Google CEO Confirms Online Payment System 251
didde writes "Reuters is reporting on statements that Google's CEO Eric Schmidt had made regarding Google's upcoming payment system. Apparently they're not looking to compete with PayPal." From the article: "Schmidt said Google does not intend to offer a 'person-to-person stored-value payments system' like PayPal's, in which money briefly resides in PayPal's control during the transaction, but he did not give details of how the Google system would differ."
Good Riddance! (Score:2, Informative)
I guess what aggrivates me more is "Not being allowed to post buyer pays paypal transaction fees on ebay purchases" in your ebay posts.
And all the other crap Paypal pulls out of it's mighty ass.
Semi-intersting links:
http://paypalsucks.com/ [paypalsucks.com]
http://www.paypalwarning.com/ [paypalwarning.com]
Global coverage? (Score:5, Informative)
Re:Good Riddance! (Score:2, Informative)
That said, in most every business that accepts credit card the seller pays the transaction fee and covers it by adjusting the price of the item.
How is that any different? (Score:4, Informative)
In other words, if I buy a Gbuck and send it to a friend and they convert it back to whatever it is worth in cash, how is this any different than what paypal does, realistically?
If they create their own currency and decide not to tie it in a fixed way to another currency, then that's interesting, but doesn't change the fact that it's still them accepting one currency for a temporary period of time.
It also introduces the problem of fluctations of the new currency. People buy Gbucks, wait for them to be worth more real bucks, then cash out. Google is now out a ton of real cash. This is done with real cash all the time, but making it easy to convert between currencies will make this simpler. Only way to combat this that I can see is for google to implement a conversion fee to stabilize the fluctuations, which will discourage the currency from taking off in the first place.
Re:It may not be real "money" at all (Score:2, Informative)
Re:Banks need to wake up. (Score:3, Informative)
There's one important component of payment processing you're missing. If it weren't for this component you would be completely correct, so I'm pretty sure I've identified the part you're missing.
Sometimes things go badly, and some kind of fraud protection is needed. That fraud protection costs much more money than the account-to-account transfers you're talking about.
Suppose in one scenario, both parties to the funds transfer trust each other completely, and both sides waive any right to fraud protection. One person can put cash directly in the other's hand, or they can do a free bank transfer. Nothing complicated can happen here, so no extra effort can be expended, so no fees are needed.
In scenario two, suppose the two parties to the funds transfer have a buyer/seller relationship, and the validity of the transfer depends on material properties of that buyer/seller relationship. Think Visa/Mastercard chargeback rights (which are familiar and comfortable to me, so I prefer them as an example). If something goes wrong with the sale, the transfer of funds needs to be reversed. But who can decide if something went wrong with the sale? Who is telling the truth? Maybe the customer is claiming they never received mail-order merchandise, but they actually do have it and are lying? Maybe the customer is claiming they never received mail-order merchandise because the seller never sent it? Maybe something different happened?
Do we really want to require the buyer to take the seller to court to get their money back? (Sure, some merchants are small mom and pops, but some are the size of Gateway, the Gap, LL Bean, etc. Their purse is longer than yours or mine.)
According to my (biased) view of the world, when a merchant runs sales they must pay transaction fees. When they ask me what their fees pay for, here's what I see:
* Some fees are 'interchange' and 'assessments', which go straight to Visa/Mastercard, for their operational costs, and to the banks which issue those cards, for profit. I don't work on the card-issuing side so I don't know. I guess this goes to pay for bank profit, for those rewards points customers get, and to offset the occasional customer bankrupcy or other bank write-off when a customer doesn't pay for the charges they make.
* Some fees pay for the systems used to process those sales, both third-party systems (like Vital Processing Service, vitalps.com) and our own systems. We're a bank, so our systems follow a rigorous (and slow and expensive) development process -- but they're well-designed. We're a bank, with *vastly* greater assets at stake than those companies you see in the news for getting hacked. Those systems aren't cheap to build or maintain. Then again, you're not going to be seeing First National on the news for getting hacked. We won't be pulling a Card System Intl or a DPI Merchant Services any time soon.
* Some fees pay for risk management: if a merchant runs a bunch of fraudulent sales, and then jumps the border to Mexico before anything gets charged back, we have to cough up those funds and then try to collect from the merchant later. We need some money to offset that risk.
* Some fees pay for general company costs: tech support staff, customer service, computer guys, auditors, finance people, building rent, etc.
* Some fees pay for the transfer of funds from the processing company (us) to the merchant's own bank account. That bank transfer isn't free: the two or three days of interest generated goes toward the cost of transferring money. There's no way to say "this transfer is for credit cards, so give us part of the fee back" or "this transfer is for a ch