What does it take to start a service similar to PayPal? What are the
requirements (legal, financial, technical, etc)?

---

Clarification of Question by jazz_aaf-ga on 22 Aug 2002 08:01 PDT

pne-ga .. thank you for your comment. I would agree it is unsane to
compete with Paypal in their markets. But PayPal is not available in
all markets of the world. That's where one should fill in. Thank you
again for your comment.

I'd say one requirement is being insane for thinking one can start up
a similar, competing service from scratch ;)
You'd probably need tons of money for advertising so that people will
use your service and not PayPal. And you'd probably need to be cheaper
than PayPal, which means your margins will be slim to non-existent,
especially since you (initially) probably won't get the discounts with
credit card companies that PayPal likely has, etc. etc.
(Disclaimer: I have little to no idea of economics or marketing. But
it seems to me extraordinarily difficult to attempt what you suggest.)

Good luck then!

Jazz, 

I've actually spoken to Peter Thiel, the CEO of PayPal, and heard many
of his comments on the venture. Very briefly:

1. The actual concept is not complicated, nor setting it up
technically is complicated. Over time, Pay Pal has had to resolve what
Peter calls the "convenience, security, and privacy" triangle. 
Typically, it is easy to have 2 of the 3 factors, but not all three.
They've now approaching resolving this technical difficulty.
2. The biggest boost Pay Pal got, and one which will be quite
difficult for anyone to replicate, is piggy-backing on the success of
eBay, a purely online site.  eBay success is based on network effects
of the online auctions business i.e. the benefits of a person on the
network increase as the total number of persons in the network
increases.  It is difficult to find many of these businesses in the
economy.  Microsoft is one.  Napster (if legal) could have been one.
3. Venture capital is pretty dry right now, which I am sure you would
need to fund your company with highly intelligent technical minds.
4. PayPal also has had potential issues with the government. 
Specifically, it had to fight to not be considered a bank, which would
require a tremendous amount of regulation, which is costly, i.e. it is
not that simple to be a bank.
5.Then they still have to fight a lawsuit for intellectual rights
infringement, against ??, which you would run into as well.

I hope this helps,
Claudietta

3. Further, VC money is important because PayPal got the money at the
time that getting VC money was cheap.  This sort of inexpensive VC
money wont come around until the next wave of innovation (or
bubble)...who knows when.

Finally: PayPal not only did the right things, it also was very lucky
in many ways.  Having said that, PayPal still has a difficult path for
longterm success.

You shouldn't be discouraged from doing what you believe in, however,
you should know why PayPal succeeded so far.  You should also know
that the business they are in is also easily expandable
internationlly.

Claudietta