their wallet to the store and checked out using PayPal without having to return home for their wallet.”

    Seriously? Would these customers be those same PayPal employees who came into the store, mobile in hand, still dressed in their pajamas? And what about their driver’s licences? And their heads, had they left them at home too? Frankly, this sort of absurd statement is past being even simply laughable; but, then, this is the sort of arrant nonsense that we have come to expect from the pathetic eBay Dept of Spin.

    “or they can use the PayPal payment card, a store-only spending card linked directly to the customer’s PayPal account.”

    Given that PreyPal is one of the two most despised commercial entities on the planet (I’ll let you can guess who the other one is) and there are a very great many unhappy eBay sellers, just how many of them are there out there happy or naive enough to be leaving their hard-earned funds in a prudentially unregulated, phony PayPal “bank” account? And, what’s this, another piece of plastic? (More on that below.)

    “there are some significant market promotions planned for the last half of 2012 with the 20 retailers that will be participating in the program”—Anuj Nayar.

    “Twenty retailers”. Oh Anuj, please do read us another lovely fairy story from the eBay Dept of Spin. Hasn’t that figure now been revised down to 10 to 15 retailers? Or 5 to 10? Or is it any others? See Storefront Backtalk article at:

    Regardless, no matter how much hot air this gaggle of headless turkeys try to puff into this absurd PreyPal “mobile” POS exercise at Home Depot and elsewhere, it is still a lead balloon and it has absolutely no chance of having even the slightest effect on the traditional payment cards.

    Next time you drop into Home Depot, ask the check-out person if anyone has yet used PreyPal to make a POS purchase.

    The fact is, PreyPal at physical POS, in competition with the traditional payment cards, is about as absurd an idea as could ever have been thought up by even the headless turkeys that run around in circles in the eBay executive suite; it has to be an idea, the germ of which, Donahoe can only have become infected with on one of his many forays with Alice down the rabbit hole, and it will undoubtedly be a total waste of eBay shareholders’ funds …

    And look at how frightened are the investors in Visa, MasterCard and Amex of eBay’s clunky PreyPal: compare their respective stock market performances. Now, that certainly is frightening—for eBay!

    Steve Holmes, are you not yet aware that eBay and PreyPal are, by the majority of their users, now the two most despised commercial entities on the planet, even more despised, on average, than “the banks”? And, what else did that unscrupulous huckster Donahoe try to sell you? You didn’t buy any bridges from him, did you?

    What were you thinking Home Depot? Were you thinking at all? I can only hope that you had a competent lawyer go over your agreement with the “eBafia”.

    “In June 2007, Bain Capital reportedly agreed to acquire HD Supply, the wholesale construction supply business of Home Depot for $10.3 billion.”

    Could this possibly explain how the “eBafia Don” managed to get his foot in the door at Home Depot in the first place. Still, eBay had to pay for the whole PreyPal roll out (and more?) themselves: Bain would surely not be silly enough to put any of their money into this lead balloon idea: “PreyPal, The New Way to Pay In-Store”. Sheesh.

    And a little more light reading on PreyPal at Home Depot POS:

    “PayPal at Home Depot – How does it Work and Does it Make Money?”

    “PayPal’s new POS service is a Piece Of Sh*t”

    Some More Nonsense on PayPal Here from the PayPal Website

    “… pay at the register by typing in your mobile number or swiping the PayPal payment card we send you in the mail. Then just enter your PIN.”

    This is not easier than “tap and pay” with a Visa/MasterCard “chip and pin” card. And, did I hear mention of a PayPal “payment card”? Another piece of plastic! No doubt it will be of the primitive, insecure, magnetic strip type.

    “View all your payments and electronic receipts—along with your other online purchases—right from your PayPal account.”

    This all sounds like an unlicensed, prudentially unregulated, non FDIC insured or regulated banking operation to me. And yo’ all thought the lawless days of the old Wild West were over. Sorry to disappoint you …

    “We also protect your ‘eligible’ purchase if there’s a problem.”

    Yeah, and we’ve all heard that fairy story before, too. And there are 50,000 reasons why buyers won’t be protected but buyers will have to spend a week digging deep into PreyPal’s 527-page User Agreement (that they agreed to by default every time they sign in) to find them. But, hang on, as these “mobile” transactions are at POS, it’s not the buyer but Home Depot that will need protection from payment transactions that turn out to be fraudulent. Then, I’m sure that Home Depot will have insisted that eBay indemnify Home Depot for any such occurrences. …

    “Is it secure? Yes. If there’s one thing people know about PayPal, it’s how seriously we take our customers’ security. Every PayPal product, including in-store checkout, adheres to the strictest standards of risk management, anti—fraud [sic], and consumer protection.”

