Tag: payment

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The New Way To Pay Just Got Interesting

SquareThe tech edge that San Francisco holds currently has people jumping with joy or frustration. There are new things developing that could be wonderful or that could screw who the status quo of how we live. I had an interesting experience last week that I’m going to share with you.

Now you’ve heard me talk about San Francisco based Square as being a good ecommerce company. They don’t charge you anything up front. They send you a credit card reader for free and their software for the iPhone and Android is also free. The company even sends you business cards to pass out to get people to understand how Square works and they charge you only 2.75% per transaction with no transaction fee.

To put this in perspective a bit, Wife and I used to own a home based business. We had clients all over the country so credit cards were necessary for use to take. We were charged $800 for the software, then $35/month plus 35¢ per transaction fee, plus 3.5% on every transaction. We didn’t have a lot of business and our corporate clients worked off of invoices so if we only had one sale of $100 in a month it would cost us $38.85 just to get that $100 [or I would only get $61.15 out of every $100 sold]. With Square it would cost us only $2.75. If I didn’t have the credit card handy Square would charge me 3.5% of the total or $3.50 out of $100. Still a deal.

Looking through the app last week I noticed a large increase in the number of small businesses who were using Square and after downloading the new update it’s even easier to run on my iPhone since I can put in the individual items and they now show up on my iPhone, not just on the iPad.

I aslo received a phone call last week from someone at PayPal who was trying to sell me on PayPal‘s new PayPal Here service. I was kind of surprised as the phone number they called me on was linked to an old account I had made a mistake on. I had used it for donations for a website I used to run and as a joke I listed a donation as something that it turns out PayPal doesn’t want you to sell. It doesn’t matter whether or not there are large companies selling the same product I wasn’t, but I apparently broke their rules so I was banned for life from ever using PayPal again.

The guy on the phone told me it works, just like Square, but is cheaper. Well it’s only 2.7% vs. 2.75% and I’m not big enough that I’m going to complain over losing 50¢ on $100. PayPal is so much like Square that they made their card reader look like a triangle to keep with the geometric primitives angle. I told the guy that it was nice of him to offer this to me, but I had been banned for life from ever using PayPal again so I would have to pass.

Now when you are told that you are banned for life from using PayPal ever again you would think that this would mean that you just couldn’t use it to accept money. Well, you’re wrong. I had tried using PayPal in the past to purchase things from small companies on the internet and discovered that my bank account that was tied into PayPal‘s system was also banned from buying stuff from PayPal online. I happened to meet up with a friend I was telling this story to and he had the PayPal Here service so I told him I’d give him a buck if he let me try something. He pulled out his phone and plugged in the reader and I entered $1 and swiped my card. Guess what? My card was declined even though I had well more than $1 in my account. Why? Because I have been banned for life from ever using PayPal for anything [which they don’t tell you]. I would have to open a new bank account to get it hooked up with PayPal so that I could use the system. I don’t want to be bothered with that and I was told that if PayPal identified me as the same person that I would be banned again. It doesn’t matter if they really hire people to search for previously banned users of PayPal who want to be able to use it to pay for items. It’s fare too draconian an attitude for me to want to deal with.

Jack Dorsey, the founder of Twitter who started Square is a genius in my opinion. While they do have a few areas they don’t like to venture into sales wise they are pretty much an ecommerce company first that wants to make taking money from people for goods and services more affordable. If you’re a tech geek you can pull out your smart phone and run their Square Wallet app place your order while in line and just pick up your stuff at the counter or if you’re one of those people who doesn’t like this new technology because in my day they didn’t have smart phones and you had to tie two soup cans together with twine to call someone, you can use a regular old credit card. This is something that gives small businesses the edge. In looking around the USA I see that most metropolitan areas have quite a few places that accept Square. Not as many places as in the San Francisco Bay Area, but still a good amount. I can see this taking off in the near future even bigger and Square has a very big edge over PayPal in that it doesn’t shut out potential users from the system. PayPal has messed up big and if you do a quick search in google you’ll find lots of people complaining about being banned for life from PayPal. Square is the future and the way to go for small businesses.

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Paybyphone.com For Parking Meters

When I’m out driving around I’ve found that I’ve started to take every quarter in change I have and put it in my jacket pocket, that way if I have to use a parking meter I know I’m covered. Sometimes though I might need to be there for a couple of hours and don’t have enough quarters on me. This happened to me today and I tried out paybyphone.com to pay for the parking.

