Now Microsoft Wants To Get Into The PayPal Business As Well?

from the good-luck-with-that dept

Mon, Jan 29th 2007 2:38am — Mike Masnick

There's a short blurb over at CNN suggesting that Microsoft is getting ready to enter the online payments business, based on some off-hand comments from Bill Gates at Davos. It very well could happen, but it's odd that the press report doesn't even mention PayPal and seems to assume that this is really an attack on credit card companies. It's certainly possible that it would be directed at credit card companies, but the brief description sounds much more like PayPal. Of course, beating PayPal at its own game has proven a difficult chore for just about every competitor. eBay couldn't do it, so they ended up buying PayPal outright and shelving their own competitor. Google is trying to beat PayPal and finding it to be more difficult than expected. There's nothing wrong with Microsoft entering the space (more competition for PayPal would be good), but it seems unlikely that any of the credit card companies need to be worried any time soon about Bill Gates' plans.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

18 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

ScytheNoire, 29 Jan 2007 @ 3:16am

brand recognition
brand recognition is what it is all about. starting early in the game and getting well known is key. Google, eBay, PayPal, YouTube, MySpace, NewEgg. they all have competition, but what sets them apart seems to be that they got in early, they did their jobs well, and they continue to work well. it's hard to come late to the game and try to dethrone a service that is a household name and still works great. it's much like Napster, which became a household name, but better services that came later, and are still around, just don't have the same brand recognition.
[ link to this | view in thread ]
The fat One, 29 Jan 2007 @ 3:50am

Imagine the hate
Picture a major credit card company pulling the worldwide hate that Microsoft already has...
Factor in the multitude of current hacker/fiscal entrepreneurs that would feast on the inevitable holes that integrating banking, home computing, and the everyday idiot users would open. Now this is already arguably in place...but your Passport ID isn't tied to your credit rating.
All things considered, Microsoft would do well in the business as long as users aren't left as a major line of defense against theft.
stupid users...FTL
[ link to this | view in thread ]
justelise, 29 Jan 2007 @ 5:17am

Living Off of the Innovation of Others
Microsoft is incapable of innovating. They read the tech news and pick out the best ideas that other companies have come up with and try to implement them. They saw that there was money in the video game console market so they came out with the XBox, then they saw that the other consoles were stealing business from the desktop computing video game market so along came XBox 360. They realized they couldn't design a GUI so they bit off of OS X, and now some MS Exec decided that PayPal was "really neat" and that if Google can have a Checkout that Microsoft should too. The thing that cracks me up is that MS is not know for their brilliance with security, so they want to process our credit card transactions in a PayPal like service? Who would be dumb enough to use this service aside from Microsoft fanboys and the Microsoft affiliated companies that would be bullied into it (Hardware makers like Dell and HP/Compaq).

Soon we will see Microsoft answer to YouTube, MySpace, and host their own blog service ala Wordpress, TypePad and Vox. God forbid they spend time, energy, and resources on the secure computing platform they dumped from Longhorn.
[ link to this | view in thread ]
comboman, 29 Jan 2007 @ 6:05am

cut out the middle man
If Microsoft's online payment system plans to compete with credit card companies, it may actually be a good idea. Paypal's model is to accept buyer payments from bank accounts and credit cards and transfer them to seller bank accounts and credit cards. Why not cut out the middle men? Rather than transferring money from my credit card to Paypal, I just use my MSCard to make purchases online and they send me a bill every month like a normal credit card. If the card is actually accepted at brick-and-mortars as well, so much the better. Why haven't existing credit cards tried this? I guess they're not interested in small transactions.
[ link to this | view in thread ]
Frank, 29 Jan 2007 @ 6:39am

Re: brand recognition
they did their jobs well
PayPal did its job well?!? I know a lot of people that really hate PayPal, mainly from freezing accounts for no valid reason.
Frankly I was surprised when eBay gave up and bought PayPal, warts and all.
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2007 @ 6:40am

So?
Mike, the text of your article does come from the good-luck-with-that department. However, the title seems to come from the let-us-sensationalize-that department.

Why would you use a title that makes it look like Microsoft is bad for entering into this business?