    Oh, dear me, this statement is so utterly disingenuous, it’s beyond the pale of even the usual fairy stories that we have come to expect from the eBay Dept of Spin. If there’s one thing a great many people have come to know about PayPal, it’s how seriously clunky, unprofessional and unscrupulous its operation is. (Likewise their feelings towards the clunky, unscrupulous, rampant shill bidding fraud facilitating eBay marketplace.)

    “Why use PayPal at the register rather than cash or a credit card? Think about all the ways you pay for your purchases, like your credit card, debit card and cash. With so many statements and accounts to monitor, it’s hard to keep track of your spending. PayPal wraps all your payment options into one easy account so you can view everything instantly in one place. You also get a confidence boost from PayPal Purchase Protection, which covers your ‘eligible’ online and in-store purchases.”

    What a load of arrant nonsense. Unless PreyPal is indeed pretending to be a “bank” and unlawfully accepting “deposits”, then you will still need a real bank account or credit card account with a licensed financial institution for PreyPal to draw funds from, so I would have thought that it was the PreyPal account that was a superfluous additional account on top of your existing bank account and credit card account.

    “What is the PayPal payment card? Do I need it to pay at stores?”

    What, another piece of plastic, one that can be used only for PreyPal account purchases and only at merchants naive enough to have allowed the eBafia Don to buy his way into their store? In the meantime, while you are waiting for your additional piece of PreyPal-only plastic to arrive, you can laboriously punch in your mobile number and PIN number every time you make a purchase.

    Then when you finally get your extra piece of PreyPal plastic to swipe with, you will still be worse off than if you paid directly with your credit card because you will have none of the statutory protections that usually apply to the use of real credit cards issued by responsible (licensed and prudentially regulated) financial institutions. And, anyway, I thought this was supposed to be a “mobile” experience; doesn’t sound very “mobile” to me. Sound decidedly “clunky”, and decidedly inferior to using a traditional credit/debit card. Give me my bank-issued “chip and pin” MasterCard any day. …

    Comical. Actually, this story is beyond comical—it’s straight out of the “Twilight Zone.”

    Steve Holmes, can you yet see anything wrong with this picture?

    “PayPal’s New Digital Wallet Will Offer Personalized Deals, Flexible Payments, And More”

    Part of an interview with PayPal’s director of communications Anuj Nayar and Sam Shrauger, Vice President of Global Product and Experience for PayPal, on TechCrunch at:

    “With the new [PreyPal] digital wallet, you can buy something in a store, take it home and decide later how you want to pay for it. PayPal will offer a five to seven-day grace period for consumers to change their minds. So you can switch from one funding source to another, decide to pay over time in installments and even apply different sources of value (gift cards, airline miles, loyalty points, etc.) to a payment …

    “… PayPal is not about replacing a card swipe with a phone tap at point of sale. We are reimagining money to free it in its digital form so that it can work better for everyone. These features and examples are only the beginning: moving forward, we’re only limited by our ability to imagine what’s possible. …

    “Nayar explains that there will be ‘an avalanche’ of product announcements that will bring these features to life in the coming year, starting in late May. ‘This will be your new PayPal account,’ he says.”

    Clearly, the executive management team at eBay/PayPal have followed Alice down the rabbit hole into that world of fantasy called Wonderland. Still, the telling of such fairy tales is what we have come to expect from the eBay Dept of Spin.

    Actually, it all sounds more like the activities of an unlicensed, prudentially unregulated banking operation to me.

    But, ultimately, one has to ask, why is eBay prepared to pay to try to con B&M merchants into offering the clunky PreyPal at physical POS? Well, the eBay marketplace has been stagnant since Donahoe took the helm in 2007, and there appears to be no further growth prospects there. But, PreyPal has been doing well; unfortunately, as Scotty Thompson recognized, Visa’s online gateway, V.me, and MasterCard’s online Digital Wallet are coming and those professional operations will undoubtedly bury PreyPal’s clunky off-eBay online activities. No more eBay marketplace growth effectively means no more growth for PreyPal either. Oh, what is the “eBafia Don” to do?

    Well, the only other possibility for growth is to try and compete with the traditional payment processors at physical POS. The problem is, PreyPal is such a clunky, unprofessional, unscrupulous operation, really, any idea that PreyPal could make even the slightest dent in the market share of the traditional payment processors is directly out of “Alice in Wonderland”, and these funds being so used to attempt to buy PreyPal’s way into various national retail chains will undoubtedly be a total waste of eBay shareholders’ funds. The only other possible purpose for all this nonsensical activity is an attempt to prepare the way for a soon to be announced PreyPal IPO—otherwise it is simply money down the gurgler.

    Frankly, any such shareholders’ funds would be much more productively spent getting rid of the “Pain from Bain”, John Donahoe. Regrettably, the eBay BoD apparently aren’t that perceptive. And, let’s face it, but for PreyPal having been effectively mandated on the eBay marketplace, it could never have become so successful, nor so despised.

