Paypal quietly transitioning into traditional banking

[MarbleHornets]

In recent light, Paypal has been quietly rolling out feature's traditionally seen in brick and mortar banks; such as accounts to deposit checks, debit cards, and even loan application. Interestingly enough, it will even be backed by FDIC, so consumers will still have a form of protection using Paypal, some form. Now what makes this interesting is that they are currently able to do this without having any banking license, meaning they are able to avoid FDIC regulations on whose deposits they actually have to insure, so it seems a bit shady but hopefully Paypal won't be too picky on who they cover and will clearly state it in their terms and services (I know its a long shot since no one reads TOS, but I guess better than nothing..?)

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So the company turned to a hodgepodge of small banks that stay anonymous and behind the scenes. It cut deals with a Delaware bank to issue debit cards, a Georgia bank to deposit checks instantly after users take a photo of them and banks in Utah to make loans to consumers and small businesses.

Interestingly enough, Paypal is supposedly not charging monthly fees for having accounts, although it has been stated that there are fee's for withdrawing cash from ATMs "not in their network" (although I haven't seen where or what their network covers yet) and a 1% fee of any check deposited via photo depositing method on their smart phone. Not the worst I've seen from a bank, but yet again, I'd love to know what constitutes as in their network and out of their network, plus specifically how much the fee would be. Although this would seem pretty tempting to a large number of people, Paypal actually is targeting a relatively small crowd.

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PayPal COO Bill Ready is pretty clear about who this “bank account” is and is not for: if you already have a bank account, it’s not for you. He told the Wall Street Journal that the new service was driven by the necessity of a bank account in order to participate in the modern economy. “If you don’t have a bank account, you can’t take an Uber ride, can’t stay in a room on Airbnb,” he said.

It does seem like a good idea to target those who might not be able to take advantage of traditional banking due to financial status, or even the limitations of where they live at. I grew up in a small town and many towns around me didn't have a local bank, so I could defiantly see the efficiently of having an online banking source by a trusted company, although I do see the change from physically being able to discuss loans and other banking options to only online access might be a bit harder for some people, though not impossible since sites like Rocket Mortgage exist with success. There's a lot of speculations other companies might be turning to this process as well, ie Apple and Amazon, but it will be interesting to see how this turns out and how the competition will affect more traditional style of banks.

 

http://fortune.com/2018/04/09/paypal-banking-business/

https://www.wsj.com/articles/paypal-makes-a-move-toward-traditional-banking-1523266200

https://9to5mac.com/2018/04/09/paypal-banking-services/

[Curufinwe_wins]

PayPal already had almost all this, I use a lot of it myself. So what exactly is changing?

 

Also banking is hyper low investment and very high profit, assuming you have a sufficient capital stream, which obv PayPal does.

 

This is why literally every car company has it's own finance division which makes almost all the profit.

[MarbleHornets]

2 minutes ago, Curufinwe_wins said:

PayPal already had almost all this, I use a lot of it myself. So what exactly is changing?

 

Also banking is hyper low investment and very high profit, assuming you have a sufficient capital stream, which obv PayPal does.

 

This is why literally every car company has it's own finance division which makes almost all the profit.

Paypal is actually going to be having those services themselves through their own company, so they don't have to use any third-party banks for their services ie loan repayment, which to my knowledge were only short time "two week" loans unlike larger ones they could do like banks. And you will be able to have an actual account to deposit checks in, not having it linked to another bank account or debit card or anything else, plus with that account you'll be able to use a debit card to pull money straight out of that account, unlike the credit card Paypal has been offering for a while. And the fact since Paypal has been turning large profits without having this sector, it might mean they can offer interest rates lower on loans to be more competitive in the market, like I said though could, as I do not work in that sector, I cannot try to guess or say for certain. 

[Bcat00]

I love using PayPal, way better than my bank who only takes my money and charge me fees without doing anything.

oh, they also like to spam my phone with stupid death insurance bs once in a while.

[Teddy07]

Paypal is by far my preferred payment option as a buyer due to their protection. I really don't like it as a casual seller.

[Mihle]

The ONLY reason I have PayPal is because sites that require it and sites I don't trust totally. (Like buying on eBay that I have done maybe twice). 

 

With PayPal you do pay more fees.

