Online trading sites like Ebay Philippines, Buyandsell and Tipidpc are indicative of the growing popularity of online trading in the Philippines. At the ease of a mouse click or two, an enterprising Filipino only need to post the item he wants to sell or to browse among the items posted to select what he wants to buy, all without leaving the comfort of his home or office.

Within these forums, buyers and sellers are not limited by their geographical locations since they can choose from a variety of freight forwarders such as LBC, Fedex, Aboitiz 2Go or even Philippine postal system to send their goods to distant buyers. So infrastructure-wise, the major primary barrier for online traders is really finding a reliable and relatively inexpensive payment system. Lacking such a system, the websites and forums already available become useful only for window shopping.

Locally, online sellers and buyers can hook up and finalize their terms in cyberspace before consummating the sale in RL (real life). Payments are made by tendering cash personally or depositing it in the seller’s bank account. Recently, the major wireless telecom corporations like Globe and Smart have entered the electronic cash/money remittance business to the advantage and delight of our cyber entrepreneurs.

These local payment schemes work very well to both parties’ mutual satisfaction within our own borders. They are relatively easy to use, reliable and widely available to Filipinos. Unfortunately, they won’t work as well when one party is abroad.

Alternatives that can work for international sales such as merchant accounts and bank transfers are too expensive for small and infrequent transactions. Also, Westerners prefer doing everything, from selecting to paying for their purchases, online. They do not have the inclination or patience to select their online purchases, log off and find the nearest Western Union branch to send their payment. The best payment scheme then for international online transactions is an inexpensive online payment system.

Not surprisingly, among US and European cyberconsumers, PayPal is the most popular and most widely used online payment service. If a Filipino seller wants to tap into this market, it is almost imperative that one must have a Paypal account because it is difficult to get these consumers to switch to another online payment system or to use a payment system outside of cyberspace.

Realizing this and loudly proclaiming that having a Paypal account will save our economy, some of our kababayan have campaigned extensively and petitioned Paypal to let Filipinos open Paypal accounts and it is perhaps due to their efforts that just a little over a month ago, Paypal opened its business to Filipinos. This would have been great news until you realize that what they asked for and what Paypal gave us were two different things.

They asked for an online payment system because they wanted to sell their goods and services to non-Filipinos. What Paypal gave us is limited functionality. We can send money but we can’t receive it or withdraw it from Paypal. Even then, the amount we can send through a Paypal account is limited to a predetermined amount. If you want to send more, you will have to upgrade your account for a fee.

To some this is a strong message from Paypal that the Philippines is too much of a credit-risk to allow full functionality. They blame Paypal’s reluctance on our weak banking system, ineffective anti-money laundering laws or to widespread credit-card fraud in the country. It is a disappointment to those who have pinned their hopes of accessing Internet commerce on Paypal.

All these may be true of the Philippines, yet it is possible that the reason for this is that Paypal itself does not have the capacity to fully operate beyond accessing its users’ US bank and credit card accounts. If so, this is an inherent limitation to Paypal. After all, many foreign banks and financial institutions are doing business here. For example, Western Union has opened so many branches, one cannot be faulted to think that business here is good despite the alleged Philippine shortcomings.

Let us look instead at this “setback” as an opportunity to truly understand how Paypal works or don’t work. For all its advantages, Paypal is not without its detractors and faults. Just last year, Forbes listed as one of the top corporate hate website, paypalsucks.com. The company is also beset with a backlog of hundred of thousands of customer complaints and notoriously known for its bad customer service. It is not a bank and therefore, not regulated as one. Its terms of service (TOS) is not only lengthy and complicated, but also may be amended by the company at any time. Paypal accounts are vulnerable to phishing and spoofing scams. These are just some of the problems experienced by past and current Paypal users.

While I agree that having a Paypal account would probably stimulate Filipino cybercommerce with non-Filipinos, we should not be blinded by the prospect of online profits and overlook the bad side of Paypal. It might be an inexpensive online payment scheme but it is far from perfect.

Business is still business notwithstanding the medium. A good businessman, whether in real or cyber space, should always assess the pros and cons of his decisions and choices to protect his interests. He should embark on his enterprise with a full knowledge of the risks he is facing and preparing for them adequately or perhaps, find another road to take because he finds that the risks of the journey may not be worth the gain.