posted on March 29, 2002 12:13:00 AM
Thought Paypal now carries FDIC insurance?
It doesn't.
What they not so cleverly did was arrange to put the funds into a bank that is FDIC insured against it's own insolvency so they could put the term FDIC everywhere. Your funds are NOT insured against Paypal's insolvency, which is far more likely than whatever bank they are using.
quoted from their web page:
FDIC Pass-Through Insurance
You do not need to keep funds with PayPal in order to use our service. If you do hold a balance, you can do so in two ways: (1) PayPal, as your agent, will place your funds in a pooled account at an unaffiliated FDIC-insured bank or savings institution, which is eligible for pass-through FDIC insurance coverage; or (2) you can elect to earn a return on your funds by enrolling to invest all funds that you receive into the PayPal Money Market Fund. The PayPal Money Market Fund is not FDIC insured, not guaranteed by any bank and may lose value. PayPal keeps a record of the amount of your balances, which you can check by logging in to your account through the PayPal Web site at any time.
If you do not enroll in the Money Market Fund, then in the unlikely event that an FDIC-insured bank in which we place your money fails, your balance placed at the bank would be subject to FDIC pass-through deposit insurance coverage, along with any other deposits you hold at that bank, up to a total of $100,000. Pass-through deposit coverage is contingent upon PayPal maintaining accurate records and on determinations of the FDIC as receiver at the time of a future receivership of any bank at which we place your funds. FDIC pass-through deposit insurance protects you only against the failure of the bank at which PayPal places your funds, and does NOT protect you against PayPal's insolvency. Through the terms of our User Agreement, we believe that your funds will also be protected from any claims of PayPal's creditors and will be returned to you even in the unlikely event of a PayPal insolvency.
You can access a list of the banks where we place your money here.
Please see the User Agreement for more details on how we handle your money.
posted on March 29, 2002 09:53:25 AM
paypal is good for small transactions for sellers who do not have merchant accounts.
paypal is not a bank,how can it take out FDIC insurance??
i think some sellers accumulate a large balance in their paypal account is that they sell electronic goods such as laptop pc and with an average price tag of 1000,it is easy to have a 5 figures balance in their account.
most of these sellers do not have inventory on hand,they rely on drop shippers to ship goods to high bidders and these drop shippers need to be paid before they would ship.hence the paypal large balance comes in handy.
sell what you dont have - if there is any hiccup in the food chain,say drop shipper does not have goods on hand and cannot ship to bidders,bidders get nervous and file chargeback,paypal could lock up seller account and his drop shippers' accounts.
posted on March 29, 2002 06:06:33 PM
so what is the big DEAL?
FDIC PASS THROUGH INSURANCE -for my lousy 30 bucks in my paypal account??
some folks sent more money to romania than what some of us keep in paypal accounts.
if you dont like its service,then dont use it.
open a merchant account and wait 13 days for them to deposit your fund.
posted on March 30, 2002 08:23:13 AM
FDIC-PASS THROUGH is not created for paypal,most people who use paypal or billpoint can read.
most folks dont keep a big balance in their paypal accounts,for those who do,they have their reasons.
posted on March 30, 2002 09:24:55 AM
I don't keep my life savings in my PayPal account, I don't think anyone with a lick of sense does that. From a investment point of view it just doesn't pay the interest you can get elsewhere.
I don't need FDIC insurance. I use the Money Market Fund for any money in my PayPal account, it makes sense. I'm not sure how many know anything about Money Market Funds but I feel real secure with them. I've made money every year with PayPal's Money Market Fund, not enough to retire on (already retired) but it's a free benefit I take advantage of.
No Money Market Fund is FDIC insured, but then nobody has ever lost any money in a Money Market Fund either. American's have over 3 trillion dollars in Money Market Funds(I'm gong on memory)... none of them are FDIC insured.
Only one Money Market Fund has ever been shut down in their entire history and that was around 10 years ago, investors suffered no losses. All Money Market Funds are under strick controls by the SEC. The Money Market Funds have an enviable track. Don't take my word for it, research it yourself if you have internet access, the information is available, you only have to look, read, and understand.
posted on March 30, 2002 09:50:03 AM
which money market fund was shut down??
back in 1989,there are 2 money market mutual funds which invested in short term securities and lost money,the share value dropped to under 1.00.
but the fund management companies ponied up the money to restore the share price back to one dollar,but stated they dont have to do it and they may not do so again in the future/
posted on March 30, 2002 10:28:32 AM which money market fund was shut down??
A Denver bank or investement firm had a money market fund shut down by the SEC back in the late 80s or early 90s. I'm too lazy to look it up and give you a link. Required a mimimum depost of $100,000.00 to get in it, I believe all their clients were banks. Going on memory here so be gentle with this old man, it fell to .96 and the SEC shut them down, they also paid 4% that year so it was a break even deal, no loss, no gain.
Anyway, the FDIC mantras have little effect on me, I use the Money Market Funds when ever possible. Better return on my money and I feel very safe with them.
posted on March 30, 2002 12:16:51 PM
even with direct fdic or fslic insurance,it takes years to get your deposit back,how do folks pay their bills and eat??
many enron employees have all their savings in enron 401 k and enron stocks,now they have nothing.
posted on March 30, 2002 07:53:21 PM
LOL, you two never do get it do you?
The point is this is a prime example that Paypal misleads it's customers on purpose, and has no ethical problem with not only doing that, but ~blantently~ doing that. There is no reason for 'pass through' FDIC insurance, except that being able to say the term FDIC on your first announcement page and putting the term in your ads so people will think Paypal is an insured FDIC institution.
Who cares how much you personally might or might not lose in this particular example.
posted on March 30, 2002 08:26:24 PM
dont you have anything better to do?
to many of us who have such a meager balance in our paypal account,it is really an under utilisation of your talents.
we dont care,period.
take my 30 dollars please!!
