Pal No More

Despite their successful IPO this week, PayPal's stock has fallen lower than ever in my eyes. I've always been a fan of the company. Some people complain about their security hurdles, and there are some ease-of-use issues, but in general I've found their service well-designed, highly useful, and at times, a god-send for those of us trying to make a business on the web. It made something which is absolutely crucial and a pain in the ass easy. Getting a merchant account for a small new company is difficult at best. Even when you have one, hooking it up to take payments online, handling security, customer service, fraud detection, etc. is not fun. I've done all of these things, and even though my company has been around long enough now to have a merchant account (and we do now, fortunately), I decided to stick with PayPal for the time being for the convenience they offered. They have a great API that keeps getting better, more and more people have PayPal accounts, and, theoretically, there's no reason I need to duplicate all the efforts they've done in building a payment system. That's what I thought, anyway.

As of today, PayPal has lost Pyra/Blogger's business. We're still using them at the moment (and don't let this stop you from sending us money ;), but will be transitioning off as soon as we can. The reason is this: Over a week ago, they put a restriction on our account, which means we can't withdraw or send money, though we can still take it. The supposed reason for the restriction was because they found there were more than the allowed two accounts (one personal, one business) with my contact information. Never mind that two of the accounts were setup for testing purposes and never used. Never mind that they didn't first bother to email and tell me that this is a problem and could I close some of them. (Or, wait, maybe they shouldn't have allowed me to create them in the first place?) And never mind even that, although all these accounts have been open for months, they happen to not put on the restriction until we attempted to withdraw several thousand dollars into our bank account—more than we ever had before (fishy?).

Fine, it's a security thing. We'll play by their rules and do what they tell us to undo the restriction. Here's what they tell us to do: "fax a copy of your driver's license or valid ID, a copy of a current bank account statement (for the registered bank account with the last four digits XXXX), and a copy of a utility or phone bill." So, we do that. It's been a week. We call, we sit on hold, blah, blah, blah. We finally talk to someone. First of all, she's a bitch. Whatever. We talk for a long time with this woman trying to make sure everything's in order. We close the other two accounts. She tells us there are a couple of complaints on the account, and we need to give these people refunds. We tell her we can't give them refunds because they've frozen our account. She says we should have called or emailed about that, and they'd do it. "Well can you do that, then?" "Phhh, I don't do that."

Finally, she lifts the restriction on the account. Then, wait, she notices that the bank statement we faxed her does not have my name on it. It only has the company name. It's a fucking corporate bank account! It's hooked to a business PayPal account with the same exact name! Of course it doesn't have my name on it. It's not sole proprietorship. That's how these things work. How can they offer business accounts and not understand the concept of a corporation?

So, she puts the restriction back on the account. They have to see something with both my name and the company name. We tell her we have a letter form the bank with both my name and the company name, but it says "Pyra Labs," a DBA, instead of Ltd. Nope, won't do. She tells us we have to go to the bank and get a letter from them, on their letterhead, that says I own that bank account.

Not only is this a ridiculous pain in the ass that will keep our money frozen for several more days (it being Friday afternoon with a holiday on Monday), I can't imagine what good it does. I understand they need to be sticklers about security. But I have a hard time believing this is about security. If it is about security, it's totally ineffectual anyway. Like we faked all of the above, but we can't fake a letter from the bank. Perhaps it's just about incompetence. Perhaps it's something more sinister to hold on to money longer to make money on the float (even though they lose it with the costomer support costs). Whatever it is about for them, for me it's about the fact that they are holding hostage what, to my tiny company, is a boatload of our money (climbing daily), and treating us like shit, not only after we've paid them several thousand dollars in fees over the last couple years (on the way to being a hell of a lot more this year), but also been a significant promoter of their service (even getting them press on more than one occasion) and driving a significant number of accounts. Perhaps its foolish to feel they should want to keep us happy. They are, after all, practically a bank (but without the protections of a bank). But I sorta felt like they were one of us. Call me disillusioned.

Not that I didn't have other things to do, but I guess I'm digging into credit card transaction systems this weekend.

Addendum: See the latest update.