How far can you trust sites like Paypal and other e-commerce business sites or payment processors? Not very, it seems. For all their utility in allowing easy payments to users, these sites are facing more than their share of complaints, which speaks volumes about the number of disgruntled users.

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PayPal plays with Indians

One of the most reason examples is the Paypal fiasco in India starting in February 2010. All of a sudden, Indians found their payments received through Paypal being reversed with little

explanation. Paypal soon sent a mail explaining that all personal payments made by or to Indians were being reversed. They offered no reason for this except a vague “we are in talks with our partners.” Needless to say, they were accused of racism back then. They then followed it up by temporarily disallowing withdrawals to Indian banks, though this was solely due to a complaint by the Government of India. What is important to note that payment processors have your money in their fist. They can choose what to do with it any time they want and can change policies in the blink of an eye.

Chargebacks

A huge menace with such sites is the number of chargebacks sellers have to face, with little protection. For online services there is almost nothing you can do to contest a chargeback. E-commerce businesses will readily reverse any payment if a buyer so requests. It’s not the buyer who has to provide proof, it’s the seller who has to do it. This means that thousands of ‘buyers’ end up getting stuff for free while the seller can only mumble in disgust.

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For example, here is a person who lost close to $400 and had his account blocked while AlertPay ‘investigated’ a fraudulent transaction claim. Such posts are scarily too common.

They have their hands in your pocket…and bank account!

Once you sign up for an internet payment site like Paypal or AlertPay and link your bank account or credit card they can do almost anything they wish. See this case of a person losing more than $100 because PayPal reversed his withdrawal to his bank, that too for no apparent reason. In such cases, they are not liable for anything. Would Paypal have done this if the Rupee had strengthened against the Dollar? Probably not. At least we haven’t heard of such a case yet.

It’s not the websites…it’s the people on the other end of the wire.

For all the hatred we posses about these sites, it’s really the few users who use these sites to scam people that we should be complaining about. These sites provide an invaluable service to society – that of easily transferring money from one point to another. Users have found ways to scam people using the short-comings of these sites. For example, there are stories of people selling things they don’t even own, using the advantage provided by MoneyBookers in such transactions. This would not work on Paypal, since the buyer could issue a chargeback. So what is often a shortcoming on Paypal (chargebacks) can sometimes be an advantage. We cannot blame the sites for following the policies they do. Besides, they really are working hard to improve their services so that there might be a day when you will have no cause to complain.

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