Time for e-Gold in Second Life

Using e-Gold instead of PayPal is much cheaper. Great article just posted this week.





Which is better Digital Gold Currency or PayPal?
Mark Herpel
July 26, 2006

Which is better Digital Gold Currency or PayPal?

Could your web business which currently accepts PayPal benefit from the addition of a digital gold currency? Would your online sales expand if you accepted a digital gold currency like e-gold?

In this brief article we are making a quick comparison of PayPal vs. Digital Gold Currency (DGC).

The focus is on e-gold and drawing some comparisons between the sale of products using PayPal and DGC.

Internet shoppers use PayPal because it is convenient and generally the places they shop online will accept PayPal. This is just stating the obvious. So why does PayPal have 115 million client accounts and e-gold Ltd. just over 3 million? This is harder to explain, but the difference in sales may be explained by the 'convenience factor'.

Most people, especially Americans, are comfortable whipping out their plastic and instantly buying goods. Consequently, it is no hardship to further press that plastic online and use your PayPal account. The familiar credit card to PayPal set up is accepted and comfortable for a majority of shoppers. It is also fast, safe and most would consider it very convenient. Credit card transactions, especially for Americans, are like the old comfortable blanket you have on your couch. It is so familiar and second nature it just feels right to use it. There is nothing strange or unknown about credit cards, you can see their ads on the TV every 15 minutes. American love them and even put their pictures on them.

If fact, from the PayPal web, we can read their Q&A section.

Q. Why should I use PayPal?

A. PayPal is far less time-consuming than making a trip to the bank or writing and mailing paper checks. And unlike checks, which can take days to clear, PayPal transactions clear instantly.

Today, convenience drives online consumers. The convenience of using your credit card with PayPal goes even further, because when you add a card for PayPal purchases, you are also interacting directly with the PayPal web. There is no real mystery to visiting this web and giving them your personal information. One can conclude that shopping with PayPal may be a lot like the exciting casino slot machine. An instant online PayPal purchase provides some measure of instant gratification to shoppers. The ease of use may even have created a kind of 'impulse' online PayPal buyer.

Much different from using PayPal, e-gold accounts cannot be funded directly through the e-gold Ltd. web. E-gold users do not send money and do not interact directly with the e-gold domain on the transfer of account funds.

To purchase e-gold you have to fund your account using a third party agent such as OmniPay or Instant Gold Exchange. To add more confusion to the equation, with credit card fraud so widespread online, most third party e-gold exchange agents do not accept plastic. Right there, you have ostracized most American online shoppers. In fact, complicated wire transfers are one of the most popular methods to fund a digital gold currency account. That type of transaction takes time. E-gold account funding is rarely concluded 'instantly' and in fact most funding takes about a day. That impulse sale or instant gratification may be lost on an e-gold retail exchange. Its hard to conclude but already we have a few small reasons why PayPal may be more accepted than a DGC.

However, for millions of online shoppers who don't have a wallet full of plastic or even a bank account, PayPal is simply NOT the online shopping answer. Remember, there are more people in the world today with cell phones then have bank accounts!

These folks also want to shop online, so a digital gold currency account such as e-gold could be the very good solution for them. If you are an online merchant and you only accept payment from PayPal and not DGCs you are missing out on a large segment of Internet spenders. Growth on the Internet of shoppers and users is now creating a mammoth army of shoppers in countries around the globe. Not all of these users can throw down the plastic to shop. If you expand your operation to include these DGC users you are almost certain to expand your sales in the years ahead.

Plus Internet shoppers also often have trouble with cross border transactions using credit cards, so if you are having trouble shopping from your location, you may benefit from a DGC account. Online freedom from credit cards is a very liberating thing. Digital gold transactions can instantly be denominated in any one of 21 different currencies without the loss due to wild credit card currency conversion rates.

Comparing PayPal vs. DGC, the differences can be large. Especially considering the fact e-gold account funding does not require a bank account or credit card. Users can buy e-gold through an agent using cash, money orders, checks, Western Union, MoneyGram or a host of other options. Throughout all major cities in the US, anyone can walk into a bank branch office or S&L with cash and make a deposit for a fast generally same day DGC purchase. The Gold Pages E-currency Directory (www.gold-pages.net) details more than 20 easy methods of funding for DGC accounts and categorizes the agents by the methods of funding. The bottom line is if you have the money, using a DGC account will allow you to shop online from anywhere in the world. You won't be restricted by borders, currencies or your local banking relationship. Additionally, if you are an online merchant only accepting PayPal or credit cards, you can expand your online sales by becoming a DGC merchant. Gold-Cart.com is a very easy, free way to instantly accept 4 digital gold currency by using one easy application. This set up works as a stand alone DGC shopping cart or will integrate into an existing cart. It is free to set up, simple to use with no credit requirements, reserve account or hidden fees.

