Paypal problems on the horizon

I just got off the phone with Paypal about a strange request they had... They had asked for "shipping confirmation" for some of my past virtual transactions that were completed several weeks ago. Even though there's no indication these were physical goods and the items say they are for link ads. I've never had this problem before, but apparently they spot-check transactions for delivery etc..

As I was talking to the rep, she mentioned something that could be a problem for a lot of people. She said Paypal is *considering* disallowing any type of virtual transactions in the near future. The reason being is that they can't easily verify the customer received their service or merchandise, such as with a UPS shipping code. This would include SEO services, links, downloads, etc..

Looking at the amount of people on here and other boards that say they favor Paypal, what alternatives do we have for virtual transactions?

 

Won't happen imho. If it does we all go to moneybookers and paypal will lose a ton of money. Although this is Ebay so who knows.

 

I just checked some of the 3rd party billing companies to compare, here's what I found:

CCNow - "No promotion based services"
CCAvenue - No "Web site promotion or Search engine registration fees"

Clickbank - seems to specialize in virtual items
2Checkout - no mention of virtual items on there disallowed list

 

hmm..I just had an idea.

Why doesn't paypal create the digital delivery system? Say I have a template I am buying. First the person invoices me with the attached file. Then I pay and paypal gives me a download link.

This way they can prove you not only got the file but they can show what the file was. For all the money they make they can host some files.

 

That's not a bad idea... Or at least have a followup link that lets the buyer confirm they received their service.

 

I think what will happen is that they will require more verification from members who want to take part in these types of transactions. I can understand where they are coming from, from a merchant/merchant bank perspective as fraud is rampant on the internet and the CC companies will overturn just about anything that you cannot prove someone received with a signature. If the CC companies get off their asses and create some kind of smart card/signature solution for online transactions, this would not be an issue. But, I am not going to hold my breath on that one.

 

That's a typical AML reaction - AML = Anti Money Laundry.

Imagine a bad guy paying $50 monthly subscription to 1,000 people or buying a virtual product $200 from the same 1,000. Now the Bad Guys are 1,000...

That's a lot of real money moving around with little tracks.
My bank merchant account refuse virtual payment for that reason. May be PayPal is following the path.

 

Actually, Visa has started "Verified Visa" which is just a PIN the buyer types in during a transaction. Since it's a secret PIN not on the card, Visa doesn't allow chargebacks for denial of usage claims. The problem is, these verification systems don't do anything to verify the buyer received their goods.

 

I did not know that...it is about time. I will have to check that out. I think what has prevented them from using smart cards, which can use encryption, is cost. Magnetic stripe cards are super cheap and smart cards are about 5 to 10 times as expensive.

<edit>Actually, it is nothing great. It only works at "participating stores". That really doesn't help anything just as the CVV codes don't do anything either. http://usa.visa.com/personal/security/visa_security_program/vbv/how_it_works.html</edit>

 

Yeah it doesn't help much when not everyone is given a visa with a PIN and not all merchants accept it

 

Exactly my first thought when I read this thread.

I'm sure they'll find a way to not loose such a huge amount of business.