PayPal has for years been promoted as the safest way to transact money online. One month into 2020 and 4 suspect transactions on my Visa account, two on my MasterCard, I am asking myself the question, Is PayPal Safe or a Hackers Paradise. With Covid -19 and the world closing up shop, what is the future of PayPal ?
A Brief PayPal History.
PayPal was first listed as Confinity founded by Peter Thiel, Max Levchin, Luke Nosek, Yu Pan, Ken Howery and Russell Simmons. Elon Musk who founded the online bank X-Com merged with Confinity which then became known as PayPal.
The company was then bought by E-Bay shortly after listing as a public company in 2002. PayPal already being a large part of E-bays success, this merger could only mean the future was going to go ahead in leaps and bounds.
And so it did, becoming the go to selling and payment option for drop shipping and importing things through Aliexpress. Initially some who jumped on the band wagon where stung by unscrupulous merchants, And PayPal still had security issues to overcome with its payment algorithms.
But with this initial trial and error there was a determination to see it work. Eventually merchants, drop shippers / importers, and retail buyers were able to shop online with confidence that their payments were secure, and technology opened a way to verify merchants as being legitimate.
E-Bay spun PayPal off in 2015, by which time it was ranked 200th in terms of revenue on the Fortune 500 largest Corporations.
PayPal. An Un-welcomed Innovation
PayPal was never welcomed into the financial sector with open arms, and cheering crowds. PayPal’s initial idea (according to one of the founders, Luke Nosek ), was to create a global currency that was independent of interference by the usual suspects. Corrupt cartels of banks and governments debasing their currencies.
PayPal was not to be independent though. That idea never materialized due to investor pressure to release a product ASAP. Still PayPal did publicly open the concept of an independent currency. About 9 years later Bitcoin was released.
Initially loved by the consumers and merchants on E-Bay. PayPal has had to constantly battle government regulations, fight claims of violating patents, class actions, and any number of compliance issues from foreign regulators, banks and security issues from consumers.
PayPal Merchant Services
With PayPal ramping up its merchant services for online retailers, it also began expanding its network to off line purchases. By 2011, with over 100 million active user accounts in 190 different markets and in 25 different currencies.
Ten years earlier PayPal was struggling with money laundering, credit card charge backs, all threatening the viability of its association with credit card providers.
In his book The PayPal Wars former marketing director, Eric Jackson states that PayPal at one point was incurring fraud losses of $2,300 per hour ! However instead of treating it as a legal problem, PayPal decided to treat it as a Risk Management problem.
Some of the most disruptive hacking has come from political activists, unhappy with decisions made by governments and backed by corporations. Wikileaks being a prime example.
As for fraud, PayPal is one of the best when it comes to detecting fraudulent transactions . By acquiring Fraud Services in 2008 for $165M, which would incorporate additional security to the VeriSign payment solution purchased in 2005. As well, in conjunction with Master card, PayPal developed and launched the PayPal secure card service in 2007.
These days PayPal has a fraud rate of about 0.30 of revenue. Still considerable when you consider the amount PayPal turns over, but also take into account it has around 300 million accounts.
Still it is way less than the 1:32 % average for retail merchants.
Covid-19, Co-Incidence I was Hacked or ?
It had been about 18 mths or two years since I had a problem with unauthorised transactions on my PayPal account.
So it came as a bit of a shock to receive 3 emails telling me I had bought some Nike Shoes !. This was on the 3rd of February, 2020. For PayPal to action an investigation into my accusations. The time from contact to resolution was about 24 – 36 hours. All money was recovered. The Coronavirus was not yet full on news.
One thing to remember though. Pay Pal gives you a month to file a complaint. if you leave your complaint for longer than a month then it will not always be possible to have your money returned.
PayPal also requests that you forward suspected phishing emails to them for their security IT guys to check what is going on
As COVID – 19 bites into the economy PayPal has issued a statement detailing its response and tips for consumer safety. See Here.
PayPal and The Future.
With much of the world going into near shutdown, hackers will use this time to get busy. People, out of money or short of money will be looking for both honest, and dishonest ways to make a buck over the next few months. The hackers will be waiting.
I don’t want to crystal ball what will or won’t happen over the next few months. But, I have been around long enough to know there will be a complete reset coming to the way we work and create wealth.
History tells me the most reliable way to make an income in any economic climate is importing and exporting.
You can start by drop shipping, and these days finding honest merchants is not as hard as it used to be. PayPal, MasterCard, Visa, et el are all up to speed with consumer protection. But, to put everything in your favor, you might want to read this post I wrote nearly a year ago.
Regards, and stay safe, these are troubling times, and are not to underestimated.
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