[Energycore]

Still patiently waiting for paypal to accept cryto

[AlTech]

I'm confused. What part about them not charging a monthly fee for accounts is weird?

 

Charging for debit accounts is a great way to get people to find a different bank. 

[Curufinwe_wins]

6 hours ago, MarbleHornets said:

Paypal is actually going to be having those services themselves through their own company, so they don't have to use any third-party banks for their services ie loan repayment, which to my knowledge were only short time "two week" loans unlike larger ones they could do like banks. And you will be able to have an actual account to deposit checks in, not having it linked to another bank account or debit card or anything else, plus with that account you'll be able to use a debit card to pull money straight out of that account, unlike the credit card Paypal has been offering for a while. And the fact since Paypal has been turning large profits without having this sector, it might mean they can offer interest rates lower on loans to be more competitive in the market, like I said though could, as I do not work in that sector, I cannot try to guess or say for certain. 

Paypal already allows you to hold a balance in your "paypal wallet" and add/withdraw money from it. I guess I don't actually see how this is functionally different than a supposed "bank account" except that you straight up can't earn interest. Which this one doesn't seem to do. Also paypal has been offering credit services for a long time (again at least in the US through "paypal credit").

[AresKrieger]

2 hours ago, Energycore said:

Still patiently waiting for paypal to accept cryto

Well you will be waiting until Cryptos become stable, so forever

[Energycore]

2 minutes ago, AresKrieger said:

Well you will be waiting until Cryptos become stable, so forever

They will at some point. If big money comes in volatility will go down. Them being stable isn't even the biggest concern on why paypal doesn't accept them yet, it's that there is no payment system in place in any coin that is well regulated, as fast / power efficient as traditional centralized systems, or secure enough in terms of being able to track fraud and money laundering.

 

Regulation is first step, second-gen payment systems are also key imo.

[Princess Luna]

I like PayPal, it works fine, gives protection... only time I needed a refund it sided with me, I suppose from the buyers perspective there is little reason to dislike PayPal, I haven't ever had issues with it.

[IntMD]

13 hours ago, AluminiumTech said:

I'm confused. What part about them not charging a monthly fee for accounts is weird?

 

Charging for debit accounts is a great way to get people to find a different bank. 

It's a US bank thing (and quite a few other countries to be honest). They like to really rinse their customers. When I used to work for a bank, we (the British side) had an account at the US branch of it to deal with a couple of things. Even we had to pay for everything (including chequebooks, statements and various other things), which in turn made the point of having that account entirely loss making. From what I remember hearing, they've now got rid of that account.

[Valentyn]

16 hours ago, Teddy07 said:

Paypal is by far my preferred payment option as a buyer due to their protection. I really don't like it as a casual seller.

My only issue is the fee can ramp up when buying in large amounts through them.

Can't say I ever hear good things about their seller protections though. Seems a bit too easy for some sellers to get scammed still.

[MarbleHornets]

14 hours ago, AluminiumTech said:

I'm confused. What part about them not charging a monthly fee for accounts is weird?

 

Charging for debit accounts is a great way to get people to find a different bank. 

Usually banks either charge a monthly fee to have a debit account, usually a maintenance fee of some sort. Some companies will waive it if you have a minimum balance of x amount in your checking account, so it's interesting; at least to me; that they wont be charging a fee for having an account open with them.

 

13 hours ago, Curufinwe_wins said:

Paypal already allows you to hold a balance in your "paypal wallet" and add/withdraw money from it. I guess I don't actually see how this is functionally different than a supposed "bank account" except that you straight up can't earn interest. Which this one doesn't seem to do. Also paypal has been offering credit services for a long time (again at least in the US through "paypal credit").

The whole thing about this is that you still have to have the money come from an external source, usually an attached bank account or a debit card, both of which has to come from an outside source from Paypal. With Paypal having the actual accounts themselves, you wouldn't have to have an account open somewhere else. And yes, they do offer Paypal credit, its highly limited to their platform. You can't really use Paypal to say buy a car or pay off a mortgage, things you'd be able to do with a normal loan from a bank; and in addition, using Paypal credit doesn't impact your credit score, so on the plus side of if you make a late payment you wouldn't get dinged for it, but also it wouldn't help increase your credit score either.