    Let’s face it, the PreyPal system cannot survive if it has to rely on sourcing buyers’ funds from credit card accounts; only if they can source funds by “direct debit” (who would be foolish enough to give them that authority?) on users’ bank accounts, or from funds that sellers’ have been foolish enough to leave “on deposit” with the faux PreyPal “bank”, can this operation continue to be financially effective.

    The fact is, PreyPal is offering the services of a bank—without a licence to do so! And, even as only a “money transmitter”, it habitually breaches the conditions of its licence with its funds holds and rolling reserves on funds due to payees.

    The lawless Wild West is indeed extant in San Jose.

    Am I otherwise missing anything here?

    PayPal Debit MasterCard

    If the funds being accessed by a PayPal Debit MasterCard are being held by PreyPal subject to PreyPal’s all liability avoiding User Agreement then you are dealing with a non-FDIC insured commercial entity (a “merchant of sorts” as PreyPal describes itself when it suits them). It does not matter that PreyPal may itself be holding those funds in a FDIC-insured bank account.

    Under such circumstance you have none of the statutory guarantees that would apply to such funds had you directly deposited them into a FDIC-insured real bank account, nor can you get any relief, I suspect, from any banking ombudsman, if one exists in the US. PreyPal is not a “bank”, it’s a “merchant of sorts” and they can literally do what they like with any funds that anyone is foolish enough to leave “on deposit” with them. Users are simply unsecured creditors—just waiting their turn to be bilked, and if the stories that abound on the internet are any indication, you will eventually be bilked.

    I suspect that the recent change in bank issuer for the PreyPal Debit MasterCard from Chase Bank to Bancorp Bank (who?) is probably a reflection of the ever-worsening image problems that the clunky PreyPal operation has. Any bank that is at all sensitive of its own image would not want anything to do with an operator, such as PreyPal, that has an image problem much worse even than “the banks” themselves could ever have. Regardless, the banks’ poor image has got nothing to do with the professional way in which they perform their part of the payments processing system ...

    And, Bancorp Bank apparently has no network of ATMs so it will now cost $4 to make an ATM withdrawal from your non-FDIC insured faux PayPal “bank” account. Whoopee …

    PayPal Here

    “Anuj [Nayer], who is PayPal’s Global Director of Communications, said payments processed through PayPal Here would be protected the same as any other PayPal payment method - which explains why the Terms of Sale for Here includes a mention of rolling reserves. Yes, merchants who use the new card reader will be subject to the regular PayPal reserves and holds (rare occurrences for sellers in most categories, said Anuj), and PayPal is extending buyer protection to shoppers who transact with PayPal Here merchants.”

    Well, many merchants already know what PayPal “protection” is like; many merchants already know what PayPal “rolling reserves” and “holds” are about; and many merchants already know what PayPal “buyer protection” is about—it has a hard wired bias towards the buyer: effectively there is no transaction mediation process as any reasonable person would understand it. And PayPal’s Nayer gives a different meaning to the word “rare” to what the rest of us understand it to mean … And for all this, PreyPal’s fee is only 0.05% less than Square’s?

    Am I missing something here or is this initial launch information not sufficient to cause this product to be literally “dead on arrival”? And, on this basis, they are trying to sell this product to off-eBay merchants? I think the “eBafia Don” has forgotten that he is not here dealing with captive eBay marketplace merchants but with merchants who will choose the product that is best for them—not what is best for eBay. To me it all sounds like the result of one more of Donahoe’s forays with Alice down the rabbit hole.

    The eBay/PayPal mode of operation of recent times has enabled, indeed has encouraged, every petty fraudster to come out of the woodwork and so easily cheat online merchants. If you are a seller on eBay then you have to put up with that situation, but will off-eBay merchants tolerate such a clunky, unscrupulous operator? I doubt it very much.

    “PayPal’s merchants can sign up for a PayPal debit card, go to an ATM, and withdraw money accumulated from sales, said David Marcus, vice president of mobile at PayPal.

    “PayPal has a good chance of grabbing some of the millions of small merchants who still do not accept credit and debit cards, Oglesby added.” [Dream on …]

    “So, you’re asking, how is this different from other small business mobile payment solutions? The key differentiator is that it comes from PayPal, a trusted brand in the online payments industry with more than 100 million customers around the globe and years of proven payment innovation, driving growth for millions of businesses globally. PayPal Here comes with our world-class fraud management capabilities, and our 24×7 live customer support. In addition to accepting more payment methods, PayPal Here offers a simple flat rate of 2.7% for card swipes and PayPal payments. Merchants are also given a business debit card for quick access to their funds and 1% cash back on eligible purchases – which means if you use the debit card, your fees are actually just 1.7%!”