I had to have an allergy test done which for some reason I’ve never had done in my life. The hospital I go to has parking garages, but that would have cost me around $12 for the 2 hours I was there. I found a meter and saw that you could pay by phone. I had no idea how long I would be there, but I guessed an hour and a half would be a good amount to start with. I called the number entered my credit card number and created a PIN number and then entered the code on the parking meter. I was all set. I did have to pay a 45¢ convenience fee which I didn’t like, but the company that runs this has to of course make some kind of money.

As I’m going through the allergy test which was carried out in a Pediatrician’s office [and I didn’t get a lollypop afterwards for not screaming and crying during the test!] I noticed that my time was running out so I opened up the web browser on my iPhone and found that the page was still available and had an extend button so judging from what the doctor said I figured adding another 30 minutes would work. I was then charged another 45¢ convenience fee on top of the last one. In the end I don’t have any allergies and it turned out I had to pay only $4.90 vs. the $12 it would have cost me in one of the lots. Not too shabby, but it would have only been $4 if I had the quarters on me.

When I got home I went to their website and saw that they have a mobile app for iPhones and Androids which is free. It’s much easier to use and doesn’t require a phone and is much more secure. Most meters around the city have the paybyphone.com stickers on them so if you’re going to be somewhere for a couple of hours it makes sense, or you can just keep $4 in quarters handy at all times. I did that once and frankly I didn’t like the jangling all those quarters made as I was walking around, so now I keep $2 in quarters as my maximum all of the time. Oh and if you really want to know, I don’t have any allergies.

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Triangle vs. Square

So I’m sure you all know by now that I hate PayPal, I hate them a lot. Yesterday they unveiled their new product for mobile merchants: Triangle umm PayPal Here. I’m not buying into it for a number of reasons and yes, I’m about to pretty much tell you all of them.

First thing that was kind of funny to me was that they’re undercutting Square by .05%. What that means is that if you charge someone $100 you’ll be giving Square 5¢ more of your money. 5¢ out of $100 isn’t going to hurt me too much.

Second, the PayPal app looks like it was a complete reverse engineer of the Square app. The only difference between the two is that you have to enter the CVV number after swiping the card which you don’t have to do with Square.

People are talking about the 2.7% fee vs. the 2.75% fee of Square and then following it up with, but you get a free debit card that any money you charge someone is immediately available on the card which gives you 1% cash back making the effective rate 1.7%. While I’m good at math I’m not so good at bait and switch economics and something just didn’t sit right with me on this one until I saw a comment made by someone using the name SounderJunkie on The Verge that said:

Umm, the 2.7% is charged to the merchant, the 1% cash back goes to the customer using the card. The only way this becomes an effective rate of 1.7% is if you are charging your own card. Interestingly, this is classified under US law as money laundering.

Money laundering? Interesting idea. So they give you a debit card that accumulates your charges without the need for a bank account. As a freelancer I’ve run into times where I have to prove to a company that I was employed by showing them bank statements verifying PayPal or Square deposits to my bank. From what they’ve said so far they won’t be issuing bank statements for you and I can only suppose that they will show up on your PayPal account which looks more and more like a bank statement every time I have to look at one and at one time in the past they were acting like a bank encouraging you to keep your money in your PayPal account and earning interest on it through their Market Rate program or spend it with your PayPal debit card [something that when they got that started years ago I applied for, but never got.]

Third, PayPal is an established online payment juggernaut. They are virtually the only form of online payment that online businesses will accept. I just happened to check their site and noticed that they’re previous fee of 2.5% + 15¢ transaction fee has now been raised to 2.9% + 30¢ transaction fee. So in order to offset the extra .05% they’re giving you to undercut Square they now have to raise their rates for normal online PayPal exchanges unless you can get approved as a non-profit or make more than $3000/month. They also have some policies that are a very draconian in nature. They’re already telling book sellers that if they want to sell ebooks and accept PayPal payments they cannot sell erotica. Yet there is on eBay an ahem Adults only section where you can buy also sorts of erotica as well as some other rather bizarre sexually fueled devices and pay with PayPal and that’s OK because, well eBay owns PayPal and they love their monopoly status.

If you make a mistake and accept a payment for something they they don’t like you to sell [online raffles are a big one that people get hit with] they will suspend your account and hold all funds for 180 days and not even let you refund any payments. At the end of 180 days you can remove the money, but your account while still existing cannot be used because you have been banned for life. As a matter of fact anyone living at your address is also banned for life. If you sell your house and someone moves in that uses your old address they may end up being banned for life as well [in a call to PayPal that one caught them off guard, but they did say it could possibly happen].

 

Now Square, a San Francisco based start up that has been getting rave reviews since it’s beginning has also become pretty well established for mobile payments. Most of the food trucks around the Bay Area use Square. Small coffee shops and bakeries are using it. Sure there are a few other options around, but they usually charge more to process credit cards than Square does and the .05% lower rate for PayPal Here won’t help them overcome PayPal’s hatred by those who have used it in the past. I don’t think Jack Dorsey at Square will be quaking in his boots anytime soon.

