Let’s hear it from Xoom as to why they had previously (24 March 2010) banned the use of PayPal as a source of funds for their money transfer services …

http://blog.xoom.com/2010/03/why-xoom-ended-use-of-paypal-as-payment.html

“Why Xoom Ended The Use of PayPal as a Payment for Money Transfers

“At Xoom, our core business is money transfer for friends and family remittances. PayPal funded transactions are mostly for commercial payments which is not the core Xoom business. Since commercial payments are not our focus, we cannot effectively vet the merchants asking for payments through Xoom.

“Why Did Xoom Do This?

“First, our customers had too many bad experiences with unprofessional or, in some cases, fraudulent merchants. We’ve decided to stop supporting PayPal to protect the interests of these customers”[/indent]

So, Xoom has previously claimed to have been only interested in consumer-to-consumer (C2C) transactions, preferring to avoid the complications that can come with B2C transactions; and "PreyPal" already does such C2C transactions for PayPal users (email address to email address), as I understand.

Bearing in mind that eBay’s “long” shareholders have never had a cash dividend, one then has to wonder what PayPal’s shareholders will be getting for their $890 million—other than possibly financing generous kick-backs for all those involved in arranging the deal, and no doubt eBay's (soon to be PayPal's) Johnny Ho will be expecting a cut from the “grease” that’s possibly been applied to facilitate the deal ...

The other problem for these latest "money transfer" start-ups—and Western Union—is that one day soon I suspect that the world's retail banks are going to extract their fingers from their you-know-where and better exploit this money transfer business themselves; they are the ones in a position to do this process most effectively, directly, bank to bank, and why should they share this potential revenue with so many clunky intermediaries? The banks offer a similar service world-wide for B2C transactions via their MasterCard/Visa partnerships; why not then use MasterCard/Visa to do likewise with simple C2C money transfers?

Regardless. methinks this is another $890 million of eBay’s shareholders’ funds going down the toilet. And, it should be interesting to see how the clunky “PreyPal” continues to handle all those “unprofessional or, in some cases, fraudulent [PayPal] merchants” that Xoom previously complained of …

Here’s another interesting analysis of this deal at SeekingAlpha dot com …

http://seekingalpha.com/article/3299715-paypal-follows-kkr-into-payment-swamp

And, just for fun, a recent analysis of a group of these “money transfer” startups …

https://www.saveonsend.com/blog/money-transfer-startups

The eBay executive suite—where the incompetent mingle with the disingenuous, the malevolent and the outright criminal, and the just plain stupid … http://bit.ly/11F2eas