I agree that it is bad for Microsoft to enter into this business, just that entering this business does not make them bad.
[ link to this | view in thread ]
ScytheNoire, 29 Jan 2007 @ 7:12am

Re: Living Off of the Innovation of Others
actually Microsoft does have a MySpace type site that has been around for a while now. it's part of their Live.com network and tied in with MSN messenger and hotmail accounts.
[ link to this | view in thread ]
STJ, 29 Jan 2007 @ 7:29am

Um, no one has mentioned a program from a number of years ago MS did, it was called MICROSOFT WALLET. Look how well it's doing now.
[ link to this | view in thread ]
Bumbling old fool, 29 Jan 2007 @ 8:27am

Re: Living Off of the Innovation of Others
Everything you are flaming microsoft for here is innovating.

You are quite confused.

You would rather Microsoft sit back and not improve their products? You would rather they focus on the security aspect that very few consumers care about instead of the usability factors that the vast majoriy of users do care about?

How would that benefit anyone besides Apple?

Innovating is not Inventing. Do not confuse the two, or your arguments wont make sense.

Innovating is paying attention to your products, and improving them in ways that consumers care about.

As for living off the INVENTIONS of others, well, thats what we have patent protections for.

If all car manufacturers had been using square wheels, and one manufacturer discovered that round wheels greatly improved the driving experience, would you flame Ford for "copying" the innovations of Toyota? No, that would be absurd.

Of course, if Toyota had patented the round wheels, we'd all be fubar'd, but thats a tangent for another post.
[ link to this | view in thread ]
FTL, 29 Jan 2007 @ 9:02am

Re: Re: brand recognition
Yeah, I'm one of the people that really hate Paypal!! After 2 weeks use with minor transactions, I started moving $1200 to $1600 as I sold products, and they froze my account. No complaints from anyone at all, just locked it up tight. What a mess!! It took 2 weeks for them to get it straight, and meanwhile my money is locked up and I can't do anything about it!! As soon as they unlocked my account, I emptied it and actually changed my bank account to keep them out of it.
[ link to this | view in thread ]
Tyshaun, 29 Jan 2007 @ 9:54am

Re: Living Off of the Innovation of Others
Microsoft is incapable of innovating. They read the tech news and pick out the best ideas that other companies have come up with and try to implement them. They saw that there was money in the video game console market so they came out with the XBox, then they saw that the other consoles were stealing business from the desktop computing video game market so along came XBox 360. They realized they couldn't design a GUI so they bit off of OS X, and now some MS Exec decided that PayPal was "really neat" and that if Google can have a Checkout that Microsoft should too. The thing that cracks me up is that MS is not know for their brilliance with security, so they want to process our credit card transactions in a PayPal like service? Who would be dumb enough to use this service aside from Microsoft fanboys and the Microsoft affiliated companies that would be bullied into it (Hardware makers like Dell and HP/Compaq). Soon we will see Microsoft answer to YouTube, MySpace, and host their own blog service ala Wordpress, TypePad and Vox. God forbid they spend time, energy, and resources on the secure computing platform they dumped from Longhorn.

And?
So one of the biggest and arguably most powerful software companies on the planet doesn't invent new stuff, yet somehow they manage to make money out of their butts. I'm all for the "innovation is good" mantra but let's not drink the koolaid too long without looking at reality.
Yes, it can easily be argued that Microsoft has a substantial history of leeching of the innovation of others, but inherently you are assuming that innovation is the optimal business model, and I would argue that isn't always the case. In fact, history has shown several instances in which the guy who tries something first ends up the big old loser. A close examination of the history of many "top of the market" companies reveals that they weren't necessarily the first in that space, and probably learned substantially from the mistakes of others. Google, contrary to popular belief, was not the first search engine. MySpace was not the first social networking site. iTunes was not the first online music distributor. Yet all of these companies are seen as the "most popular" and/or "best in class".
In short, being the first to market and innovating sometimes is a recipe for poverty and the guy who sits around and waits for you to work out the kinks could end up the big winner. From an communal standpoint, innovation is of the greatest benefit to society, but in a good ole money grubbing kind of way marketing and good business savvy have shown to win out most of the time.
[ link to this | view in thread ]
xxl3w, 29 Jan 2007 @ 9:56am

omg, shutup
@ 3. DAMN them for trying to make money! I wish people would stop being annoying.
[ link to this | view in thread ]
xxlew, 29 Jan 2007 @ 10:00am

