# How do places like Paypal that only have money for brief periods make money on deposits? **URL:** \ **Category:** Factual Questions\ **Created:** [January 3, 2010, 8:25pm UTC](https://boards.straightdope.com/t/how-do-places-like-paypal-that-only-have-money-for-brief-periods-make-money-on-deposits/523535 "2010-01-03T20:25:00Z")\ **Posts on this page:** 5\ **Page:** 2
**Author:** ![pan1](https://avatars.discourse-cdn.com/v4/letter/p/e495f1/32.png) [@pan1](https://boards.straightdope.com/u/pan1)\ **Post date:** [January 4, 2010, 9:36pm UTC](https://boards.straightdope.com/t/how-do-places-like-paypal-that-only-have-money-for-brief-periods-make-money-on-deposits/523535/21 "2010-01-04T21:36:17Z")
> [@Rumor\_Watkins](#): > > I won’t dignify your inane comment about how written negotiable instruments are identical in terms of security to a comprehensive linking-up of a bank account to an on-line service. > > Nor am I claiming that all people go through Visa/MC. But I would be surprised if less than 3/4 of their _consumer_ accounts (i.e. not one who receives money, rather one who pays it out to others) are linked to a bank account. In the words of Inigo Montoya: I do not think it means what you think it means. A “linked” account is nothing more than a way for them to transfer money to and from your bank account. They can no more take money out without direct authorization than your landlord can write another check using your routing number/account number from the last rent check. In other words, they have the capability but can’t get away with it in the long run. But anyone you’ve ever written a check to or handed a credit/debit card has the capability to run additional transactions with that information. If you have a debit card, you give Visa direct access to your account, why not paypal? The only real protection you have on your accounts is to monitor them regularly and catch any fraudulent transactions. Or you could limit your online purchases to using only prepaid Visa cards which you pay for in cash and use only cash for in person transactions. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [January 4, 2010, 9:45pm UTC](https://boards.straightdope.com/t/how-do-places-like-paypal-that-only-have-money-for-brief-periods-make-money-on-deposits/523535/22 "2010-01-04T21:45:05Z")
> [@not\_alice](#): > > Are you alleging btw that Paypal is not legitimate, or that checks are more secure or more universally accepted or something? Negotiable instruments don’t give anyone access to your bank account. at all. All that can be done with them is presented for payment. Online money transferring systems don’t have the same definitional limitations on them as do negotiable instruments. Equating a check to an online bank agreement, merely because both reveal an account number, is wrong. > [@](#): > > Even if that is so, so what? Everytime there is a transaction, they have captured it. They get a piece of it and someone real or potentially competitive does not. That is the business of transactions. But that is not all they do nor is that all they plan to do. I think “online services” are here to stay, and for better or worse, there was a window of opportunity for Paypal to jump in fresh in 1997 or whenever and they nailed it. I have no idea why you think i’m saying things that I’m not. I’m glad paypal’s around - they provide a good service and I don’t complain about middle men. I just find it amusing in a “this guy is an airhead MBA way” when he calls VISA a dinosaur when the “dinosaur” drives the bulk of their entire freaking business model. Which is all I said. I want to ask you: why are you so defensive about this guys dumb comment? Is he a relative? My comment cannot rationally generate all of these defensive phrases regarding how they were not missing their mark, how they got in on the game early, bla bla bla. ---
**Author:** ![pan1](https://avatars.discourse-cdn.com/v4/letter/p/e495f1/32.png) [@pan1](https://boards.straightdope.com/u/pan1)\ **Post date:** [January 4, 2010, 9:53pm UTC](https://boards.straightdope.com/t/how-do-places-like-paypal-that-only-have-money-for-brief-periods-make-money-on-deposits/523535/23 "2010-01-04T21:53:38Z")
> [@Rumor\_Watkins](#): > > I have no idea why you think i’m saying things that I’m not. I’m glad paypal’s around - they provide a good service and I don’t complain about middle men. I just find it amusing in a “this guy is an airhead MBA way” when he calls VISA a dinosaur when the “dinosaur” drives the bulk of their entire freaking business model. Which is all I said. Your argument relies on the assumption that more people think like you do than do not. Your willing to bet the 3/4 of the people do not give their bank account information, but give credit/debit card information instead is unfounded, uncited, and without merit beyond your opinion. (Whether it’s true or not; its underminable from your opinion alone.) Take a few minutes and do some research, gather some numbers and spout actual facts rather than your opinion. The airheaded MBA has the job-requirement to have exactly that opinion. His inability to sell it to everyone with 2nd Millenium mentality when it comes to transactions, is probably a factor in his business model. Undoubtedly they regularly have meetings to try to figure out how to reach these last eon dinosaur mentality folk. I had no intent of mischaracterizing, if I read wrong when reading between the lines when you start a statement with “No Way in Hell,” you have my humble apologies. ---
**Author:** ![Rumor\_Watkins](https://avatars.discourse-cdn.com/v4/letter/r/d9b06d/32.png) [@Rumor\_Watkins](https://boards.straightdope.com/u/Rumor_Watkins)\ **Post date:** [January 4, 2010, 10:02pm UTC](https://boards.straightdope.com/t/how-do-places-like-paypal-that-only-have-money-for-brief-periods-make-money-on-deposits/523535/24 "2010-01-04T22:02:54Z")
> [@pan1](#): > > Your willing to bet the 3/4 of the people do not give their bank account information, but give credit/debit card information instead is unfounded, uncited, and without merit beyond your opinion. (Whether it’s true or not; its underminable from your opinion alone.) Take a few minutes and do some research, gather some numbers and spout actual facts rather than your opinion. Compare the consumer protections afforded to credit users by Regulation Z and the ones afforded to ACH/debit users by Regulation E and get back to me on that one. ---
**Author:** ![pan1](https://avatars.discourse-cdn.com/v4/letter/p/e495f1/32.png) [@pan1](https://boards.straightdope.com/u/pan1)\ **Post date:** [January 4, 2010, 10:12pm UTC](https://boards.straightdope.com/t/how-do-places-like-paypal-that-only-have-money-for-brief-periods-make-money-on-deposits/523535/25 "2010-01-04T22:12:21Z")
So you’re own argument that most consumers opt for credit/debit card deposits was ignorance, hot air or have you changed your opinion? Paypal is subject to exactly the same regulations/protections as debit cards. (regulation E) Regulation Z protections are more stringent and offer better protection, but your original arguments put debit cards in on the credit card side of the arguments - meaning you were saying Credit/Debit card deposits/spending were safer (or percieved as safer the majority of people, whom you assume think as you do) than paypal when the facts are that credit cards have more regulated protections and debit cards have identical protections as paypal. The disparity between your posts is showing your opinion is merely opinion and possibly devoid of facts. [Previous page](https://boards.straightdope.com/t/how-do-places-like-paypal-that-only-have-money-for-brief-periods-make-money-on-deposits/523535.md?page=1)