Purchasing the safe way

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Online Payments Examined

WHY DON'T WE feel comfortable accepting instant payment from P2P services like PayPal, Webcertificate, or Ecount? There are simply too many well-documented horror stories about using these payment services for everyone not to be concerned. For other services such as Nochex, CheckFree’s Auction Payments, or Citibank’s C2it, it’s simply because they do not offer their service to customers living outside their home markets of the United Kingdom or United States. Many banks will not accept money orders (even US dollars ones) or will charge high fees, so BidPay and Payingfast aren’t really all that useful for international payments, let alone a cheap guaranteed payment method for purchasers. Other services like eBay’s PayPal, NETeller or Citibank’s C2it charge high fees or are not available to customers outside their domestic market which limits their usefulness for international payments over the world-wide web (i.e. the Internet).

IF YOU HAVE any feedback about the usefulness of or problems with any payments service we invite your comments. We are particularly interested in hearing from customers of several new services: Skrill, MoneyMover, NatWest’s FastPay and CheckFree Auction Payments. As we understand it, Skrill is primarily a low-cost, Euros-based (along with 28 currencies) system aimed at simplified Euro payments, while FastPay and CheckFree offer interbank account to account transfers for UK and US residents only respectively without risk of charge backs. However, banking laws and practice does permit a buyer to stop a payment by filing an affidavit of fraud. There is a limited amount of time during which the buyer can do this, and it is a serious crime to do so falsely. So while buyers do have recourse in the event of actual fraud, sellers will be protected against false claims.

CREDIT CARD BASED payment services such as PayPal have seen a marked increase in buyer fraud either through reversal of payments after receipt of goods, or credit card chargebacks up to 180 days after the transaction. In most such cases the seller ends up with neither the goods or payment, but an excellent case for mail fraud against the buyer and service used to facilitate it.

Paypal scam artists www.paypal.com

Paypal is too
risky for YOU
US market only www.ecount.com

Ecount is
US only
UK market only www.nochex.co.uk

Nochex is
UK only
US market only www.validcash.com

CheckFree is
US only

CERTAINLY THERE IS a real demand for these services, if the number of people using them are any indication. Unfortunately the companies who should have been offering these services, banks, who have long experience at moving money safely and quickly, have been slow to enter the market and not without good reason. Most banks already receive substantial income from transaction fees on credit card payments and have a vested interest in NOT improving the speed or ease of money transfer by other means which could jeopardize their existing highly-profitable operations. A major problem in accepting credit cards for international transactions is the lack of address verification except for accounts in a handful of countries. Credit card companies and associations are in no rush to introduce it either, even though the number of international transactions is growing at a higher rate than domestic ones. Hopefully some day soon banks, credit card, or financial service companies will introduce a secure, low-cost global electronic P2P (person-to-person) payment service, but until then we are happy to deal with bank to bank transfers, personal cheques and cashiers checks through the safety and security of the existing banking system.

WE HAPPILY ACCEPT deposits and credits to our bank accounts in major trading currencies including US dollars, UK pounds, Euros, Swiss Francs, and Japanese Yen. We may also accept payments in other currencies on request - contact us for details. We can also accept cash through the postal system, but to avoid disputes on the amount sent or receipt of payment they should be sent directly to a bank where we have an account. European customers can finally start to enjoy the fruits of closer financial integration with free or low cost cross-border Euro payments after July 2003 using IPI and IBAN which largely negate the need for foreign intermediaries like PayPal.

www.bidpay.com

Banks will not
accept them
UK market only fastpay.com

FastPay is
UK only
US, UK market only paydirect.yahoo.com

Yahoo! PayDirect
is US & UK only
www.payingfast.com

Payingfast is
not global

PAYPAL IS POPULAR with buyers, particularly those in international transactions for it apparent ease of use and speed of payment. However PayPal is not very popular with sellers in international transaction for an important reason - PayPal payments are not guaranteed. PayPal has a long history of reversing payments long after they have been cleared, leaving very dissatisfied sellers without the item or payment. Using any third party payment service carries more risk, even when payment is not from a credit card, as buyers and sellers can hide behind email IDs and use fake names to open accounts. Even if you prove you were scamed, most of these services will not divulge any information without a subpoena, in effect protecting known criminals. And there are no rules to protect you, despite claims to the contrary from PayPal.

AS ONE EXAMPLE of why we do NOT recommend payment services, (in a well publicized case) when a problem arose with an account at Paypal, the customer was requested to fax: a certified copy of their birth certificate, their marriage license, their high school diploma, and a certified copy of their fingerprints. Paypal then promptly lost all the information ... the matter was only resolved when several major media organizations and financial magazines were alerted to Paypal long history of trouble’s - suddenly Paypal managed to fix the problem overnight, something they failed to do in the previous three weeks.

FRANKLY, WE DON'T feel comfortable dealing with companies in the cash payment/transfers business that aren’t regulated or subject to close regulatory oversight, particularly when funds held at the majority are NOT covered by FDIC or bank depositor insurance. The risks (mainly credit card charge backs) to sellers are too great for such small benefits as prompt payment (minus the hefty fees).

FOR THOSE INTERESTED we have provided some links for further reading about the risks of using such services:

Magazine articles about Paypal: Salon, ZDnet, The Register U.K.
paypal victim’s action website, www.consumeraffairs.com, Victim of x.com
Various yahoo victims support groups: Paypal, Paypal/x.com, Paypal consumer rights
Affected former business customer of Paypal
Other cautionary warnings from PayPal customers...

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