PayPal - Round and Round We Go

Full disclosure, I am a shareholder in PayPal and believe that that is a sound position.

However, what happened this morning reminded me of the bad old days of PayPal's journey.  

One of the companies that I do expert consulting calls for uses PayPal to pay me.  I received a notice that the money had been credited to my PayPal account.  All I wanted to do was transfer the money to my checking account so I went to the app.  I had to poke around for a minute or so to find that choice.    I was first asked if I wanted to sign up for a Venmo debit card which I chose to skip over.  No matter how appealing the deal, I am not interested.  

This reminded me of the old days where in order to back a PayPal purchase with my credit card I needed to bounce around and switch from the default ACH method.  This was very annoying and caused me to hesitate to use PayPal for all but very rare situations when I was totally unfamiliar with some no name merchant.  Then miraculously PayPal finally made it possible to make the credit card the default funding backing choice.  Once that annoyance went away I was less likely to choose another method.

So, I am torn, as a shareholder I admire their objective to make money and get a deeper relationship but once again I am likely to choose another payout path if the consulting agency offers it.  All the other agencies I do business with push my payment directly via the ACH to my checking account.

PayPal, if you want to market to me, and I am opted in, send me marketing emails or texts but please do not get in the way of me doing the simple transactions I want to do.  PLEASE!  THANKS

"concentrating on the potential next big things in payments from your perspective would spark conversation"

OK, I get asked this a lot. I have had the benefit of being in the industry as it experienced; a) transformation from zip zap machines/warning bulletins to electronic authorization/capture, b) the emergence of the internet as a commerce platform and c) the mobile revolution. I could share stories that would make your hair (for those of you who still have it) go on fire. Back in the day at Verifone, ...... nah - your going to have to buy me lunch or a beer. OK, so back to the question. The pundits have said it was going to be crypto, fed now, the metaverse, BNPL, Social commerce, QR Codes, and of course now AI. The next time I hear someone proclaiming their thing is a Game Changer, I am going to scream (again and again and again).

The honest answer is I do not know but I do not think it is any of the seven things I have mentioned.  But of course, I have to at least take a guess, right?  The most challenging market to make this prediction is here in the US where cards, cards, cards continue to dominate and IMO will for my lifetime.  Note - I have put my money where my mouth is, I own Stripe, Adyen, Fiserv, Visa, MasterCard, Block, Google, Apple, etc.  In other markets like Asia, Latam, and Europe, there have been massive transformations such as Alipay, UPI, PIX and Open Banking. 

AI itself is a tool so the question is what truly transformational change can it be utilized for and when I say truly transformational I am not talking about a tenth of a percent uptick in authorization optimizations or fraud reduction.  

OK, since success in payments, for all parties, is about risk management, I would say that the winning opportunity to really change the paradigm would be for the industry to fully embrace PassKey/Fido authentication across all channels.   Combining this with full Network tokenization that is already nearly fully deployed would truly be a game changer.  Authentication rates would skyrocket, fraud would be mostly eliminated, the Interchange premium for CNP "could" be eliminated albeit that might require Durbin like legislation, and many associated costs for Merchants, Issuers and Acquirers could disappear. 

Thoughts?

I asked, you spoke, so here we go....