    “PayPal, a trusted brand …”? He is joking, of course. “PayPal Here comes with our world-class fraud management capabilities …” Oh, dear me, another poor joke. “… and our 24×7 live customer support.” Now I really know that this guy is on the Kool-Aid. “… and 1% cash back on eligible purchases – which means if you use the debit card, your fees are actually just 1.7%!” Another disingenuous distortion from the eBay Dept of Spin. To realize this saving, firstly, you would have to yourself buy goods with your PayPal Debit MasterCard to an amount equal to that which you received via “Here” and even then you only get the cash back if you don’t use your PIN so that the other merchant then pays the equivalent of the much higher “credit purchase” discount fee. This statement sounds very much like eBay’s not long ago disingenuous claim of a “reduction” in fees.

    And again, if indeed the funds being collected (and “held”) by PreyPal are being held by PreyPal subject to PreyPal’s all liability avoiding User Agreement, in a “PayPal account”, then—again—you are dealing with a non-FDIC insured commercial entity. All the comments made above about the “PayPal Debit MasterCard” apply equally to the use of this “PayPal Hear” device. Again, merchant users are simply unsecured creditors—just waiting in line to be bilked.

    PayPal also claims that Here is superior to other mobile payment solutions such as NFC terminals and app payment systems because it includes “world-class” fraud management capabilities and 24-hour customer support. They are joking, of course. And you can take a paper check with Here. Wow, I haven’t seen a paper cheque for about five years …

    The dominant existing player in this field, Square, surely has absolutely nothing to fear from this latest clunky PreyPal offering. Square deposits collected funds directly into the user’s real bank account the following business day as is the norm with merchant accounts with real banks (PreyPal: same day into your PayPal faux “bank” account; three business days otherwise). Square provides its card readers for free to its users. The Square app is also freely downloadable from the App Store and the Android Market. Square charges a fee of 2.75% on every credit card transaction (manually-entered cards cost 3.5% + 15¢ per transaction).

    And, Visa bought a stake in Square in 2011—what does that tell you about PreyPal’s chances? This clunky PreyPal product has got about as much long-term future as PayPal at Home Depot POS (and elsewhere), and that is, none. a

    Frankly, it’s incomprehensible that eBay/PreyPal think that they can sell this clunky product on the stated terms. Well, maybe they can, but only to those who would anyway already be looking for the provider of last resort. And the responsible financial institutions would undoubtedly say that the clunky PreyPal is welcome to those people.


    On 25 April (2012) Square announced a 25% increase in payment volume since March when eBay announced PayPal Here; the many subsequent comparisons of Here with Square have undoubtedly been the best thing that has ever happened to Square. Obviously, for any small online merchant, the nauseating thought of dealing with the clunky PreyPal has given Square a boost that Square could have otherwise only dreamed about …

    PayPal SmartPay at Cumberland Farms

    “PayPal is teaming with regional convenience store chain Cumberland Farms to introduce SmartPay, a new mobile application enabling motorists to pay for gasoline from the seat of their car.

    “The SmartPay pilot program is currently limited to 50 participating Cumberland Farms locations within Massachusetts. The chain encompasses roughly 600 retail stores and gas stations in all, operating in 11 states across the East Coast.

    “In addition to the SmartPay trial, PayPal is currently testing mobile wallet services at more than 2,000 Home Depot stores across the U.S., enabling consumers to pay for items at checkout via mobile device or a special PayPal card. …”

    The Barclays Group is a primary payment processor in Europe, and apparently is naïve enough to licence the use of their “SmartPay” brand name to the clunky, unscrupulous PreyPal. Oh, well, that’s one way to destroy the value of your brand …

    “As for PayPal, the partnership represents an opportunity to acquire new accounts for a pretty negligible cost. To that end, Cumberland Farms CIO Dave Banks confirmed to TechCrunch on Friday that PayPal is footing the bill for the 5-cents-off discount. But it’ll take a lot of gas buying at 50 stations for the expense to be of any significance to eBay.”

    Yeah, well of course, once again, eBay is subsidizing this operation; what POS merchant would deal with PreyPal unless the eBafia was footing the whole bill and then some. And, Cumberland Farms, do you know that all these PreyPal transactions are high-cost “credit” transactions? PreyPal has no concept of EFTPOS …

    “The only confusing thing was that I also received an e-mail that said I had authorized a payment of $100 to Cumberland Farms. The small print noted that it was for ‘up to $100 in fuel’ and said the ‘final payment will only be the amount dispensed.’

    “[Cumberland Farms’ Dave] Banks said Cumberland Farms hopes to roll out the app at all 600 locations and would like to continue the 5-cent discount - or perhaps increase it to 10 cents.

    “‘For us, this is a way to attract new customers who are mobile-savvy,’ he said, adding that the app can help increase customer loyalty. It is also a way for Cumberland, based in Framingham, to save on credit card transaction fees, since the PayPal network is less expensive.”

