PayPal $7.2 B Revenue Greater than Banks<$10B $6.8 B Service Charge Revenue

PayPal revenues were $7.2 Billion last year, up just 19% after growing for several years at over 20%. Its success is so great it is breaking away from eBay to be its own company.  Banks $10 Billion and under, however, earned only $6.8 Billion in total service charge fees on deposit accounts, down 4% from 2013.  What is worse, PayPal does not offer a service that does not settle to a bank account or bank credit card. 

How is it that PayPal captures transactions with 60% of US households, stealing them from banks and then settling to bank accounts in transactions neutered of revenue, such as debit ACH?

The answer is actually quick clear.  Consumers today are shifting transactions to “payments” providers who offer: 

• Payments branding and marketing of “transaction services,” not “accounts.”

• Consumers want more protection and security in shopping online and in-store, which PayPal promises.

• Consumers want to not spend funds they don’t have and not use transactions that generate overdraft fees.

• Consumers want automated liquidity choices like BillMeLater (nowPal Credit), of which PayPal reports 24% of its customers use (a number strikingly similar to the percentage of customers who used to have an overdraft.

It is not regulation or “shadow banking” that is causing banking loss of revenue, but the fact that banks are not marketing “payments” branded products with added online and in-store card security and “no overdraft fees ever” with online, automated liquidity options.  Except for our PaySound^® clients.