Currently interested in hyperspectral imaging & NeRFs.

The Bank to Beat: PayPal?

If you take a look here at this Wired article where the announcement of PayPal was made, one may have just brushed over it and think nothing of substance but another eventual dintless foray of an internet startup’s attempt at pitching their next idea during the last internet craze. Fast forward to more than a decade later, PayPal is looking much more like a bank, which is making quite a few people angry.

LAS VEGAS-Credit unions must unite against PayPal by offering alternative payment services that members are willing to pay for-before the online giant makes off with all the profits. That was among the sentiments share at the recent CUNA Technology Council Summit here. The TMG CUSO “is working with some credit unions to explore alternative payments and to compete against PayPal,” Russell added. “Payments are the key to your future with your members,” and will most likely migrate to the mobile channel. With non-sufficient funds and interchange fees dropping, credit unions need to make money by charging for services, he continued. “Free checking is over. How do we create a bundle of services that our members are willing to pay for?”

Nonetheless, PayPal had always posed itself to be a challenger of the dormant banking institutions and even governments, as Peter Thiel puts it: “The founding vision of PayPal centered the creation of a new world currency, free from all government control and dilution — the end of monetary sovereignty, as it were.”

Jim over at NetBanking says that PayPal’s may just become the dial tone of internet and mobile banking. True, but that’s only if Facebook does not partake in the action. With an estimation of a billion dollar in potential revenue with just Facebook Credits, if executed right, Facebook can in due time take PayPal for its money (pun intended).

Facebook Credits are poised to be this generation’s American Express: an “affordable luxury” lifestyle brand and credit card with reward programs, frequent flier miles, and other incentives built right in so that the more you use it, the more you earn. ”Facebook Platinum”, anyone?

In any case, last week the “PayPal dial-tone” got even louder with the announcements at their second annual PayPal X convention for developers of a few initiatives:

  • PayPal Mobile enhancements: PayPal Digital Goods: Two-click checkout for low-value digital goods eliminates the hassle of logging in
  • PayPal Embedded Payments: Pay without leaving the merchant’s app PayPal Business Payments: Electronic payments (non-credit card) of any size for just $0.50 per transaction
  • PayPal Apps: Allows companies to embed applications into the PayPal website: where Expensify, and Bill.com are participating.

Including a partnership with Discover that provides Discover cardholders with the ability to send money to family and friends directly from their Discover online account or mobile device. The Credit Unions seem to be already in disarray and looking for innovative ideas to hold on to their diminishing shares of the payment market. In all likelihood, I’ll hold my bets on a device, most likely the iPhone, which relies on the Facebook platform or iTunes credits which is funded by PayPal – the online financial transaction company.