    What! The PreyPal network is less expensive than traditional credit cards? In your dreams Mr Banks, unless eBay is offering you their special lower (“bait and switch”) introductory rate. And, you think eBay might increase their subsidy for this operation to ten cents per gallon? Well, why not give it a try, the “eBafia Don” is particularly desperate for any type of business activity these days …

    But, what a shame it is that you still have to get out of your vehicle to pump the gas; now, if only they would bring back driveway service …

    PayPal Local (Loco?)

    “PayPal Showed The Future Of Retail Today—And It’s NOT The New Credit Card Reader

    “It lets you walk into a store and buy a product without touching your phone, money, or a credit card—or even taking your wallet out.

    “When you walk into the retailer, their PayPal app (used with the PayPal Here reader) will automatically recognize you. If you want, you can pay with a credit card or cash.

    “It’s so much smoother than the clunky NFC-based system that Google is using in Google Wallet, where you have to take out your cell phone and tap it against a reader.

    “In fact, this feature isn’t new at all. It’s called PayPal Local, and it’s been around since late 2010 in San Francisco. But I’ve never seen it in use, anywhere.” [I wonder why?]

    “But the idea—walking into a store, being recognized, and being able to buy something without having to use any physical object to complete the transaction …”

    “Meanwhile, Square had more or less the same functionality in its Card Case app about six months ago. You can use the app to find any nearby store that takes Square and open a tab on your credit card. When you walk in you can simply say "pay with Square" they'll charge it automatically.

    “There's also a new viral element: users can send info about Square retailers to their friends using Twitter, SMS, or email. So for instance, you can text a friend to meet you at a local ice cream place from within the app, set up payment ahead of time, and when you walk in everything's taken care of.”

    Frankly, I shudder at the thought.

    Watch With eBay

    “The new [ipad] app from eBay allows customers to be watching their favourite [TV] shows and movies to then find out where to buy certain products from eBay’s online stores. For example, for someone watching an award ceremony who likes a dress worn by one of the stars, eBay will find the same or similar designer whose products are happening to be sold in a store on eBay.”

    Wow! This is x times better than even number-plate recognition. Gee, if this really works, we will never again have to leave the couch. But to me, it sound like simply one more crazy idea that Donahoe has picked up on one of his many trips with Alice down the rabbit hole.

    PayPal Payments

    Well, what can be said about the new “PayPal Payments”, other that it’s simply an off-line version of the same old, clunky, PreyPal? Come on, PreyPal trolls, do tell …

    The fact is, none of this before-mentioned nonsense will keep the rusting old scow, “eBay”, afloat much longer …

    In summary

    Of course, eBay’s PreyPal is popular with online buyers on the eBay marketplace, even I, as a most vocal critic of these two most unscrupulous commercial entities, occasionally use PreyPal on eBay because of its convenience (and, one never knows when its hard-wired “buyer protection” may come in handy, although I have not yet had reason to call on it).

    Unfortunately for John Donahoe, the problem for PreyPal is that off eBay it is the merchant who gets to choose the method of digital payment (if any), not the buyer—nor John Donahoe. Does anyone really think that an off-eBay merchant would touch PreyPal, even with a forty foot pole, when an alternative to PreyPal, such as Visa’s V.me becomes available? I think not. Even before Visa’s V.me arrives PreyPal is starting to suffer:

    “Study Sees PayPal Adoption Down Among Multi-Channel Merchants” (21 Nov 2011)
    “A year-over-year comparison of nearly two thousand multi-channel online merchants showed a drop in the number who accepted PayPal on their own websites and off-eBay stores. EcommerceBytes measured the number of merchants in the EveryPlaceISell.com directory who accepted PayPal on their off-eBay marketplaces in October 2010 and found that one year later, 22% of them had stopped accepting PayPal as a payment method on those venues.
    “The study also found that the number of merchants who accepted credit cards on their own websites and off-eBay stores increased 19% in the same time period.”
    PreyPal offers unlicensed banking services and wants to take the much higher “credit” purchase transaction fee, that the merchant account provider would normally take, without bearing the cost of professionally assessing PreyPal users, hence the PreyPal funds holds and rolling reserves now being applied. These holds and rolling reserves are also a breach of the statutory conditions that apply to the money transmitter’s licence under which PreyPal usually operates.

    The fact is, as simply a “merchant of sorts”, PreyPal can never know the parties to any transaction the way those parties can be known by their respective real bankers, and this lack of knowledge will always be PreyPal’s Achilles’ Heel.

    Visa/MasterCard don’t suffer that same disadvantage because they are directly and dynamically linked into the payment systems of the real FDIC-insured banking system. Amex and Discover likewise ensure that they otherwise “know” their customers.

    But, I suspect that Donahoe’s real problem is that he has been too long on the tit of eBay’s “captive” on-line merchants; apparently, he is laboring under the delusion that, even off eBay, he can mandate the uptake of his latest clunky PreyPal products, or that PreyPal’s “brand” will carry the day.