PayPal

The PayPal web states, "PayPal enables any business or consumer with an email address to securely, conveniently, and cost-effectively send and receive payments online." However, for e-commerce and retail sales, PayPal has a number of restrictions on who can use their accounts and what they can sell. A visitor to the PayPal web could literally spend one entire day reading and understanding the Acceptable Use Policy. PayPal imposes some restrictions which your business may need to operate online. In addition to these limitations the country in which you live could also exclude you from using PayPal or restrict your account to only certain transactions. If you give their Policy a quick glance you will notice some far reaching items such as these:

You may not use PayPal to send or receive payments for any form of gambling activities which includes: Online Casino Games and Sports Books or Sports Betting.

You may not use PayPal in the purchase or sale of, or receipt of donations for, any obscene or sexually oriented goods or services.

South African residents may not use PayPal to receive payments.

You may not use PayPal to sell humans, the human body, or any human body parts. (Well, OK, on this I think we all agree.)

In addition, as no one under the age of 18 is permitted to use the PayPal service. Regardless of the jurisdiction, under no circumstances shall the use of PayPal be permitted by persons under the age of 18.

e-gold

e-gold account holders are bound by the e-gold Account User Agreement. However, there are no restrictions such as PayPal. In a nutshell, e-gold says if the transaction is legal you can use e-gold. Any user and any age. This is a large contrast to a PayPal account.

PayPal vs. e-gold Worldwide Users

PayPal offers service to users in 55 countries and regions. E-gold can be used ANYWHERE in the world without restriction. E-gold and DGC accounts are available to anyone wanting to begin accepting Digital Gold Currency in any country around the globe. e-gold is also one of the 4 digital gold currencies accepted by Gold-Cart.com

There are a host of reasons why some Internet users find a large advantage using a DGC over PayPal. One reason, as stated above, may just be the country where you reside or the reason may be defined by your access to local banking faculties. With almost 2 dozen methods to fund your DGC account, exchange agents make it easy for all to use DGC. In the United States today there are an estimated 35 million Americans who do not have a bank account or credit card. Merchants accepting digital gold currency can include this market segment in their sales forcasts. PayPal can not.

Additionally, PayPal merchant fees can be very expensive for the small business person. If you are selling a low priced item of $5 or less, you may want to consider accepting a digital gold currency. The PayPal or credit card fees on small purchases can mount up to a good portion of your net income. However for small sales, transaction fees are much lower using a DGC. Unlike credit cards DGC transaction fees are very low. As an online merchant, if you accepts the sale of a dozen separate one dollar items using PayPal or a credit card, your profit margin will quickly shrink.

Here is a quick comparison:

A PayPal payment coming from a US account to another US user and based on the PayPal Standard Rate (2.9% + $0.30)*

A business receiving a $1.00 sale payment is be charged a PayPal fee of .33$ and the merchant would only receive .67$ net to their account.

An e-gold transaction using the same options (Spend Fees 5% + AUG 0.0002)**

The e-gold merchant receiving this same sales transaction in a $1.00 e-gold payment would only be charged a transaction fee in e-gold .05$ and would net a total of .95$

*http://www.ppcalc.com/

**http://www.e-gold.com/unsecure/fees.htm

Lower transaction fees is another compelling reason to add DGC to your sales web. When using e-gold instead of PayPal, the saving on multiple smaller transactions is astonishing. Additionally, all DGC payments are non reversible. When using e-gold you are guaranteed against any chargeback's, cancelled sales or fraudulent transactions. There is NO fraud or chargeback's with DGCs.

Taking a closer look at our reasoning and examples used comparing 'PayPal vs. DGC' a strong argument can be made for the use of DGC in addition to or in place of PayPal. While PayPal is a fantastic product, there are millions of Internet users and shoppers around the globe who would greatly benefit from the addition of digital gold currency on their retail webs.

I'd rather use Google Checkout

I use shells and beads. I bought most of Eldora from some newb for a sand dollar! What a sucker!

You do know that owning e-Gold protects you against Inflation of both the Linden Dollar and the US Dollar. Or any fiat currency for that matter. Gold is inflation proof.

RBD

You are missing a few particularly important issue with e-gold. How funds are transferred, how funds are redeemed to currency, withdrawl limits etc..

There are a slew of service providers, some of whom have attractive looking terms of business, some onerous. The transfer of funds is a particular concern with many of the payment providers and the security of the transfer is another.

