At first glance, the email I received from PayPal on Wednesday, June 29 seemed like a well plotted phishing email.  The email claimed that PayPal had updated its policy again. So, I went directly to the PayPal site and logged in.

I’m not concerned about the fact that users will no longer “be enrolled”  in the Money Market program – it never amounted to much anyway.

In fact, here’s the exact message I saw:

Amendment to the PayPal User Agreement Money Market Fund. Section 5.3 Money Market Fund, and all references to the Money Market Fund in the User Agreement including the definition of “Money Market Fund” and the references to the Money Market Fund in the definition of “Pooled Accounts” in Section 16 Definitions and in Section 5.1 Balances. Beginning at the end of June 2011 no new enrollments in the Money Market Fund will be accepted. Beginning at the end of July 2011 each PayPal User enrolled in the Money Market Fund will be no longer be enrolled and their Balance will not be used to purchase shares of the Money Market Fund.

via Policy Updates.


What is interesting about this policy updates, is that I wonder if it’s a sign of things to come? You know, trouble brewing?

I’ve been very vocal about my problems and issues with PayPal in the past. While they were once one of the leaders in digital transactions, since they joined with eBay, they seem to be pulled in the downward spiral that eBay itself is heading.

My customers who attempted to use their Citi Bank Visa cards to pay me through PayPal were declined, only to find out that Citi itself wasn’t allowing folks to use their Visa cards on the site due to the immense fraud.

At another point in time, my clients credit cards were being declined at random because they were flagged by PayPal’s “security model.”  Only to find out later that the ‘security model” is based – in part – on the fact of whether or not the payee has a PayPal account or not.

Then of course, it’s the old PayPal policy updates that one minute their holding my funds for 21 days and the next cycle, their not because I was not adhering to my business model. WTF?

So, am I surprised that PayPal is starting to cut services like the Money Market Fund? No.

Would I be upset if PayPal went away? No.

Google Checkout is by far superior to them now and with banks having transfers and inter-bank payment systems online now, is this service even needed anymore?

And if anyone is still using eBay, the only protection using PayPal is in favor of the buyer now that eBay changed its policies. That’s why I haven’t sold on eBay in more than 2 years.

eBay and PayPal became the companies they were on the backs of sellers. You know, small business folks like you and me.  Then one day they decided they were better than that and changed their business model and literally s#&t all over those sellers.

In the meantime, companies like Intuit, Google Checkout, and a host of other “hungry for the sellers” business models cropped up who are happy to take our transaction fees and do not hold us hostage to the money we earned.  Imagine that!

I think PayPal and eBay are headed toward the Internet graveyard where old companies go when they have outgrown their usefulness or have refused to change with the new way of doing business.

In the new age of digital transactions and instant everything, you either keep up or get left behind.  It will now be interesting to see how long it takes eBay and PayPal to fall the rest of the way.

It will also be interesting to see which way the wind starts blowing with the new smart phone-based payment technologies that are cropping up at banks and merchant services.  There will be a leader soon. You can count on that. But just which one, is yet to be decided by our digital society.