    PreyPal’s “brand” may carry some weight with naïve buyers, but with most merchants “PreyPal” is a thoroughly despised brand. Donahoe is utterly delusional if he thinks that, with the reputation for unscrupulousness that PreyPal has developed, off-line merchants will rush to take up his clunky PreyPal POS products. Square indeed has nothing to fear from PreyPal Here. And Visa’s professional online payments gateway, V.me, will undoubtedly bulldoze PreyPal’s off-eBay online operations …

    What then can one say other than, good luck John, you are going to need it ...
    “We did not build eBay. We provided the trading platform that connected buyers and sellers, but it was actually the buyers and sellers who built the company. It was the ultimate experiment in crowd-sourcing, what I later described as the power of many. What we can do together, none of us can do alone, and the eBay community build this company in a way that was really very unique.”—Meg Whitman, on the startup company she joined in 1998.
    What a shame it is that eBay’s current “Pain from Bain”, John Donahoe, apparently has no appreciation of that concept.

    As Meg Whitman herself has been quoted as saying of her time at eBay: “A monkey could have driven that train.” And then, apparently, unable to find another monkey, she went on to anoint the headless turkey, John Donahoe, as her successor …

    But don’t take only my word for it, see “How PayPal Works”, the full clunky story, at

    There is a rumour …

    There is a rumour afoot that the reason PayPal is now so aggressively applying lengthy holds on many seller-users’ funds is because PreyPal’s clunky, stand-alone payment system is causing too much trouble for the real banks with charge-backs and other transaction disputes and PreyPal has apparently been told to shape up or ship out, and if they don’t shape up, then they risk having their “merchant account” with the infamous Wells Fargo Bank declared “persona non grata”. (Funny too how the unscrupulous tend to congregate.) This, of course, is the same risk that any unscrupulous merchant account holder faces with any real bank. And what could such action against PreyPal mean? It would effectively mean the end of the clunky PreyPal.

    So, to avoid involving the real banks in all the transaction disputes that eBay’s hard-wired and buyer-biased “buyer protection” policy is now generating, PreyPal is exceeding the bounds of its money transmitter licence(s) and is holding the receipts of many merchants—on and off eBay—for up to 180 days. PreyPal is effectively conspiring with the eBafia in what is little more than the facilitation of simple wire fraud. After all, PreyPal is not an escrow service; it is licensed merely as a “money transmitter” and under such licence(s) PreyPal is not entitled to hold funds due to a payee longer than that statutorily specified in the particular licence.

    However, it appears that there is little chance that PreyPal will, of its own volition, cease applying these funds holds—which are a clear breach of the conditions applying to its “money transmitter” licences. (Still, it would be nice to think that the situation was causing the “eBafia Don” some loss of sleep.)

    Regardless, notwithstanding that users have supposedly “agreed” to these funds holds, the details of which are buried somewhere deep in the bowels of the PreyPal user agreement, the fact is, such conditions, that are contrary to the particular state’s regulations that apply to PreyPal’s “money transmitter” licence, are not enforceable, and the local Money Transmitter Regulator should instruct PreyPal to desist if users complain about such unlawful funds holds.

    If users are not happy about PreyPal holding their funds, in excess of the statutory time, they should do something about it. It appears that in the US relief can be obtained from this arbitrary, nominally unlawful activity by lodging a complaint with your state’s “Money Transmitter Regulator”, details of which can be found at

    And now, back from the “Twilight Zone” to the real world on the planet Earth, for an updated critique on the “eBafia Don” and his delusional plans for the clunky, criminal eBafia and the clunky, unscrupulous PreyPal:

    “When Do We Start Calling eBay A Payments Company?”

    A tale of two clunky, unprofessional and utterly unscrupulous commercial entities: eBay and PayPal

    eBay / PayPal / Donahoe: Dead Men Walking
    Last edited by PhilipCohen; 06-10-2012 at 09:57 PM.

    “Today we’re dealing with phase two or phase three [he can’t remember which one] of disruptive innovation. We’ve had the disruption, now we’re having to disrupt the disruption. ... Based on our experience, here’s how innovation at the core worked. We had to create a mind shift at our company—we had to think bold and not just incremental. We had to create a vision of the future so people could let go of a very successful past.”—John Donahoe, Legg Mason "Thought Leader Forum" (26 Sept 2007)—The whole interview transcript at http://bit.ly/16McqO1. Ten prizes of a "Mentoring Day With John" for anyone that can read the whole of it—without their head exploding ...

    "Our ambition is to be the strategic partner of choice for every leading retailer, brand and manufacturer across the world ..."—eBay Employment Ad (2013)—Dream on Johnny Ho-Ho-Ho ...

    Some other fun (mostly inane) quotes from the eBay executive suite ... http://bit.ly/12xvzyA

    “The difference between genius and stupidity is that genius has its limits.”—Anon.

    Note: All the statements made by me and contained herein are my opinion only; readers must form their own opinions from the facts presented.

