PayPal is focusing more on
serving the liquidity needs of both consumers and businesses. They are targeting directly the customers of
banks who want faster, automated options that can be delivered online. The greater focus by PayPal on liquidity
needs is reflected by its
re-branding announced this week of BillMeLater to PayPal Credit.
PayPal, which provides transaction services that rest on
settlement to a bank checking account or credit card, already serves 6 out of
10 households in America. PayPal already earns more in revenue on transactions than all banks
under $5 Billion earn in total deposit service charges. The largest revenue source for payments and
retailers is liquidity, and PayPal’s move recognizes this key fact. PayPal is expanding to serve both consumers
and businesses under the broader brand name.
“We want to bring credit
closer to the center of PayPal.”
Steve Allocca, PayPal Head of
Global Credit
Others like PayPal are
automating online delivery of liquidity and meeting transaction needs of
consumers. Financial institutions,
however, mostly provide transaction credit with one service, at one price and
delivered in one way: overdrafts.
Rather than watch PayPal and
the growing number of online players such as FlexWage, Better Finance, Lending
Club, Float Money and Lend Key steal bank transaction revenues, we recommend
financial institutions provide their own online transaction credit for payments
as alternative to overdrafts. Our
turn-key program, PaySound® does just that, and grows relationships,
revenues and payment relevance for banks in the new mobile payments world.
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