Not your PayPal

Sometimes the best service can be ruined by greed. I find it particularly insulting how PayPal continually defaults to direct debit from chequing instead of paying through my credit card. I've been burned by this, trying to make a purchase quickly and realizing after the fact that I've just hit my bank account instead of my credit card. I have repeatedly set my primary method of payment to credit card, yet PayPal continually and consistently ignores this preference and requires me to override chequing at every purchase. This practice is misleading and dishonest, and illustrates the lack of respect that PayPal has for its customers.

When you set it back to credit card, PayPal tries to convince you not to, stopping you in your tracks:

Paying with your bank account offers the highest level of PayPal protection and security, plus these advantages:

• No Fees -- Payments made using your bank account don't accrue interest fees
• Instant Payment -- Bank account payments are processed instantly
• Convenience -- Paying with your bank account means that your payments always go through -- instantly.
  Note: Sellers with Personal accounts cannot receive credit card payments. Any PayPal user can receive bank account payments.
• Safety -- Your bank account information is kept safe through the highest grade commercially available encryption and is extensively covered against unauthorized use

Do you still want to make this payment with a credit card?

Fear, uncertainty, and doubt. PayPal tries to muddy the waters here, raising the spectre that the recipient might not be able to get the money. Um, if they have a personal account you can't even send them money with a credit card, so there's no danger of them not being able to receive their money. They also try to give the impression that using a credit card might delay the payment, when actually they use the credit card to guarantee the slow bank account transfer. They even flash the terrorsafety card, implying that the terroristsmafia will get hold of your credit card number, when in fact the merchant has no idea which method you're using. (If the merchant were able to find out, they'd probably avoid PayPal like the plague.)

See, this is how PayPal makes money. They withhold 2-3% from what they pay the merchant for the transaction whether it comes from your credit card, your bank account, or your PayPal balance. So of course they want to take it from your bank account – ACH fees are much cheaper than credit card settlement fees. But don't worry about poor little PayPal. They also make money from foreign exchangefees, transaction fees, and float.

If PayPal provided some incentive to use direct debit over credit card (like, maybe, a discount) that would be another story, but instead PayPal presents bogus benefits of direct debit that just don't make sense. Because they cannot legitimately convince someone to forgo thirty extra days to pay to have the money sucked immediately out of their bank account, instead they engage in this sort of chicanery.

Believe it or not, I use PayPal quite a bit because it is convenient. As annoying and opaque and arbitrary as they can be, they almost always beat the banks for immediacy and limited hassle. For example, they make foreign exchange relatively cheap and easy – heck, they make it simple as hell. But the little touches sometimes colour the whole experience, and I think PayPal suffers from contagion from its prematurely sclerotic and abusive corporate parent.