Magazine article Black Issues in Higher Education

Cash Flow Changes Course on Internet

Magazine article Black Issues in Higher Education

Cash Flow Changes Course on Internet

Article excerpt

PERSONAL COMPUTING

For years pundits have predicted that the digital age would usher in the paperless office and the cashless society. But computers have led to more paper, not less. And though getting cash may be more convenient with computerized ATMs, the need for it is no less great.

But significant change is in the works, at least on the money front.

Today you can carry out transactions using your personal computer and the Internet without exchanging cash. You can buy, and you can sell, and you don't even need a credit card.

Online auctions have been the catalyst behind the innovations, says Mark Morgan, a research analyst who specializes in e-finance for the San Francisco investment bank Putnam Lovell. The biggest mover here is a little-known, meteorically growing, and controversial company named PayPal.

Out of the heart of the Silicon Valley, PayPal has vaulted in little more than a year from nowhere into the world's largest Internetbased payment network. More than five million people now use its PayPal service, according to a company spokesperson. This constitutes more than 10 percent of all Internet traffic in the financial services sector - more people than are served by big names such as Citibank, Wells Fargo and Bank of America combined.

For consumers and businesses, PayPal offers useful services, and for businesses, useful lessons as well.

Using PayPal , you can quickly and conveniently pay for goods or services by having money transferred from your bank account, credit card account or PayPal money market account The kicker here is that you can sell over the Intemet without a credit card merchant account, which for individuals and even small businesses can be difficult or expensive to obtain.

PayPal used to promote itself as being "always free," - in its logo no less - but it now charges if you buy or sell more than specified amounts. It can still be a good deal, compared with other options.

But PayPal's abrupt change of terms of service created a storm of protest -- Internet message foruns were flooded with scathing complaints and calls for boycotts. In what undoubtedly is a side effeet of this, the Better Business Bureau just gave PayPal an "unsatisfactory" rating.

PayPal will likely weather this deluge, in part because a key competitor, ExchangePath, just went belly-up. But it could have handled things better.

Sure, in today's brutal dot-com shakeout, businesses need to make money rather than just coax venture capital and grow market share. …

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