Yesterday on LinkedIn I posed the question - In 2008 I launched a blog called PaymentTalk. I am contemplating revving this back up. I would welcome a show of hands if there is interest and also welcome topics that would be desired. I had nearly 30 respoonses. Here is an example; >>>>>>>>>>>>>>>>>>>> I would be interested if there were topics on on/off ramps for Ripple, 3dsecure, and payment rails. >>>>>>>>>>>>>>>>>>>> I'd read it and share it. Go for it! You are voice of reason Steve. >>>>>>>>>>>>>>>>>>>> Forward looking stuff, the evolution of Wallets, fraud in payments, payments in specific countries, Open Banking payments, payment processors..So much to cover! >>>>>>>>>>>>>>>>>>>> Take my money! don’t think you’re ever retiring Steve >>>>>>>>>>>>>>>>>>>> would love your reality check on unstable and stablecoins, AI driven fraud mitigation, and quantum banking / payments please. You make it all make sense. >>>>>>>>>>>>>>>>>>>> ...the topic I would say is honest facts about PCI Compliance >>>>>>>>>>>>>>>>>>>> ...concentrating on the potential next big things in payments from your perspective would spark conversation. >>>>>>>>>>>>>>>>>>>> Would love your take on the implications of Apple opening access to SE and NFC. >>>>>>>>>>>>>>>>>>>> I'd challenge you to provide commentary on an area of payments where you either feel less certain of the future or are less familiar. >>>>>>>>>>>>>>>>>>>> Yes! As long as you bring your sense of humor that we see so often on LI. >>>>>>>>>>>>>>>>>>>> How about cross-border payments/money movement, instant/real time payments, pay by account…so much evolving stuff in payments. Topics of high interest to NYPAY members from 2025 survey. >>>>>>>>>>>>>>>>>>>> I would be very interested; wallets, agentic AI, and identity are all topics I am interested in >>>>>>>>>>>>>>>>>>>> Thanks to all who responded. I will start writing soon! (in between travel, tennis, pickelball and walking my dog)

Partnerships in Payments

Almost a year ago to the day my session on Partnerships in Payments was published on PaymentsOnFire; https://glenbrook.com/payments_on_fire/episode-234-partnerships-in-the-payments-industry-steve-klebe/ Discussing this topic never gets old.

Surcharging

So I walked into a Dr's office yesterday and there is a sign saying that as of May 1 they are adding 3.5% whenever a patient chooses to pay with a Credit or Debit card. This doc happens to be a personal acquaintance so I choose to do a little calm education by sharing one of many blurbs I found with a simple web search stating very clearly that surcharging is not allowed on Debit, even Signature Debit. She was quite surprised and said her processor assured her it was allowed. She reached out to them and got back more BS trying to justify their position. Now sadly as often is the case with legislation there are unintended consequences and since most merchants pay a blended rate they don't get the benefit of reduced costs on Debit cards, their PSP does. Arguably if the PSP didn't get that extra margin all the blended rates likely would have risen in recent years. Stay tuned as this story unfolds. She asked me to talk to her PSP. p.s. they offered me the option to pay with Venmo without any surcharge which I did. A day later - I spoke to their PSP who is actually an old school ISO. The person I spoke to seemed genuinely surprised that he and his company did not understand the rules. He promised that they would try and find a POS solution that would not surcharge Debit cards.

Zelle and Fraud

As someone who is intimately familiar with Reg E, the Electronic Funds Transfer Act, reading news like this - https://www.finextra.com/newsarticle/41920/senators-urge-regulators-to-take-action-on-zelle-fraud - is thought provoking. The actual fraud losses by consumers relative to the total amount transacted is very, very small. However, if you are one of the people who loses their life savings due to one of these scams, that does not matter very much. As a user of Zelle, Venmo, CashApp, PayPal, etc. I have noticed a significant increase in messaging about how to prevent one of these scams from occuring which is great. I also appreciate that for the most part consumers are not charged for these transactions and hence why the FIs and non FIs (ie; PayPal, Venmo, CashApp) are reluctant to reimburse their customers. However, this was the same for ATM transactions in general and REG E was imposed and the systems not only survived, they thrived. So, I think a balanced solution is needed. REG E or something similiar should be implemented to protect consumers using Zelle and these other services. The money the service providers save by having these TXs done electronically is massive and either already or over time paid services will be added making these systems profit generators. But consumer confidence is critical and therefore the regulation is a necessity.

Nostalgia

As we draw 2022 to a close I thought I would share a link to a few photos I have in my archive which I lovingly call the Klebe Payment Museum. Happy New Years to All! Lets hope 2023 is a better year for the world and the world of payments! Peace Steve