Paypal micro-loans - maybe a good business idea?

[Y Combinator]

I noticed that a lot of my friends (and also myself) often end up with funds that they can't access in a timely manner because of the excessive clearing delays that banks have. There's also the more common case: you get paid in N days but you need to access your money NOW (ideally from within Paypal, though sometimes also in the reverse direction.)

After searching Google there doesn't seem to be any solid competition doing Paypal loans. Seriously, what the fuck. Isn't there huge potential here for the right person to make money doing this? I mean think about it: with an electronic cash system like Paypal's account credit you can transfer funds to anyone instantly. This would be a much better way to move money than waiting for bank transfers or shuffling money between credit cards (the same could also be said of cryptocurrencies.) You would also be making money from volume + high interest rates (which are easier to hide with micro-loans since the fees look comparatively smaller.)

Best of all: checkout the bullshit competition for these terms: https://kwfinder.com/analyzer/kw?kw=paypal+loans&location=&language=

Now apply this idea to BHW. Notice that some members like me have premium accounts (meaning that they paid for it.) Theoretically, you could do micro-loans to such people with greatly reduced risk if the trades were made somewhat transparent by using their account value as the loan collateral. If they fail to repay the loan by the agreed upon date: their account is banned from BHW. Simple. No need to get more technical than that to start with. A no bullshit approach should get you customers. Speaking of customers: if anyone wants to start this consider me your first customer because I desperately need around $100 USD in my Paypal fast

Thoughts?

 

[crosnake]

You would end up broke! Loaning the money to the public or even to BHW members is nonsense. Simply because you can not force anyone to give you the money back with additional interest rate, unless you track them down, pay the airplane ticket and beat the shit out of someone. (Expensive and Risky) :spankme:

Most of the reliable BHW members wouldn't even consider loaning the money. Why? Simply because they already have it.

Broke = Not Reliable

 

[Y Combinator]

You would end up broke! Loaning the money to the public or even to BHW members is nonsense. Simply because you can not force anyone to give you the money back with additional interest rate, unless you track them down, pay the airplane ticket and beat the shit out of someone. (Expensive and Risky) :spankme:

Most of the reliable BHW members wouldn't even consider loaning the money. Why? Simply because they already have it.

Broke = Not Reliable

BHW donation status costs around $100 USD and getting a reputation is a time consuming process. If the loan amounts were small, they would be backed by enough collateral that giving out loans to trusted members would carry a reduced risk (since the buyer would not want to risk their account and reputation to steal miniscule amounts of money.) The idea also has nothing to do with being broke and everything to do with being able to move money faster - a common complaint among people that use Paypal.

These are all things I mentioned in the OP that you never bothered to read.

 

[UptonGoodwin]

Loaning money to people that can't keep a Paypal account in good standing is about as dumb of an idea you can have. Probably at least 80% of the people you would be loaning too can't get their money because they are scammers and using fake identities. You would just be giving away your money.

 

[KingDingALing]

Since the only way to do it and guarantee a way to get your money back you would need to do everything legally. Someone doesn't pay and you post on these forums to try and "ruin" their reputation, you just violated privacy laws and if sued you would end up paying out more than you would have lost by them not paying. Also you would need to have contracts in place. Every state and every country have different laws and you would need a lawyer to make contacts for everywhere you do business.

Don't get me wrong, with a lot of knowledge and huge bankroll for setup costs this COULD be possible (if it's within PP TOS). But the only way I could possibly see it working is if you started locally and slowly grew from there.

 

[Y Combinator]

Agreed. This kind of business would be outright painful to run. I recall a similar business myself to do with Paypal + Bitcoin (selling Bitcoin for Paypal) started way back during the golden years of Bitcoin and the OP described the insane anti-fraud preventions he was forced to take with every customer. So it seems that while this kind of business would be possible (and simple) to start in theory - there are definitely far better ideas out there to start with.