Author Topic: PYPL - PayPal  (Read 22068 times)

Jurgis

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Re: PYPL - PayPal
« Reply #60 on: July 24, 2018, 04:23:42 PM »
http://www.leadersmerchantservices.com/sq/index.php?st=top10bestccp&vendorSubId=AFF_pM2Aeokxgj

I don't know who these guys are and if they are legit and whether their ads are bait and switch. So caveat emptor. Just showing I did not invent the pricing.  8)
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mwtorock

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Re: PYPL - PayPal
« Reply #61 on: July 25, 2018, 06:49:22 AM »
 :) happy that i re initiated some wonderful discussions.

So on the point of ebay, i actually think it is not a negative situation because pypl will be able to do a lot that is not allowed right now due to the contract with ebay. At least i dont think it would have a large impact on paypal's revenue or profit by 2020 to lose ebay.

on the point of competition with cc processors, i think paypal users/user experience may be the competitive edge. Think about buying something on the internet using cc - you need to input your name, address, card number, etc. Even if user saves the card info, he or she still needs to put the same for different sites and update all over again when uses a new card. With paypal, it is one button. Ok maybe a couple buttons.

The weakness of paypal network is physical stores, and that is what the management is after,  izettle. venmo pay, etc.

The valuation is pretty high, but it is a good business - network of payment processing.

Broeb22

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Re: PYPL - PayPal
« Reply #62 on: July 25, 2018, 07:39:56 AM »

I thought this piece did a good job of quantifying the eBay lost business impact, even if their overall conclusions seemed extreme.

In short, eBay is more material than you think due to their much higher than average take rate which contributes above average profitability.

https://seekingalpha.com/article/4016612-paypal-ebay-subprime-lender-ticking-time-bomb-70-percent-downside-surprising-risks

Jurgis

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Re: PYPL - PayPal
« Reply #63 on: July 25, 2018, 07:45:21 AM »
on the point of competition with cc processors, i think paypal users/user experience may be the competitive edge. Think about buying something on the internet using cc - you need to input your name, address, card number, etc. Even if user saves the card info, he or she still needs to put the same for different sites and update all over again when uses a new card. With paypal, it is one button. Ok maybe a couple buttons.

I've heard this argument before and personally I don't buy it. Yes, if I go to superrandom site that I use only once and I have a choice of PP or CC, I use PP. But if it's a site where I buy more than once, I choose CC. PP for me is a hassle because I have to do extra login, something may go wrong, etc. rather than CC being a hassle.
But then maybe I'm not the common case...  ::)

Anyway, I believe glorysk87 argues that the PP competitive edge is with merchants. At least that's how I understood.

I think interesting questions are - and I'm sorry, but I probably won't have time/interest/etc. to dig out these:

- What are PP terms with eBay? Why is eBay leaving? Do these reasons apply to other merchants? If big merchants like eBay get low fees from PP, what these fees are? I doubt they pay 2.7% like random PP one-person-merchant account. OTOH, I did not find offhand what the big merchant fees are. Maybe they don't disclose.
I think it also would be interesting to learn more about CC processing competition. Not just nonames, but companies like BAC, etc.

Anyway, I think overall I'll admit that I don't know enough to have strong conviction where PP goes from here. They definitely have some brand name, some moat, some good areas. But I'm not confident enough to value these or calc growth/profitability for long term.

Good luck
"Before you can be rich, you must be poor." - Nef Anyo

Spekulatius

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Re: PYPL - PayPal
« Reply #64 on: July 25, 2018, 10:19:24 AM »
I prefer to use my CC for online payment rather than PP, due to cash back, extra warranties and other perks.
I have used PP only twice during the 7 years I have an account and honestly donít see a point from a user perspective.

I feel like a large player will shake up the payment market by completely circumventing the existing payment networks offering a cheaper solution, but I have been thinking this for years. Large companies like FB, GOOG or Apple with their huge user base should be able to do this, but I am guessing the relatively small benefit for the user isnít  worth it.
The innovation probably starts in 2nd or 3rd world countries out of necessity where people donít have CC and maybe never win one. Maybe wechat goes worldwide and competes with Visa, MC etc.
To be a realist, one has to believe in miracles.

Sportgamma

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Re: PYPL - PayPal
« Reply #65 on: July 25, 2018, 11:48:30 AM »
Here's how he might be wrong:
- Merchants don't love PayPal as merchants are extremely conscious on pricing.
- PayPal does not have untapped pricing potential as the payment gateway space is moving to a omni-payments environment. Online merchants, in particular, will want to offer flexible payment options, where PayPal will be but one of multiple options.
- The competition in fintech - online payment gateways/processing in particular - is really fierce currently.
- The cost reduction arguments that he makes are applicable to all players in the sphere, i.e. all players in the market are working on automation of customer service to lower costs. Any cost saving are likely to be competed away.
- The changing relationship with eBay might well present opportunities, but what about the threats? How is this not a net negative event? Beats me...

It may well be that the shares are trading at 18x2020 eps, but I just find the reasoning for this so weak.

DTEJD1997

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Re: PYPL - PayPal
« Reply #66 on: July 25, 2018, 03:40:41 PM »
http://www.leadersmerchantservices.com/sq/index.php?st=top10bestccp&vendorSubId=AFF_pM2Aeokxgj

I don't know who these guys are and if they are legit and whether their ads are bait and switch. So caveat emptor. Just showing I did not invent the pricing.  8)

I didn't think that you were making things up out of the blue...but there is just simply NO WAY that a small merchant is paying .15% fee for credit card acceptance.

Upon some research....it looks like most small merchants will pay a monthly interchange fee of something like $25 or so.  Then, if they are taking payments with a person presenting a card in front of them (card present), then there is a $.10 fee along with about a 1.6% fee of the transaction total.

If you are taking cards over the phone OR through the interwebs...then the fee escalates to something like 2.25% to 2.5%

https://www.cardfellow.com/blog/average-fees-for-credit-card-processing/

The above website jibes with what I've seen & heard.

HOWEVER, I've heard that if you do a lot of volume in high $$$ transactions, you can get your rate down by paying a monthly flat fee of something like $150 and then a very small % of each transaction.

I don't know how fraud/chargebacks are handled with the low rate processors. 

PayPal used to be excellent on fraud cases.  As long as you did everything right AND shipped to the correct address, you would be reimbursed by PayPal.  This seller protection is included in their percentage fee.

I would imagine that in the sub 1% fee processors, there is probably little to no seller protection against fraud/chargebacks. 

If you get little or no fraud, and do tremendous volume, it would make sense to go with the low rate processors.  If you have to deal with fraud, then you probably want to go with PayPal or other relatively high rate processor.

Jurgis

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