Some Tips for PayPal

I can't believe that something that was invented in order to streamline online payments has made it MORE difficult to make online payments almost every single time I've used it.  If it weren't for eBay and all these little independent merchants who don't have their own credit card processing, I'd never use it to begin with. Here are some suggestions for PayPal to help make things easier for the end user and make some more money in the medium- to long-term.

  1. Stop defaulting to the payment option that's most profitable for PayPal. I have my checking account linked to my PayPal account.  But it's often better for me to use one of the credit cards linked to my account.  PayPal always defaults to take money directly from my checking account and makes it a huge pain in the butt to pick another payment type.  The end user, though, doesn't care what's most profitable for PayPal.  They just see that PayPal is picking the option most profitable for it, and not the one that's most convenient for the end user.  I find myself changing my payment option out of spite - to the debit card that draws money from the same checking account PayPal wants so desperately to directly debit.
  2. Make it easier to change information after you change addresses.  Having just moved, I now know that this process is a pain in the ass.  You can't just change your home address in the system.  You have to log in, delete any credit cards associated with your old address, then delete the old address.  Then you have to add your new address, add the credit cards back and then designate that address as your new home address.  All credit cards have to be reconfirmed.  How about an "I'm Moving Wizard?"
  3. Change the whole process for confirming credit cards. The existing process is screwed.  PayPal wouldn't let me use my Discover Card because it was "associated with another account."  I just found out it was associated with the right account, all right - just the wrong address.  So I went through the steps described in #2 above and found out that I needed to reconfirm the Discover Card.  How PayPal does this is to charge the card $1.95 and have the owner of the card confirm it by entering a code that appears on their statement.  Once confirmed, the $1.95 is refunded.  The transaction takes a few days to show up in electronic billing, assuming you don't want to wait for the statement to come in the mail.  Meanwhile, PayPal gave itself a $1.95 interest-free loan on your credit card.  Doesn't sound like a big deal, but what if you're confirming a few million credit cards at any given time?  That's a lot of float, to say nothing of the breakage.  I should point out that when I've opened checking accounts with ING Direct and Emigrant, they send you a micropayment of something like 8 cents or 12 cents and ask you to confirm the amount.  They don't take money out.  Interesting...
  4. Quit trying to upsell when you should be streamlining payment processes.  People resent it when PayPal wastes the chance to make a payment process shorter and simpler and tries to upsell a Mastercard or whatever.  Do Not Want.  Keep doing it and its a big Do Not Want for the whole service, which exists (ostensibly) for simplifying payment.

There are a lot more tips I could give.  PayPal ought to give serious consideration to fixing some of this stuff.  The big picture is that they're screwing up their brand.  They look like a company that scrapes for every nickel and dime it can get out of customers in exchange for adding minimal value.  That may cut it in a world where PayPal is pretty much the only game in town for folks who don't want to spend money on payment processing, but how much longer can that last?  It can't be too long before PayPal will see serious competition (most likely indirectly).

My guess is that PayPal will leverage its user base, the eBay ownership and other assets to enforce the status quo.  Should be good for a 4-7 year slide into oblivion while users slowly find and exploit other options.