March 26, 2007 2:12 PM PDT
Newsmaker: At PayPal, fending off phishers--and Google
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So there is always going to be competition, and I actually love good competition. It raises your game to a higher level when you have good competition. So as it relates to Google Checkout, where as you would expect we are very aware of what they are doing, we don't think they are in a payment system business. We think they are specifically in a check-out business, and there is quite a bit difference between checkouts and payments. I would argue that we have such a lead in the business of global payments that if somebody wants to chase after us a little bit, I think they are going to realize it's hard to do, and I think they will fully appreciate and understand the head-start we have. Nobody here is overly confident, but I think what we need to do is have a strategy and focus on that and not on any competition.
How big do you see the market for micropayments? It seems like you would have the infrastructure to do that more broadly. Are you seeing content owners like music or print publishers going in that direction?
Thompson: Micropayments is a remarkably big opportunity. I said doing payments is hard. Well, micropayments is extremely hard, and that is why nobody has cracked the code on it yet. It's just very, very tough to do. You probably recall 10 to 12 years ago the phone companies thought micropayments (would be a way to) extend their billing reach further into their customer set. But every phone company that tried that has realized that this is a whole lot harder than they thought, and they all backed off those initiatives. So, I think somebody at some point will come up with a real cute idea on this, and it will be one that changes the game. I think that's one where you stay tuned. It probably plays out two or three years from today.
Is PayPal planning to move into online banking services?
Thompson: If you are PayPal, you can never say never. But I can tell you, we don't do online banking today. In the near term, we don't intend to do online banking. We have a rate payments business. We have tremendous future growth opportunities in the payment business that we are in. We are completely focused on that online payments business, and we view something like online banking as an adjacency that may be of interest some number of years from today. But now we are solely focused on online payments, and we don't want to be distracted.
How is adoption of PayPal among mainstream users going? Some people have complained that the initial sign-up process can be a little bit difficult.
Thompson: One of the things that we are focused on genuinely is the complete end-to-end user experience that you might have with PayPal, and we are pouring a lot of investment dollars into making absolutely certain you know what we stand for, you know what this brand is, and you have the sense of why you would use it. And then every element of interacting with us after that, we want to make it as easy and as convenient to you in your life as possible.
In every survey I have ever read, the answer for why people don't shop online is that they are worried about giving their financial information and personal information to somebody they don't know. That has been the same answer for the last 10 years. Our challenge is to make certain that all of our current customers and all future ones we attract completely understand our value proposition, and that is that when you use PayPal we don't share your personal or financial information. We will never give elements of your credit card to a merchant. We could do a better job explaining it and marketing it. But at the end of the day, if you are in that two-thirds majority who say, "I am worried about (security)," you will eventually find your way to PayPal, because you will understand the benefits our operating model has.
PayPal has a strong record of alumni going off to start successful companies or at least fund them, like YouTube, Yelp and LinkedIn. Why do you think that is?
Thompson: We don't look for a lot of fanfare on this subject, but the entrance criteria to work in engineering and to work in product development in PayPal, that bar is set extremely high. In order to get a job offer from us you have to be a very talented engineer and you have to prove it to us through a number of hurdles that are in the interview process. We do testing; we do problem solving; we do lots of things to make certain that you are in the top 5 percent of engineers around the world, and we have done this for years now. This becomes a very self-reinforcing culture that we have. So it is very easy to understand why when they leave so many of these people become successes yet again--because these are truly the best and brightest people in this industry.
Is there anything else that you would like to discuss?
Thompson: I think we are literally in the very, very early stages of this business and very early stages of the growth of this business. That might be hard for people to believe because we are already very big. We operate in 103 countries, and we are approaching $40 billion of payment volume. One thing I am 110 percent certain of is that five years from today we are going to be a much, much bigger company than we are today, and the reason for that is that our product, our operating model of value proposition is very special. It is unique, and it plays everywhere. It plays in Spain; it plays in Italy; it plays in Korea, it will play in Japan, we just launched the localized site in Japan; and it plays in the United States.
Every place there is electronic payment our business model is perfectly suited for. We are a 7-year-old start-up with 6,000 people, and the best is yet to come from PayPal.
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11 comments
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Needless to say, my client refrain to use paypal to pay me, and I bet she will never use paypal in her life - understandable. I contacted paypal and they told me that I had to download and install a ssl certificate in my computer from an obscure link they sent by email. Obviously, I refused, i don't install anything like that in my computer unless it comes from windows updates.
I use a multitude of online banks and IE 7.0, arguably the safest browser nowadays, works perfectly with all - but if you want to use paypal, you have to install extra software (??) on your computer. Thanks, but I pass, and so does my client.
Recently I received a paypal payment from a friend and it was credited to my account. I made an attempt to withdraw this money to my bank account - instead my friends account was frozen, money I received withheld and a charge placed on my account. Customer care was unable to provide any information or advice, was confused about what is happening or when it will be resolved. It took two weeks after which the money has been returned to my friend's paypal account. This happened even though he immediately logged into paypal and confirmed his identity to unfreeze it.
2. Credit card payment reversed months later
On another occasion I sold an unused DVD player on ebay, received a payment by paypal and sent the item. After a several months the money I received has been taken from my account as the buyer called his bank to cancel the transaction.
I did not even know the buyer used a credit card to pay me.
Summary: You are not in control of the money you think you have in your paypal account.
I found a very informative site on how paypal works:
<a class="jive-link-external" href="http://www.paypalsucks.com" target="_newWindow">http://www.paypalsucks.com</a>
<a class="jive-link-external" href="http://paypalsucks.org/graphics/PPS-Cartoon1.gif" target="_newWindow">http://paypalsucks.org/graphics/PPS-Cartoon1.gif</a>
Perhaps IE7 users with problems should try a Windows Update, to make sure that their browser is 100% up to date.
You don't need separate email accounts. You need either a service that allows you to have many different addresses received in the same inbox such as fastmail.fm or gmail (username+paypal@gmail.com, though it's better not to use the word paypal as eventually villains might adopt), or a service that forwards mail coming to many different addresses to your address (such as sneakemail.com. this is the one I use with banks and such. The email passing through sneakemail arrives at my inbox marked with the label I chose at sneakemail, so mail that comes to the address I gave to my bank would carry that label, and if it is not from my bank or if mail claims to be from my bank and doesn't carry the correct SneakEmail labeling I would know something is phishy!)