PayPal Denies Another Co-Op

As news broke today of another co-op shut down by PayPal, people are starting to ask again about alternatives. PayPal’s inconsistent U.S.-only policy of not allowing sales of e-cigarette-related items has decimated more than one group buy, and their notoriously uncaring customer service has angered buyers and sellers alike.  So, what viable alternatives do we have?

The obvious replacements would be similar services like Popmoney and Dwolla. Those options aren’t without their own drawbacks, however.

Popmoney’s policies do not addressing e-cigarettes specifically, but they do prohibit the sales of tobacco and other items, and those policies could potentially be invoked to wreak a lot of the same havoc PayPal has caused in the past.  Other than the potential for policy problems in the future, many co-op managers have turned to Popmoney as their primary payment provider, because of their relatively easy-to-use interface and lack of interference. The system can be a bit quirky, though, and “features” such as a limit that kicks in when receiving money from a certain number of email addresses, and a low daily limit on the amount of invoices that can be sent, have slowed more than one co-op to a crawl.

Dwolla, on the other hand, does not have any policies on what can be bought or sold, as they present themselves strictly as a currency exchange. The problem with Dwolla isn’t their policies; it’s the interface.  Many find Dwolla to be difficult to use, time-consuming to set up, and slow to transfer funds, often taking up to a week to complete a transaction.  In Dwolla’s defense, a lot of this is just perception, as Dwolla handles the exchange from end-to-end.  While a PayPal transaction may look instant, it will most often take days to transfer a balance to the user’s bank account. This transaction will happen automatically with Dwolla, so the lag is visible to everyone involved, and not just the person receiving the money. As a result, Dwolla looks like it’s a slow way to transfer funds, even if the overall transaction takes about the same amount of time as other services.

Of course, there are always the old-school options, such as money orders and wire transfers, but those tend to add additional levels of delay and uncertainty that make them frustrating for users, and they typically lack any kind of buyer protection.

For now, the push to move away from PayPal seems to be strengthening, and having had our own disputes with PayPal (who, in the spirit of full disclosure, we should mention we’re currently battling with — they’re refusing to release the amount refunded by the manager of the co-op mentioned at the beginning of the article), we tend to agree that discontinuing the use of PayPal for co-ops is probably a very good idea at this point.  It seems quite likely that PayPal’s days as the go-to payment provider for e-cigarette co-ops may have finally come to an end.

 

PayPal Denies Another Co-Op