I would not pay anyone with e-gold, although I would with some of the noon-traditional, alternatives to paypal, there is however no way I would accept e-gold payments and you will be hard pressed to find many who will.

Many of the statements in the article are simply incorrect.

As just one example. I have a direct transfer, exactly the same as the SL one, to a gambling site. One which paypal advertised through their home page at the beginning of this year.

As a merchant on the web, my company has looked at many offerings and are regularly offered newer and ever more esoteric ways to receive funds and make payments. e-gold has been around for a fair time, as has Nochex and Western Union etc. Their market penetration, is not just hampered by lack of profile, it is often compromised completely by security concerns or onerous funds transfers.

e-gold for all it's potential is far too complex and far too vague for the majority of merchants and therefore not widely available for consumers.

Too complex for the simple minded. Perfect for those sick of 1/3rd of your profits going into Paypal's pockets.

Pay Up: https://2327104.e-gold.com


It would be nice to see LL pay out to eGold accounts instead of PayPal only. And the same with accepting eGold for payments.

http://www.hyipexplorer.com/news/index.php?storytopic=0&start=10

(and yes, similar thoughts concerning paypal too)

RBD

Once again, missing facts.

My Compnay pays paypal merchant fees of 1.4% + fixed fee, making an average fee of less than 1.75%

If you look more closely at the terms of business with e-gold you will identify for yourself a number of contradictions with the article you post.

As for the comment about the simple minded. Hardly correct. You need to know a little more about International banking law, than the terms of business provide, to understand the nature of the transaction and the nature of the deposit and withdrawl process, to fully understand the nature of the risk in accepting e-gold payments.

In regard to your comment of gold being inflation proof, this is, as you will realise incorrect. Gold is a tradeable commodity and therefore is prone to market pressure, whilst the romantacism surrounding gold, does play a part in its valuation, there is plenty of empirical evidence to demonstrate the fallacy of a statement claiming Gold to be inflation proof.

As I mentioned previously, I have been aware of e-gold for some considerable time and their history predates the article you have chosen to quote.

Your link goes to a page with an invalid security certificate, though on ie6 without appropriare security checks, this would probably not be in evidence.

What more can I say....

The comparison between PayPal and e-Gold fails to scale and instead relies on the fee differences _solely_ between a US$1 transaction. It doesn't take into consideration that at a certain price level and beyond the fees for goods or services purchased using e-Gold (5-percent) will exceed those for a PayPal purchase (30-cents plus 2.9-percent). Plus, it fails mention that a merchant will pay "outexchange" fees to convert their precious metal(s) to real world, physical currency. And PayPal wasn't designed for micropayments (amounts smaller than US$1).

A merchant should always be willing to accept as many different forms of payment as possible, and due to the long tail nature of SL (goods can be replicated endlessly with minimal resource costs) it's unlikely that a merchant would turn up their nose at accepting US$67-cents after PayPal fees for an item normally priced in-world at around L$300 (though it would be unlikely for such a transaction to take place).

That depends on how you look at Gold. Yes, the USD isn't backed up buy gold. I can't go to the bank and give them a $20 and they have be a $20/Gold Coin.

What I mean by Gold being Inflation Proof is as the fiat currency in question (USD) will decline in purchasing power as inflation eats away at it. So if a hamburger is worth $3.00 today, 10 years from now it might be worth US$10.00. Which means that if you held that $3.00 in your pocket for 10/years, its value will have declined by 66%. Thats why you hear that old saying about how stuffing money in your mattress is a bad idea.

Instead, if you bought $3.00 worth of Gold and 10 years went by and you cashed it in, you'd get $10 in cash (or the equivalent of that amount of purchasing power). Thus allowing you to buy that hamburger for $10.00.

Now this is true for Gold since it has a history as a currency itself. But any commodity, assuming it can last the test of time, can provide the same level of protection against inflation. A barrel of Oil in 2006 will still be a barrel of Oil in 2020. Although you have to deal with supply issues.. Corn or Wheat might not last 14 years..

Everything boils down to what is "money"? Is money paper issued buy a government? Or is money a commodity which can be used in-and-of-itself as money or cashed in for the paper issued by a government. Which technically is also a commodity. Really, we are just trading commodities for commodities in exchange for goods and services. We are trading in our inflating currency which is being worth less and less for another that is becoming worth more and more.

e gold is e trash, basically

Paying with E-gold adds complexity and gives no fraud protection?

Sounds like a scammer's dream.


Is that why you endorse it RBD?

Yes, exactly. Paypal is much easier, and probably cheaper. With e-Gold, all transactions are final, even if someone hacks into your account and transfers all of your money to themself.

