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Thu 12 May 2005

About PayPal and Automated Workflows

Category : Technology

It's been a week since we've had this system going which allows us to process credit card payments from almost anywhere around the world.

Well, almost everywhere. I've learnt that it doesn't work in Panama, Indonesia, and Slovenia (plus a few other places I've yet to encounter).

But using PayPal is probably the easiest way to go. Technically, it's relatively easy to set up and you get to test the system before going live. From the business end of things, it's easy on the pocket because there's no signing-on fee, no set-up fees, and no monthly fees. You do have to pay 6 cents off each dollar of the transaction to PayPal. And there's a sizeable exchange-rate conversion charge when you transfer the money to a local bank. But the pay-as-you-go approach makes it bearable.

Oops. It should read "6 cents off each dollar" rather than "60 cents off each dollar".

One significant factor that has made life easier for me is PayPal's policy on refund. When you make a refund, PayPal also refunds its transaction charge. What I understand, from a traditional credit card arrangement, is that the merchant has to pay a fee to the credit card company for processing a refund. If this were so, every time I offer to make a refund (because I can't figure out why Postfix Enabler isn't working for a customer), I'm doubly punished by the system.

If you've ever tried to build a credit card processing system using the other (brain-dead) companies' systems, you'll understand what I mean when I say here's a breakthrough - on top of the fees after fees, you'll meet obstacles after obstacles just to get to test the other systems.

Of course, you could out-source all these to people like Kagi. But, if you have an accounting system at the end of the process, you could get a lot of productivity and efficiency advantages just by tying everything together. It's the ultimate business machine that I'm trying to build.

I think, then, that this could grow into something big. PayPal says that it has over 63 million accounts - which should make it a big enough ecosystem for people to trade with each other.

We've started off collecting donations from people happy to use our software. That gave us some time to think about what we need to do to make the transition towards actually selling things on the 'Net - which involves collecting money before we turn over the goods, in this case a serial number that will open our software.

The complications here are : 1) Timing issues. Sometimes, when PayPal is too busy, we get the notification that the transaction has completed very late, making the customer wait too long for his serial number. 2) E-mail issues. For any number of reasons, sometimes the e-mail with the serial number doesn't reach the customer (because he supplied an invalid e-mail address, or he has a picky mail server that bounced our message, etc...)

And there's a major technical issue concerning synchronising the transactions (keeping all the concurrent sessions apart), and avoiding deadlocks because they're all going thru a single serial number generator.

These can break and they're disastrous when they do. These are the things that really matter. They're invisible but they matter more than knowing how to say cold-start or warm-start, three-tier or n-tier systems, etc. Building systems is fun. Dealing with buzzword-compliant systems architects is not.

It's been a week and there's a lot to be learnt just from doing these - not only the technical issues but also the business issues - like how we can reduce the number of support calls - by either improving the user interface or simply improving the documentation?

So, in terms of the range of experience gained, I think doing a stint as a would-be on-line entrepreneur may be almost as good as enrolling for an MBA course. The Journey is The Reward ? ...

Posted at 2:27PM SGT | permalink


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