Article on Forbes about paypal/porn

[Cains]

Link

PayPal won't touch online gambling, porn and other vices. That's just fine with Neteller.
No buxom cocktail gals distract the 40,000 or so gamblers on PokerStars.com at any given time, where high rollers plunk down an average of $100 to $200 per transaction. So popular is the site that it doubles its player pool every six months. Some of that business slides right into the pocket of a company called Neteller Plc., the largest handler of financial transactions on the site.

PayPal, the Ebay-owned e-payment financier, used to control that rake--until it swore off the business in 2002, citing legal risks. A year later PayPal paid $10 million to settle Justice Department allegations that it violated provisions of the Patriot Act barring the transmission of funds known to have been derived from a crime. (Federal law effectively bans online gambling sites from operating in the U.S., but it doesn't prevent American gamblers from using them.) With $18.9 billion in online transactions last year, PayPal has also disavowed the sale of material for "mature audiences," which it says poses a high risk of chargebacks, where a customer refutes a charge. Says a spokeswoman, "We decided to focus on more traditional businesses."

And punish the sinners. Last summer PayPal announced that merchant violators of its "acceptable use policy" risked a $500 fine. The company threatened to freeze out little guys like Perry Brass of Bronx, N.Y., who used his own site to sell his erotic fiction, and Rod Shelley of Independence, Mo., who peddled old issues of Playboy.

Crumbs for PayPal, perhaps, but Black Forest cake to an outfit like Neteller, headquartered on the Isle of Man. It claims to handle transactions for roughly 90% of all online gaming sites and compensates for chargebacks by getting as much as 8.9% per transaction versus PayPal's 2.9%. To date the company boasts 1.5 million customers (versus PayPal's 64 million accounts) and enrolls 3,000 new members every day. Last year it netted $33 million on $82.6 million in sales. In the last year its shares, traded on the AIM London Stock Exchange, have tripled to the equivalent of $11.56.

Other piglets are feasting at the trough abandoned by PayPal. GKBill.com of Antigua services at least 11,000 porn sites. Moneybookers of London has already signed up 800,000 customers, including a fair number of online porn outfits. "It's been a huge opportunity for us," says David Roe, Moneybookers' chief operating officer.

Online gambling, now $9.8 billion a year, will grow an average 13% annually through 2010, estimates industry tracker Christiansen Capital Advisors. Neteller is eyeing more conventional businesses, too. Last month the company paid $12.5 million for Quick Access International, a debit-card processor in Macau that handles $50 million of transactions a year in Asia, most non-gambling-related. Taking the moral high ground may yet prove costly to PayPal.

A relatively small link to porn but I thought some people might be interested, at the bottom of the article are a couple of links to other forbes articles discussing the size of the porn industry and New Frontier

[Chio The Pirate]

YARGH! Good find.

[NetRodent]

Originally Posted by Cains

GKBill.com of Antigua services at least 11,000 porn sites.

Heh. Gkard. Can it really be called service if they don't payout?

[skillfull]

cool article

[Downtime]

good article, thx for posting! i didn't know paypal was owned by eBay

[DomBuyer]

NeTeller guys are great!

[woj]

nice find...

[Drake]

Great article. Paypal left an enormous void that's being filled by other companies. An unprecented opportunity.

[crockett]

A little US govt shenanigans trivia for you!

Q. Which terrorist organization did the US justice department first use the Anti Terrorism Bill the Patriot Act against?












A. PayPal

[jimmyf]

fuck paypal, I still have an account but have not used it in 2 years

[RyuLion]

All I'm going to say is..please release my funds PP!

[Kevsh]

I didn't see the link to other related articles, so I did a search instead and found a few interesting ones on Forbes:

http://www.forbes.com/search/results...Cap%2Cpinnacor

[Pornwolf]

Very nice article.

[r3ap3r]

It's a good read

[Sosa]

nice info. I use paypal still for some ebay stuff but that is about it.

[CynthiaB]

Great article.

I use Paypal all the time for ebay auctions, but was annoyed when they cut out adult sales since I used to sell my erotica through them. I can understand them backing out on the gambling issue - I used to work with an online gambling site and keeping the legal status while we had offices in the US was very tricky. Most credit card processing companies wouldn't touch us. We dealt mostly through Neteller which worked well in Europe but here - imagine using Neteller for ebay! I'd lose sales.

Cyn

[Rich]

t claims to handle transactions for roughly 90% of all online gaming sites

haha, riiiiiiight.

Last year it netted $33 million on $82.6 million in sales.

Online gambling, now $9.8 billion a year

lol, the 10% of sites they don't bill for must all be HUGE. Neteller's so full of shit.

[2HousePlague]

Informative post -- thank you.

It's interesting (and funny) to see how PayPal is still trying to position their DOJ "slap on the hand" as somehow connected to a positive business result for them.

Bullshit:

"...PayPal has also disavowed the sale of material for 'mature audiences', which it says poses a high risk of chargebacks, where a customer refutes a charge. Says a spokeswoman, 'We decided to focus on more traditional businesses'.

They would KILL to be able to get a piece of Neteller's business -- not to mention get back in bed with Adult.

But they can't, because PayPal is owned by a publicly-traded company, during (yet another) moment in the history of American commerce when xenophobia (as today embodied in the Patriot Act), and religious conservatism (ref. Janet's nipple) is more influential of American Business than the profit motive, or even sound business principles --

Meanwhile, Neteller's heading mainstream. Now tell me, who's smart.



j-

[DateDoc]

eBay should sell PayPal to eBay Europe or whatever they call it. Then they could pick up the gambling and adult business.

[hydro]

Great article