I really hate Paypal. It is astonishing that a company a mere 16 years old could so quickly devolve into a lumbering bureaucratic beast that is indistinguishable from a government agency. As the consumer/buyer I have no qualms with Paypal; sending money to people or companies is more or less a painless experience. However, when the roles are reversed and I’m the one receiving funds, well, they are less “pal” and more “foe.” Allow me to explain: My company has used Paypal for many years to process credit card payments. Their fees are generally lower and their electronic data integration not too terrible. But something has changed in the last few years. We have quite a number of overseas accounts and it would seem that once you start processing charges for such accounts you become the financial equivalent of dead Nigerian potentates and Viagra merchants in their eyes. They suddenly develop a keen interest in the inner workings of your business. They want to know what you do, what you sell, and (for a few “select” transaction involving overseas customers) every few months they request detailed copies of invoices, bills of lading and proofs of delivery. Mind you this is not in response to a complaint from anyone. No one is claiming they didn’t get their product. No one is claiming their card was stolen. They just do it because some misguided bureaucrats at Paypal thinks “not-US” = “criminal enterprise”, therefore all things in any way linked to “not-US” must be subjected to absurdly intrusive levels of scrutiny that would make IRS audits look tame by comparison.
So these requests came up once before and I complied, because (a) they freeze your account so you can’t withdraw funds and (b) I assumed it would just be a one-time event. It wasn’t. It happened again this past week (hence this rant). This time I told them I would not be complying with their silly requests and that perhaps they should consider the amount of charge volume we move through them when they considered my request to cancel their request, unfreeze our funds, and never subject us to this garbage again. They didn’t budge. They don’t care. I was told I would have to 180 days to get the company’s money if I wasn’t going to be supplying them with the laundry list of requested information. So much for valuing the customer.
Now at this point most people would be thinking, “that’s unfair, they can’t freeze your funds absent an accusation of fraud, the government should do something about that!” And to be quite honest I understand the sentiment. But it’s not very empowering thinking “well maybe those folks called government might fix this mess in a few years.” What is much more empowering is realizing you are always in control. I can tell Paypal to pound sand. I do not have to comply with their edicts. Yes waiting 6 months to get the money is an inconvenience, but one that is well worth the gratification of refusing to comply. You always have a choice. Or at least you do when dealing with a private business. If you’re dealing with the government you don’t have that choice; you either comply or face prison or worse.
Why do we have no choice when it comes to government? Because the state declares a monopoly on governance, thereby eliminating all competition in the services provided by said monopoly government. Without competition we end up with entities run as poorly as Paypal but which will never improve because there is no incentive for them to do so. Paypal has competitors. Paypal eventually must change or it too will perish (just witness the ashes of AOL’s internet monopoly). The state allows no competition. It’s power forever ratchets upward, untouched by the counterbalancing force of free competition. Voting is no proxy for competition; it is the false choice of two doors that both open on the same room.
Just a follow up on this. Apparently what Paypal has been doing is not unique to Paypal. We switched to Square, and they eventually did it, we switched back to SunTrust Merchant Services, and they eventually did it. It seems to be a universal thing now for anyone with a “Retail” merchant account based in part on a response to an increase in not only credit card but merchant processing fraud (it’s actually the same fraud as it is the same party, they steal credit cards and then that same person or group sets up a merchant account and makes fake charges to themselves. This gets around the cash withdrawal limits. You can read more about it here:
In any event we finally ended up opening up service with our primary banking relationship at Wells Fargo. They set us up with a Business to Business merchant account which does not have these intrusive requests thrown at you for running cards when the card is not physically swiped (because a B to B account is much harder to set up, a lot more vetting and background check is done at the beginning so they are sure you are legitimate). Hopefully this will now be the end of this issue.