[blindbid]

The competition is getting more competitive.
Paypal will be offering funding not in days but in minutes.

http://www.entrepreneur.com/article/228538

[MCNetwork]

Luckily very few of the merchants I've come across are on the Paypal platform. The Paypal MCA rates are ridiculously low...

[Sean Cash]

what are the rates on the paypal mcas?

[J.Celifarco]

if you look at the chart in the beginning of the article, there are some rates. Seems very cheep

[jbrown]

Processors thought they could play the MCA game. First Data, IPayments, and others. They claimed they "knew" their merchants because they were already extending them unsecured credit for card processing. We know how that experiment ended.

Cheap is good as it will hasten the demise of PayPal and others that enter into our space.

[MCNetwork]

what are the rates on the paypal mcas?

From the chart in the article it looks like factors ranging from 1.03 to 1.12. You just need a small number of defaults and the lender will be in the red. We shall see...

[Sean Cash]

Chart attached so we can all take a look:

paypalchart.jpg

[Sean Cash]

Processors thought they could play the MCA game. First Data, IPayments, and others. They claimed they "knew" their merchants because they were already extending them unsecured credit for card processing. We know how that experiment ended.

Cheap is good as it will hasten the demise of PayPal and others that enter into our space.

I'm in agreement with these Statements by Jeremy. My thoughts are that an online business is even less stable and predictable than a brick and mortar business. Even Kabbage charges rates in the traditional MCA range. PayPal and can try to buy these merchants away from Kabbage but it will end horribly.

[staten]

I'm in agreement with these Statements by Jeremy. My thoughts are that an online business is even less stable and predictable than a brick and mortar business. Even Kabbage charges rates in the traditional MCA range. PayPal and can try to buy these merchants away from Kabbage but it will end horribly.

This not the main source of revenue for ebay/paypal. Not even close. It is simply a mechanism to drive transactions on the platform. It will be viewed as an advertising cost, not a profit center. I will bet on the intellectual horse power at paypal versus MCA players every day of the week! Kabbage and other MCA players are dead in water.

[Sean Cash]

This not the main source of revenue for ebay/paypal. Not even close. It is simply a mechanism to drive transactions on the platform. It will be viewed as an advertising cost, not a profit center.

I doubt taking big losses on loans will be justifiable as an "advertising cost" or anything similar in the long run to shareholders.

I will bet on the intellectual horse power at paypal versus MCA players every day of the week! Kabbage and other MCA players are dead in water.

Dead in the water? RapidAdvance just became part of the Quicken Loans family. Google and Peter Thiel invested in On Deck Capital. Doesn't look like MCA players are going to be dead any time soon.

[CO1]

So what does this all mean? There are still people that don't know the product that we pitch an they don't understand the concept. We are the new way of getting money an merchants will understand what we are about. Look at yellow record month, look at Ondeck, look at capital access network. We are getting more recognition than ever before, I just hope that we don't get regulations that's all. Just because PayPal came in doesn't change anything it's just more understanding but the factor rates I might add might be the tricky part after they understand the product. As we drip market we notice people call us the credit cardinal goes an say high interest but what they don't understand is we are taking a risk but I just want some more aggressive numbers from the big guys so we can sell sell haha an talk about governmental shut down maybe we go for our California gold rush again!!

[JayBallentine]

This is a business PayPal is clearly happy to run at a loss. Why?

Why are they offering "no credit check?"

I don't buy this nonsense about displacing cash advance. I think they are looking for an "entry point" to get more merchants on their platform - thus generating more data (not to mention revenue). They'll monetize both.

Collecting merchant processing fees is the only possible way for PayPal to grow - right now, while it seeks to get in on this rush to aggregate ordinary transactional data... Or, big data.

It's a burgeoning business and this "head fake" may buy them a split second breathing room in this global multi trillion dollar processing fee competition.

Here's a scenario that immediately popped into my mind based on this article. Merchant applies for PayPal loan. PayPal says; "sorry not enough transaction history, but if you want a chance (to win) this dirt cheap and no credit check money - process with us and we will circle back soon."

They have just created a passive game mechanic. The merchant with poor credit no has a "shot" at a business loan. Only costs him time now... Cuz, "all PayPal needs to do is see my transactions for a while and I get a loan!" For the merchant who refuses MCA rates - but who has good credit, this is much the same.

PayPal had cast a wide funnel at the top, monetizes it, and as the funnel narrows -they lend money and will lose that.

No one has seen their funnel analyses before launching this - but Max Levchin is on that board so it makes me wonder.

There is something to be learned from the marketing of this product too. "Invites" "selected businesses..." If you email or call 100 businesses with exclusive invites to your "offer" - money, vs calling of emailing them "click here to apply now."

Which campaign will perform better?

If this industry is to be displaced - it won't because PayPal displaced it.

Maybe the gov, certainly not PayPal.

[MCNetwork]

Good analysis Jay. When you look at the big picture, it seems like the Paypal MCA will be a loss leader (kind of like McDonald's Dollar Menu) and be used to attract merchants to the processing platform.

[Sean Cash]

I've found when you dangle the money carrot in front of someone's eyes and then say "oh well first you have to sign up for this and do significant volume for 3-6 months and then you might be eligible" does not work.

[JayBallentine]

I've found when you dangle the money carrot in front of someone's eyes and then say "oh well first you have to sign up for this and do significant volume for 3-6 months and then you might be eligible" does not work.

And this is probably why they will fail. You should market your consulting services to these companies for $1,000 an hour. Let me resell for a cut!!

[marksbury]

Rates on the chart look very intising and will create a whole new market of Business Cash Advances.

[Eric S]

Just like AMEX, GBR and a lot of equipment leasing companies. They saw what we're doing and thought they would like to get in on this action but they will be done within one year because they will get taken advantage of by brokers that talk them into doing stupid things. Just another name that will be a complete non-factor before you even run into them as competition.

[isaacdstern]

PayPal Expands Its Working Capital Service To UK, Switches From Loans To Cash Advances

http://techcrunch.com/2014/07/22/paypal-working-capital-uk/