  2. #2


    13 April 2012

    “How PayPal Squeezes Merchants with Unfair and Likely Illegal Business Practices”

    Some selected paragraphs from an interesting article at:

    “With the help of the Illinois Department of Financial and Professional Regulation, Sauter, who lives in Chicago, would eventually get his money and compel PayPal to withdraw its reserve permanently. He also joined Zepeda v. PayPal, an ongoing class-action lawsuit representing, according to one of the principle litigants, more than 1,800 plaintiffs in similar situations.”

    “PayPal isn’t a bank or an escrow service, both of which are expected to hold money for potentially lengthy periods. Instead, per its user agreement, ‘PayPal is Only a Payment Service Provider.’ It transmits money between parties and collects fees on the transmissions. It’s a bit like Western Union, but nothing like Wells Fargo.

    “As such, PayPal needs to obtain money transmitter licenses in order to operate in most states. PayPal has a license for every state that requires one.

    “In its 2010 annual report, eBay acknowledges that this licensing scheme creates potential legal risks. ‘As a licensed money transmitter, PayPal is subject to restrictions,’ the report says. ‘If PayPal were found to be in violation of money services laws or regulations, PayPal could be subject to liability’—up to and including the closure of its business in certain states.

    “One of these restrictions concerns how long a transmitter can hold onto money before forwarding it to the intended recipients. For instance, the Illinois statute governing licensed money transmitters allows three business days. On its face, this provision prohibits PayPal from holding portions of Sauter’s money for 90 days. …”

    Summary: If you are not happy about PreyPal holding your funds, without valid reason, don’t whinge about it, do something about it; it appears that you can obtain relief from this unscrupulous, clearly arbitrary, apparently unlawful, activity by lodging a complaint with your state’s “Money Transmitter Regulator” at

    eBay / PayPal / Donahoe: Dead Men Walking
    Last edited by PhilipCohen; 04-13-2012 at 05:14 AM.

    “Today we’re dealing with phase two or phase three [he can’t remember which one] of disruptive innovation. We’ve had the disruption, now we’re having to disrupt the disruption. ... Based on our experience, here’s how innovation at the core worked. We had to create a mind shift at our company—we had to think bold and not just incremental. We had to create a vision of the future so people could let go of a very successful past.”—John Donahoe, Legg Mason "Thought Leader Forum" (26 Sept 2007)—The whole interview transcript at http://bit.ly/16McqO1. Ten prizes of a "Mentoring Day With John" for anyone that can read the whole of it—without their head exploding ...

    "Our ambition is to be the strategic partner of choice for every leading retailer, brand and manufacturer across the world ..."—eBay Employment Ad (2013)—Dream on Johnny Ho-Ho-Ho ...

    Some other fun (mostly inane) quotes from the eBay executive suite ... http://bit.ly/12xvzyA

    “The difference between genius and stupidity is that genius has its limits.”—Anon.

    Note: All the statements made by me and contained herein are my opinion only; readers must form their own opinions from the facts presented.

  3. #3


    Goodbye clunky PayPal; it’s not been nice knowing you …

    PreyPal is fine for buyers; it’s a potential nightmare for sellers …

    Let’s get one thing straight at the start, banks don’t issue credit cards or merchant accounts to users without first professionally verifying them and their credit ratings.

    PreyPal, on the other hand, is an unprofessional, utterly clunky “middleman”. When PreyPal sources a payer’s funds from a credit card, as they do the majority of buyers’ funds, then the owner of a fraudulently used credit card may not know that there is a fraudulent charge on that card until the receipt of the monthly card statement which could be as long as a month or so later; at that time the card holder is still entitled to report the matter and the credit card company will reverse the charge; it’s as simple as that; and that is the way it should be.

    And, like in the latest PreyPal nonsense with Amex charge reversals, PreyPal merchants can’t simply refuse to accept a particular source of funds because they cannot know from where PreyPal is sourcing those funds, and PreyPal can never guarantee those funds unless they are sourced from a buyer’s faux PreyPal “bank” account, and who would be silly enough to leave any funds there?

    I also have no doubt that PreyPal’s “sophisticated technologies for fraud prevention” are as illusionary as the “sophisticated” and “proactive” systems that eBay claims to have for the detection of shill bidding fraud—all these claims are in the main false and are effectively frauds on consumers.

    Ultimately, with any credit card fraud, if the merchant account-issuing bank at the other end of any fraudulent transaction cannot recover the funds from the merchant from whence the fraudulent charge originated, then that is that bank’s problem for not vetting the merchant well enough.

    PreyPal places itself in that same position, of being the merchant entity of record that “accepts” the credit card charge; why then should PreyPal, having advised a merchant that the payer has paid and it is now OK for the merchant to ship the purchased goods, ever be entitled to later, if the card use turns out to be fraudulent, pass this responsibility back onto their user who had at no time any idea from whence PreyPal sourced the funds?

