[Marchillo]

Originally Posted by rats60

These aren't remotely close to the same thing. Paypal doesn't make its money off fees. When they started out, everything was free and they said their profit came from holding people's money. With the increase of rewards credit cards, credit card fees became an increasing expense and so they moved to collecting that fee back from the user. When you pay with paypal friends and family, you have to pay from your bank account, which costs paypal nothing, or the sender pays 2.9% + .30. .30 is the swipe fee which goes to the credit card company. The % is negotiated between paypal and the CC processor. I don't know what if paypal pays that, but they do pay most of it on rewards credit cards. I have a CC that gives me 3% back on paypal, so if I pay with F&F and add 3%, it is a wash. If I pay with goods it is still a wash. Paypal is out very little if anything and on F&F they don't have to worry about fraud. If Paypal does away with F&F, I could care less, I am never paying the fee. It is Paypal charging me 3% to cover the charge from the CC company for the CC company giving me 3% for using their CC.

Ebay is a completely different matter. They make their money off final value fees. Most people are getting free listings, getting to advertise their cards for free, doing a deal off ebay is costing them all of the income from you using their platform. For the seller, they should price their item with the fees built in. I pay 9% (some pay less) Ebay and 3% Paypal. The buyer should be getting 1% Ebay bucks + 5% CC rewards or 6% off at a minimum. By doing a little work and timing, the buyer should be able to recoup the 12% plus more from ebay bucks, CC rewards, ebates, store rewards, etc. So why would anyone do a deal off ebay and assume all the risk and deny ebay income for using their platform?

Explain this -

My buddy runs an annual NCAA basketball pool at $5 each with around 200 people. For a couple years everyone would pay friends and family. Then PayPal caught on and wouldn’t allow it anymore. Why is that?

I have no idea of what you say is true but of course PayPal makes money off of fees. It may not be their main source of income but nonetheless they make money.