L'Ombre de l'Olivier

The Shadow of the Olive Tree

being the maunderings of an Englishman on the Côte d'Azur

25 January 2008 Blog Home : January 2008 : Permalink

Nanny Paypal and Auntie E-online Know Best

[Note this post contains sarcasm and irony ]
In the light of the previous post about the high quality banking system you might think that I would be glad that a couple of financial institutions are doing their best to ensure that members of the public do not take leave of their senses and hand over wodges of electrons worth hundreds of dollars to would-be scammers.

Unfortunately though, these institutions - Paypal and E-Online Data - seem to be so keen to protect the poor credulous masses from the crooks that they also prevent us from buying from genuine bona fide organizations too. I, along with about 100 other people to date, have attempted to buy a Bookeen Cybook via NAEB. Why? because NAEB, having investigated the option of building their own DRM-free ebook reader decided that it really made much more sense to make a bulk buy of the Bookeen.

In other words NAEB are a buyers club, a form of semi-commercial enterprise that has been around ever since a bunch of Mesopotamian villagers realized that they'd get a better deal from the Babylonian merchant if they promised in advance to buy a significant chunk of his goods. The difference is that, unlike the villagers, or the more modern church or sporting group who arrange something similar, the NAEB buyer-club members are geographically distributed across at least 3 continents instead of all sharing the same postal code. This in turn means that gathering together the dosh is nto quite as simple as getting everyone to write a check on the way out of the church door.

Now thanks to Al Gore's wonderful intertubes thingy it is possible for interested folk to use thinks called websites to coordinate their actions and companies such as Paypal (prop. eBay) and E-online (prop. HSBC Bank USA*) have as their raison d'être, the facilitation of monetary transactions across these intertubes. Hence NAEB thought that rather than ask people to write them checks which they then have to lose in the post etc. etc. it would be so much simpler if people could pay using bits of plastic because both Paypal and E-Online promise (for a trifling fee, a mere pittance to be sure, to be sure) to take all the hassle out of the back end bit.

Moreover they advertise that they can set you up as a merchant almost instantly.

And this is true they do let you set up as a merchant pretty much painlessly, making it pretty straightforward to accept the valuable electrons of customers. What they don't do, however, is hand over these electrons to the merchant. Not until they have decided that said merchant is not a scammer.

Which is where we come to the tragic bit (a-hum) because the two enterprises don't to be able to grasp the concept of a buyers group. For NAEB to work they have to take the money now, transfer it to Bookeen, receive the Cybooks from bookeen and then ship them out to the buyers as Bookeen for some reason don't like the idea of shipping the Cybooks without being paid. (bloody French don't they understand that taking things on trust like this is what makes you a financial genius?) Paypal and E-online seem to think that the NAEB founders will take the money and run and so they are not releasing the funds that have been paid by people such as myself. Oddly enough they do seem to have billed my credit card though so somebody (hello HSBC) is earning a bit of interest on the money, interest which I bet they don't intend to pass on the NAEB.

Of course in order to NAEB to prove that it is a genuine business it has to ship Cybooks and in order to do that it needs to pay Bookeen, and in order to do that it needs the money that Paypal and E-online are sitting on. Which, as Pamela Gadsden, the NAEB CEO explains, is a great modern example of catch 22.

Fortunately there is however a vague glimmer of light at the end of the tunnel. When the predicament was reported on Baen's Bar, a bunchaton of buyers offered to write checks anyway dammit and indeed to write double or triple the amount. Reading that made me really happy because at the same time (more or less) I sent the follwing email to NAEB:

Just saw your ebookreader post wrt the Paypal etc. idiocy. If it helps I could probably loan you some of the money personally (well sort of personally) at a very competitive rate of interest (probably 0%). Why? because the money is sitting around waiting for the stock-market to decide whether it wants to recover or continue crashing for a while and is earning some minimal rate of interest.

I can't give you a loan for 100 ebooks but I could probably finance (for a short period say 1 month or so) a chunk of them, maybe a half or so. E.g. if you have 50 orders via Paypal I could loan you the 50*$400= $20,000 you would need to have to get Bookeen to ship those orders. Obviously I would not be willing to do that unless I were certain (i.e. Paypal confirmed in writing to me) that Paypal would release the funds once the orders were shipped. [... skip details]

 Of course publicising this probably means I'm going to get even more spam from the heirs of Saddam Hussein and various African kleptocrats but I'm quite serious about the offer. I think it would be a huge shame if all the work done by the NAEB folks went to waste and loaning the money to NAEB (people with whom I have had a significant number of conversations over the last year or two) is less risky than investing it in a hedge-fund full of subprime loans or banking with either Societe General or Northern Rock.

*HSBC Bank USA. Isn't this a bit like the Department of Redundancy Department seeing as HSBC stands for Hongkong and Shanghai BANKing Corporation? And isn't it wonderfully