You know..
A lot of people say "microsoft cannot innovate, they are just good marketers". Why doesn't microsoft just sell clothes hangers or something? or big piles of shit and label them "operating system.. office software" considering it's all about the marketing, it should work fine. annoying people need to die. Also, Office is the best, hands down, office suite i've ever used. especially the new version. I gave up with grammar halfway through this e-mail.
[ link to this | view in thread ]
OffBeatMammal (profile), 29 Jan 2007 @ 10:14am

Used the Xbox or Zune Marketplace?
I don't know if you've noticed but MS have slowly been ramping up a "currency" all of their own - MS Points.
At the moment it's only really useful in the Zune and Xbox360 marketplaces but a logical next step would be to roll it out to buy bling for Messenger or upgrades for Vista...
Imagine then if they were to start to open it up to allow 3rd party online stores to use it, and then as a peer-to-peer transaction method.
Imagine a secure app on a windows mobile device that acts as your wallet and they've got a reach that PayPal and others may find hard/expensive to duplicate.
I personally dislike PayPal (and even more since they became part of eBay) and would love to see some competition.
None of the credit card companies seem to have realised yet that there is a market here for micropayment (ebooks, music downloads etc) so MS and Google (both trusted brands on the whole) have a good oportunity here.
Of course eBay will do like it did with Google Checkout and refuse to let MS play in "their" space as well "... in the interest of protecting their users..." but they are slowly finding their grip on the market slipping
[ link to this | view in thread ]
Mark Johnson, 29 Jan 2007 @ 10:27am

Innovation is key to survival
Wait a minute, isn't that why the Japanese are so great right now because everyone else around them were too worried and engrossed into "inventing" when they should have been innovating instead. Why do you think Toyota is bigger than GM and Ford right now, because they took the very essence of what made GM and Ford great and improved on it while GM and Ford sat back on their butts thinking that no one can overtake them.

I am not a big Microsoft fan but I am not a hater too. I realize that the more big companies like Microsoft come out with innovations, it is for the good of consumers like us. It just creates healthy competition and those companies trying to outdo each other will result in us having great products/ services, vast options to choose from and inturn cheaper/ higher valued products.

Do you think Apple "invented" the system of putting music in compressed form into a portable box with the iPod? Not even close, that technology had been there for a while, all they did was take it and improved the concept. Don't forget Google bought Blogger and improved on it to compete with the likes of Typepad, Wordpress etc. Angelfire innovated from free hosting to free blogs now. If Xbox 360 didn't come out, they wouldn't have tried to make a superior product in PS3 so fast, and Nintendo wouldn't have come out with WII. Apple also came out with their own version of Office to compete with Microsoft. What I am trying to say is that it is all a chain reaction that is part of innovation, marketing and healthy competition and it is not just Microsoft that is doing it -- they just seem to be out in the news a lot more because they are a gigantic company.

Having another Paypal type service is great in the fact that it will kick Paypal's butt to make sure that they offer good or even better service. I haven't had problems with money transfers with them but I must admit their customer services sucks! Competition is good, it'll only kick start them into making a better product and improve themselves or else their customers will go to the competition.
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2007 @ 10:40am

First does not equal best
A previous post mentioned that the first to a market is not the winner.

Look at MS' own history. MS Word, back a ways, it only had 2% of the market share. Now look at it. Where is WordPerfect? Amypro? The word processor that everyone said was a lost cause ends up being the most widely used word processor in the world.

Same story with Windows. Remeber that HP and Apple came first. Who holds 92% of the market in this sector as well.

The Xbox 360 is just the latest accomplishment in a long list for MS.

Microsoft has a very long history of successful underdod enterprises.
[ link to this | view in thread ]
About, 29 Jan 2007 @ 11:53am

Making money
It's all about the micro-transactions. People are realizing that the big dollar items are not where you make your money. Making $.05 per CC transaction is better than selling the hardware for $200.

THAT's where the money is. That's where MS is going.
[ link to this | view in thread ]
Anonymous Coward, 29 Jan 2007 @ 1:48pm

Re: cut out the middle man
Rather than transferring money from my credit card to Paypal, I just use my MSCard to make purchases online and they send me a bill every month like a normal credit card. If the card is actually accepted at brick-and-mortars as well, so much the better. Why haven't existing credit cards tried this? I guess they're not interested in small transactions.
Actually, credit card companies already do that.

Why not cut out the middle men?

The benefit of a service like Paypal is it hides your credit card info from the seller.
[ link to this | view in thread ]