WSJ: PayPal Steps Up Security to Reduce Fraud
The Wall Street Journal is reporting that PayPal will offer its customers reimbursement if they are defrauded by vendors that PayPal has verified.
If you haven't heard of PayPal before, perhaps that's because you do not participate in on-line auctions very much. PayPal is referred to as a "person-to-person payment system" that allows a buyer to easily pay an individual seller of goods or services for an on-line transaction.
The primary innovation in person-to-person payment systems is that a seller can accept most modern forms of payment, including credit cards, with substantially less of a banking relationship than has traditionally been required by banks offering credit card merchant accounts. Of course, this feature has also made these systems a vehicle for widespread fraud. It will be interesting to see if this new service offering from PayPal makes their service less fraud prone or more acceptible to reticent consumers.