PayPal just charged me £3.60 to receive a payment of £100 from someone. If someone sends me a cheque for £100 and I pay it into my bank account my bank do not charge me a penny for it, even though in their case they incur real costs with real human beings sitting behind a counter processing it for me. PayPal on the other hand is totally automated, the payment is processed in nanoseconds by a computer with no human involvement at all.
The banks don't charge because they make good money out of having our money sitting with them earning next-to-no interest (and if they do charge its by way of annual bank charges based on the number of transactions on my account, not a percentage of my money passing through their hands). PayPal must have zillions of pounds of our money sitting with them at any one time waiting for us to get round to moving it out to our bank accounts, on which they pay flat zero interest, so why do they need to charge when the banks don't?
And even if they do need to charge, why do they need to charge on this hefty 3.6% basis? The cost to them of processing each payment is the same whether it is £1 or £100 or £1 million pounds, so why not just charge the same tiny flat-rate fee for every payment? 10p or something should give them a handsome profit given that they are processing zillions of payments all over the world every minute of the day.
The answer to all my questions is that it is because PayPal are a bunch of spivs controlled by eBay, neither of whom I trust as far as I could kick them and whom I use only because I have no real choice. When is our government going to get round to doing something about them?
You are completely right, but only if your argument is based on comparing personal bank accounts with PayPal. Commercial - or business - bank accounts, however, are a different animal altogether. If you have a business account and want to do anything, the baks charge for it. Paying in cheques or cash? You will be charged. That is the model that PayPal are competing against. But there is still more than a whiff of profiteering. If you look at the fineprint of charges for PayPal, you will see that those who make huge regular levels of transactions pay as little as 1.4% As usual, it's one rule for those with plenty of money, and another for those without.
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