The price of gold might hold value better than US$.

But synthetic diamonds are commonplace today,
can you really count on cheap gold being an impossibility?

--
Represent! Use Bling-bling for currency!
Today's rappers will be tomorrow's gnomes of Zurich.

Look out for the n00b onslaught.. CBS News just ran a story about Second Life and all the money you can make. Here come the suckers.....



http://www.cbsnews.com/stories/2006/07/31/eveningnews/main1852600.shtml

(CBS) When reality gets hard to take, there's an escape to a parallel universe — a virtual world without end where real people create online personas called avatars. Anything is possible.

Catherine Smith showed CBS News correspondent Jerry Bowen that her avatar has "red hair" and "big nice cool glasses.

Choose a good password. Just like the article says, paypal is easier, but it isn't cheaper.

If you are only cashing out $3.00 at a time (and hence losing 1/3 to the $1.00 PayPal bulk transfer fee) then quit wasting everyone else's time with alternative suggestions.

LOL. But at least you actually provide a variety in threads

I think e-gold is BS. I, for one, don't even believe they have silver and gold purchased as they say. And there's no way to find out until they get in such a (crash) situation.

Second, the price of gold fluctuates. Might as well be e-oil though gold is cheaper to store. (Though even cheaper no to store

PayPal 'just works'. And works easily. Yes, the countries which cannot receive funds via paypal (like mine) are out of luck, sadly. But still, I can pay to a PayPal receiving person in seconds. I don't need e-gold brokers, whatever. It's easy, it's fast.

Oh, lol, come on! You're not THAT silly!
Anyone seen who has money in hand for 10 years will surely put it in the bank, not stuff it into their pillow. So it's not a 66% decline.



Works the same if you take your money to a bank, see above. Only the bank might be more safe.



Oil also needs storage and care, which has costs. For example, you might need to circulate the oil in the storage slowly.



Money is definately not paper. It's more like numbers today. Paper was just an object, which carried the numbers. Today, databases carry the numbers.

Money might be worth less and less, if just sitting there. However, money can make money, too, if invested or put in a bank. Money wants to multiply, make more money, so you just have to let it multiply

It's cheaper if your time is valuable (costs money). The easier and faster do add up to money. What you win by e-gold being cheaper can be offset by the complexity, more time and steps needed, etc.

It's like: the gas station near you sells gas at 1 USD/gallon. A gas station 100 miles from it sells it for 99c/gallon. Will you go to the other one? No, because the overhead and additional time and costs make it not worth it.

Summary of my thoughts :
1) There are a lot of people who know PayPal sucks.
2) Credit/debit cards are just so convenient that it'd be difficult to convince me to use any other payment method.
3) I'm not convinced by the 'it protects you from fraud' argument in favour of using paypal or egold over cards, because IIRC if your card is used fradulently then you can just call up your bank, get them to reverse the existing charges, and get them to cancel your card to prevent future charges. You then get a new card - and the whole experience costs you only the time it takes you to make the phone call to your bank, the time waiting for a new card (usually a few days) and the few minitues it takes you to look up your own records for that card, find who you used it with, and update your payment info on the sites you trust to keep using it.
4) Based on #3, it's hard to argue that one should use paypal or egold or any similar service, unless they can provide something you want (privacy) which is so important to you that you're willing to suffer the extra fees, and time delays, in order to get it.

Angel, I agree to an extent with your comments regarding paypal against merchant services, however, for many small sellers, the merchant services option is not viable for a variety of reasons.

Many merchants on the internet are relatively small, t/o small sums of money on the internet, this may be because they are just starting out, or are a specialist shop with low t/o, or any other reason.

When a merchant offers card payment systems to consumers they need to find a merchant service provider, who will permit them to have a card processor on their website.

Many of these merchant services providers may not permit card processing to be carried out by the business in question, for a variety of reason, if they do, they may then make high demands of the seller, particularly as they are internet based The merchant should also have ssl certified sites (the https rather than http designation), which are an additional cost. They need to ensure the integrity and security of their site as data collected must be secure.

As an example, taking costings from one of the UKs largest Merchant Services providers.

They will typically demand a bond from a new merchant selling on the internet of between £10,000 - £50,000. Alternatively they may require a holding period of between 15 and 60 days before funds are cleared to the merchant. They also charge fees varying from fixed rate 1- 15 pence per debit card transaction to 3 - 4.5% for some credit cards. They additionally charge a monthly useage fee.

In addition the web site owner needs to make the site secure with SSL certification, a one year certificate ranges from about £50 to well over £500.

So before the merchant has sold anything their costs can be very high. There are alternatives which are cheaper, I don't dispute this.