    In the final analysis, why would any sane person agree to such terms? No one in the regulated world of real banking could get away with such a grossly unfair condition—only the atrophying eBafia’s most ugly adopted daughter, the virtually unregulated, non-bank, PreyPal, apparently—Ugh!

    PreyPal may well be convenient for online payers (as a buyer, I have never had a problem with them). But for payees, the risk of credit card fraud via PreyPal is very real and ever present. The fact that it is PreyPal that accepts the credit card charge (and takes a fee therefor), not the merchant (who would be responsible had the merchant accepted the card charge directly), and PreyPal then wants the merchant still to accept all the risk, is outrageous. But, that will always be the real and ever present risk with all of the “third party” middleman wannabes entered in the race for the holy grail of “payment processing”.

    Anyway, it is all approaching the point of being moot—except for sellers on eBay’s marketplace; Visa’s V.me is now up and running (and MasterCard’s version is not far away); and therefore any off-eBay merchant that continues to offer PreyPal as a method of accepting payments is simply naïve in the extreme, or simply too small to quality for a merchant account from a real bank, and is eventually going to get done over by PreyPal, if they have not already been done so.

    It’s time for all online buyers to apply for a professional and truly secure Digital Wallet such as V.me offered by Visa (or the still to come MasterCard offering), and for all those off-eBay merchants who can, to get themselves a merchant account with a real bank, otherwise they will never be sure that they are going to get their money, or if they have already got it, whether PreyPal is going to snatch it back from them some time later.

    And what about on-eBay merchants? Well, sorry, but I’ll eat my hat if the eBafia Don ever allows Visa’s V.me gateway to appear on eBay, so you are going to continue to slowly atrophy along with the eBay marketplace, and probably get done over by PreyPal from time to time.

    There will be none of these uncertainties with the digital wallet offerings from MasterCard and Visa; they will work seamlessly, and even more securely, as do their credit cards now work at physical point-of-sale, and you will have real protection from credit card fraud because it is the card company that dynamically verifies the card user and it is, in effect, the credit card company that accepts the credit card charge.

    Still, as long as the tired old scow, eBay, manages to stay afloat, there will always be an effectively mandated place for the clunky PreyPal on the eBay Marketplace, and elsewhere as the merchant account provider of last resort—Yuk!

    In the meantime, the eBafia Don continues buying (literally) PreyPal's way into more "partnerships" in competition with Visa / MasterCard / Amex—LOL. What a total waste of eBay shareholders' funds; and, don't any of these "partners" research anything before they enter into agreements with such clunky operators as the eBafia and PreyPal?

    If anyone wants a true measure of the potential for these partnerships, next time you drop into Home Depot, ask a cashier how the clunky PreyPal “mobile” is going at their point-of-sale—LOL.

    Read about it and weep, John Donahoe ...

    “When Do We Start Calling eBay A [Failed] Payments Company?”

    And from another observer of the clunky PreyPal, on eBay’s own forums:

    “I just ordered an item [online] from Buy.com. When I completed the “fill in the blanks” stuff, I had a choice of payment. There was the usual charge card form and then three offerings with logos:

    Pay by Visa V.me
    Pay by Google Checkout
    Pay by PayPal

    “Funny, isn't it, which one was last. I thought there was some kind of arrangement between eBay and buy.com, a platinum-like anchor store on eBay.”

    Funny isn’t it too, which one Buy put at the top of the list; major online retailers apparently are smart enough to distinguish the wheat from the chaff after all. But, the real question is, now that Visa’s V.me is available (MasterCard’s offering still on the way), how much longer will that PreyPal logo continue to appear at all? Any one want to take bets on a time frame?

    Goodbye clunky PreyPal, it hasn’t been nice knowing you …

    eBay / PayPal / Donahoe: Dead Men Walking

    “Today we’re dealing with phase two or phase three [he can’t remember which one] of disruptive innovation. We’ve had the disruption, now we’re having to disrupt the disruption. ... Based on our experience, here’s how innovation at the core worked. We had to create a mind shift at our company—we had to think bold and not just incremental. We had to create a vision of the future so people could let go of a very successful past.”—John Donahoe, Legg Mason "Thought Leader Forum" (26 Sept 2007)—The whole interview transcript at http://bit.ly/16McqO1. Ten prizes of a "Mentoring Day With John" for anyone that can read the whole of it—without their head exploding ...

    "Our ambition is to be the strategic partner of choice for every leading retailer, brand and manufacturer across the world ..."—eBay Employment Ad (2013)—Dream on Johnny Ho-Ho-Ho ...

    Some other fun (mostly inane) quotes from the eBay executive suite ... http://bit.ly/12xvzyA

    “The difference between genius and stupidity is that genius has its limits.”—Anon.

    Note: All the statements made by me and contained herein are my opinion only; readers must form their own opinions from the facts presented.

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