If you want to get away from PayPal for online payments that don’t require a card swipe I suggest you check out Venmo. There are no fees associated with it unless you’re making a lot of money through it which in the future they say they will be instating fees for businesses to use it, but keep it free for individuals.

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Venmo: The App That Will Kill Paypal

Many of you know I have a bit of a hatred for PayPal after they banned me for running a raffle that I didn’t know wasn’t something you were supposed to do with them. They didn’t tell me to stop they just told me I was banned for life along with anyone in my house or anyone who ever will live in my house if I decided to sell it. A friend of mine turned me on to Venmo today and I have to admit, it’s much better than PayPal and will probably shut them down.

First thing is that they have some major funding for a startup and they don’t take a cut of your payment. They’ve said in the future they will from businesses, but that’s only to keep people like you and me from using it without having to lose money. They have iOS and Android apps so they cover a large amount of the smartphone hipster world.

People like me who work as freelancers and are pretty much off the grid so to speak can use this electronic form of payment to transfer money between clients and myself and the best part is when the client pays you don’t have the 3-5 day wait and charge like you do with PayPal, it’s an overnight transfer to your bank account. OK, that’s a really good start.

They are working with businesses so that you can pay them like you would with a credit card only you use your smartphone. Oddly enough it hooks you up with lots of social media so that it can broadcast to the networks when you’ve paid for something and/or charged someone for something. I’m not too keen on that, but you can turn that off easily.

Currently they are in an invite only mode, but if you want to give them a try go to their website and use the promo code selfmag1 and you’ll get in. I’m predicting this company which unfortunately for a tech company isn’t based int he Bay Area will grow quickly. They’ve got the killer apps that are free and they don’t charge you to exchange money. This is going to be a big game changer for me. I’ve been billing people when I do virtual work for them and it takes time to get the money. If I’m in person I’ll swipe their credit card with my Square app [which I also love] which is also cheaper than PayPal, but still there’s a charge. Now I can virtually bill people and collect money free of charge. That’s pretty cool to me and it’ll give me a little more bang for my bucks that I’m earning.

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The Second California Gold Rush Hits San Francisco

Back in the 1800’s when James Marshall found a chunk of gold at Sutter’s Mill California it started a wave of people who wanted to get rich quick flooding into the state to make their millions. Sound a bit familiar?

San Francisco was the landing place for a lot of the people who were heading out to get rich during the Gold Rush. We were a big port that had lots of food and supplies for the get rich quick people and because the demand was so high we could raise the price. San Franciscan’s back then didn’t have to head to the hills to get rich. They could do it by sitting on their butts selling goods to the newcomers at inflated rates.

Well since then things haven’t changed too much. I realized this while talking to a friend of mine who came here about 18 years ago from Italy following another gold rush — the gold rush of Silicon Valley. This time the gold rush was a little different. He was a computer programmer and was lured here by an offer of big money. Sure, you had to work long hours to get it, but it was big money and he was single like many of the original people to gold rush. There difference was that he was coming here to be handed the money. It was guaranteed up front for at least a significant amount of time all due to venture capital.

Like many of the gold rush people of the 1800’s he came to San Francisco first and then he slowly moved on to parts outside the city. Luckily he didn’t have to go far up into the Northern hills, but only had to move a little bit south to Brisbane. Brisbane is nice town. It has an old city feel to it which is a funny contrast to the eastern side of town which is all high rise office buildings gleaming in the sunlight. These campuses [or should that be campi?] bring in tech workers from all over the San Francisco Bay Area. You  notice that we call it the San Francisco Bay Area right? While not the most populous city in the Bay Area, it’s the best known. I know people who live in Alameda, or San Bruno who tell people they live in San Francisco because it’s easier for people to identify the location if they don’t live here.

San Francisco has many tech companies such as Adobe, Yelp, Square and Twitter that help keep us on the tech map. The problem is how to keep them here. Our minimum wage is higher which isn’t too much of a problem for tech workers, but our costs are higher. Rent is high here and the City of San Francisco is one of the few cities that tax employers. Things like this make the people who come from San Francisco leave San Francisco if they want to start a company. This is also another reason why housing rental is so high. We have a high turnover rate in rentals which gives the owners incentive to raise rates when people leave. Remember what I said earlier about how we sold goods at an inflated price during the first gold rush? The same is true today. We’ll still keep people coming, but we may not keep them here for more than a few years unless we take a look at how we deal with the people and the businesses in our city.

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