Now look at setting up a paypal account. Zero up front fees, ongoing fees, which reduce by volume of transactions, down to 1.4% plus a fixed fee. Immediate access to funds (subject to bank transfer time, typically 3-5 working days).

I take the point and agree there is a perception in the minds of many, that paypal has problems, or the user doesn't like the transaction process and we along with many, offer both these services as well as others for customers to make payment. However, our ongoing costs from paypal are far lower than our ongoing costs from our Merchant Services provider, that is despite the fact we have been trading for some years, have lower merchant procesing fees and have longer term security certificates and do not use the most expensive merchant services provider. Our transaction costs on paypal are at the minimum level.

In regard to problem transactions. Well, we have more problems with our merchant services provider than we do with paypal. Just yesterday all transactions were showing up as double entries, this was a known fault, which took 24 hours to rectify, it didn't mean the customer was charged twice, but it shows on our transaction records as two sales. We now have ongoing accounting records issues that have to be dealt with, as the system ties into our ledgers, which of course mean that for the period we are showing double the sales.

As far as the customer, yes, there is the frustration of going to the paypal website and possibly the 'New account page' with its 'terms and conditions', however the customer can pay by credit card, does not have to concern themselves about foreign currency transactions, as the buyer is billed in their local currency and the merchant selects which currency they would like to retain funds, unlike a traditional transaction. As a merchant who purchases from a variety of countries and many of the firms we deal with take paypal payments, we do not need to convert all transactions to our home currency so reduce our own currency conversion fees. It is also cheaper as a merchant, for us holding short term funds in a US$ paypal account than holding short term funds in our US$ bank account. (We are a UK based business just incase hat wasn't clear)

In relation to fraud. I disagree with the comment of protection by direct merchant. If paying by CC the consumer always has the right to chargeback, regardless of how the transaction was processed (not absolutely 100% true, but near enough for this discussion) however debit card paymetns afford no such protection, though they do possibly, with a paypal transaction.

Having said all that, I am not an apologist for paypal, I prefer direct card payments and normally use them where possible and am well aware that the majority of our online sales are paid via direct card transactions. I do however feel that the 'paypal is bad' brigade, miss the banking regulation under which paypal operates. Yes, it is very easy to set up a paypal account and request payment so making fraudulent merchants a more feasible proposition, but the consumer retains the same protection, regardless of the merchant and the cost base question is far too simplistic as the figures quoted are normally for a low volume paypal merchant and a high volume merchant services merchant with no consideration of additional costs.

For the consumer, or occasional user, the paypal transaction is longer winded, has perceptions of security issues and is not necessarily something people want to do. That said, the flashy website with its 'pay via our secure checkout' isn't always what it appears. How often does anyone actually look to ensure the http has changed to https before enterning any card details and even assuming you do, what do you do if it isn't? You are trusting all your card data to someone you don't know, who may just be off on a shopping spree with the details you give them.

e_gold and others, wel they have their own individual issues, which take forever and a day to deal with, but lumping services such as paypal and nochex with e-gold and Western Money Union is like lumping a good quality restaurant with a late night mobile kebab vendor.

In this paragraph, you have identified a BIG reason why e-Gold won't catch on in the US. The problem is that a customer-initiated wire transfer (that is, one that you walk into the bank to request, not one that is linked to an online payment site or something similar) carries HUGE fees from most US banks; $20-30 is not uncommon. This cost takes it right out of the picture, except possibly for very large transactions.

Wire transfers are only 1 of multiple options. There are also Money Orders, Bank Checks, Direct Deposits if you are a member of a certain banks (ie: Wells Fargo/ Bank of America), etc...

I will agree with you and everybody else who is fussing, that e-Gold can be a time consuming process to move around money. The benefit is that you keep more of your money. A simple way to compare the two are:

PayPal:
---------
Pro: Quick Receipt of Funds - Ease of Use
Con: Paypal takes 33% of your money in fees

e-Gold:
---------
Pro: You keep 95% of your money, only paying 5% in fees
Con: Cumbersome to Use/Understand - Slow Distribution of Funds



What I'm calling for is the "choice". The choice to pay LL or receive funds from cashouts via Paypal or e-Gold. If I don't mind the slow boat in order to keep the majority of my money, then I'll pick e-Gold as a delivery option. If I'm uptight (like some I know) and need to move money in-out quickly, then I'll pick PayPal and eat the 33% loss.

Ease of use? Paypal wins

Fraud protection? Paypal wins

System verification and/or change to current setup? Paypal wins

Less costly/less fees? Paypal wins

Paypal wins - egold is trash.