The Russian Saga of American PayPal

Do you remember a song from movie “Big Break”: We choose from men, and they choose from us. And very often this choice varies … it’s a law of life, or people call it Sod's Law. Even in business where one can always find a compromise such situations occur. Before 2006 the relations between the largest country in the world and world’s largest payment system were awful, or it’s better to say that where no relations were at all. Russia is a gold mine for PayPal, and Russia was waiting it more than other ones. But everything was much more complicated.

Being launched in 1998 by Peter Thiel and Max Levchin, who was of Ukrainian origin PayPal system was very friendly towards all including Russia. And Russia that time was searching for a way to buy goods from abroad. An ideal situation, what’s wrong? However that very time came the Russian crisis that affected everybody in the country. Absence of money and spite of the crisis victims made people show their worst features. And imperfect PayPal with its chargebacks was as if created to tempt even the most devout people. Foreign goods sold by the western capitalists were regularly coming to Russia however money was returning to its owners with the same regularity. And finally the notorious habit of the Russians “to bring home everything” resulted in adding of Russia to a blacklist of PayPal along with other suspect and unreliable countries.

And here the affliction of people began. Americans were so offended that even the minor and indirect connection to Russia could cause the account block. That time system hadn’t the present sizes and many people thought that PayPal wasn’t a great loss for the country. But in 2002 the company has been acquired by one of the greatest online marketplaces – eBay. Starting that day the star rise of PayPal began. And here everybody became whipping the cat and do his or her best to get the desired account in PayPal. People started using the assistance of people living in countries not included into system’s ban list. Very often they Russians even didn’t know them. They opened the accounts on behalf of people they didn’t know, such accounts were sold… Though it’s necessary to say that having detected such account system was immediately locking it without any investigation. The situation when people who were pseudo-owners of the accounts took all the money was not a frequent one. There was no way to prove the rights for such money since there were no proof and everything was illegal. The happiness of those people who managed to get such account was also short since having detected the Russian IP the system also was blocking the account. Some people were using all kinds of proxies though there were some problems as well including the same account block. A long ordeal, no other words can be found!

But were the system’s troubles caused only by the Russians? Actually all the hackers are all the same regardless their location. And not all the hackers and carders were “made in Russia”. We think here should be something else. After the end of the Cold War Americans and Europeans were prejudiced against Russian. It’s not a secret that long time the name Ivan was a common name of an enemy. Such prejudice was very convenient for the company owners to hide their faults. They started finding some strange where the role of the malefactors was played only by the Russians of by the people of west European origin. So, for example Vadim Shemarov in his article “PayPal – the ninth circle of the hell” says that the owners of PayPal were constantly claimed of the Russians’ attacks. First it was some Biryukov from the South Ural who has created the exact copy of the company’s site and named it PayPai to steal users’ logins and passwords. In 2001 FBI officers have arrested two Russians Aleksey Ivanov and Vasiliy Gorshkov from Chelayabinsk who were continually redirecting users from the official site to steal credit card numbers. Everybody started hating Russia that seemed to be a cradle of carders, hackers and other swindlers.

Nevertheless we should admit that there is no want of carders in Russia. And not only in Russia! It seems that PayPal company was specially created for money laundering. People say that every registered user can be considered a money laundress. There is a great number of tips and advices in the Internet provided by the kind carders. It there anybody who can resist the temptation?

In 2006 the owners of PayPal decided to come to terms and close their eyes to the past having included Russia to the list of countries with which the system works. Though it is necessary to say that the most services of the payment system were still unavailable for the Russians who were allowed to pay for some service or merchandise with credit card but it was a great progress anyway. The ice was broken.

Today PayPal payment system processes $2000 per second and that is 9% of the whole e-finances in the world. As for Russia, today it is just a developing country where e-money is just obtaining the love of Russians. The only worthy payment system on the Russian market is Webmoney which has recently launched a new service in Europe is almost unclaimed in the USA and Europe. The lesser payment systems such as Yandex.Money, RUpay are good only in Runet and have no ambitions on promotion of their services in the West. In case of a successful integration of PayPal with Russian market it will process up to 20% of world e-payments. A tasty morsel, isn’t it? However starting from the same 2006 almost nothing has been done, let alone the translation of the site into Russian. And Russia is still included into the list of the countries allowed only to send payments. “Send Money to Anyone in the Growing PayPal Network,” says a kind of slogan. According to PayPal administration they still have some difficulties with Russian users. Being more precise, Russian users still face difficulties with verification of credit cards issued in Russia and payment processing. So, in the beginning of 2008 year the Russian users were indignant with the fact that some American banks refused accepting payments via PayPal from Russia.

What is it? A dead-end? The broken ice will freeze again? May be it could be but for Russian payment system ChronoPayall which has announced that it is able to solve the problems with PayPal. In August 2008 it has opened an office in Florida. Having partnered PayPal Russian payment system has significantly increased its chances to be accepted by the Americans and to become a rat of world e-payment market. In its turn ChronoPay promised to help its American partner to enter Russian market and to become a kind of bridge which will be used to “transport” goods and services from eBay which have already became a dream of many Russians. Everything’s ok we may say but for one disturbing fact. And this disturb is caused not by PayPal but by the Good Samaritan who has trusted out his hand to help, in other words, it is ChronoPay. According to CNews the turnover of Chronopay in Russia in 2007 was $250m. In 2008 this number was to increase owing to partnership with such payment giants as Moneybookers and Alipay. It’s great you may say but for the rumor actively discussed on the forums telling that Pavel Vrublevsky, the owner of ChronoPay who have stolen money of thousands of Fethard users. If this rumor is truth, PayPal will fail to get Russia once more since the fraudsters will never miss a chance to get someone’s money.

Now let’s think together: do we really need that payment system? Yearly scandals, endless fines and penalties… Unwillingness of the owners to reconsider their rules and policies which bring the system rather losses than profit. So, according to some sources, starting from 2001 PayPal system has managed to attract 17 million users and every year that number increases by 28 thousand people. At the same time more than 100 thousand claims were addressed the system, however not all of them were even considered and answered. Finally, it appeared that every 100th American/European had legal proceedings with PayPal to unlock his or her money n the account.

A few words about the blocking. The system policy was made so that PayPal reserves the right to block users’ funds without any preliminary notifications. Support team is very idle in speaking to the users. After account blocking they do not answer at all. See ya in court!

The number of displeased people is constantly increases. The system is charged with theft and fraud. Forums and sites created to join the anti-paypalists are not new. So, why do we need that PayPal? Only because of eBay? Today eBay is not the only payment tool of the auction. The recent acquisition of Bill Me Later payment system bring to the though t that the owners of eBay are tired and sick with the PayPal problems. Another question: do we really need eBay? Purchases on the local marketplaces are much cheaper owing to the absence of necessity to pay for delivery. Unfair sellers are also become closer and easier to reach. And if someone wants to get something from abroad he or she can simply use the services of other auctions. So, according to the recent reports Amazon has beaten eBay’s traffic this year. Today eBay is just a name and company brand. People who do not know anything about the problems with this action are caught with the famous name and very soon get disappointed. However following the same Russian nature we do not want to learn by someone’s mistakes, we prefer our own ones. We see the mistakes of other people though we rush to follow them, to repeat their mistakes. People say that experience will come with time, let’s wait for it.

“We choose from men, and they choose from us. And very often this choice varies …” May be it’s better?

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