Monday, April 14, 2008

"the float"

At lunch last Friday, I learned about "the float." Today, I found this article, What PayPal does with your money that says, "The money-transfer service earns interest on funds in its custody" and describes how other folks are kind of miffed at paypal. Cool. I'm not alone.

Actually, now that it's been explained to me, I'm not miffed anymore. Now, I'm just puzzled. Why couldn't the customer service folks tell me about the float?

service rep: "Listen, chick, you get this service for free. In order keep it free, we need to accrue some interest. You signed an agreement that said your money could be combined with others and blah blah blah."

Done and done.

1 comment:

j allen said...

Interesting the article says the float is a "drop in the bucket" against revenues. The float makes up a significant part of free cash flow. For another example of this, prediction as of 2002 was that float from starbucks cards account for 11% of Starbucks free cash flow. http://www.forbes.com/2002/01/14/0111starbucks.html