PayPal is setting its sights on the unbanked, with an eye, too, on offering mainstream banking services, reported The Wall Street Journal on Monday (April 9).
The company has been offering basic banking services to some of its consumers, with those services coming through PayPal’s digital wallet.
Among the services offered are insurance via Federal Deposit Insurance Corp. for balances that scale up to limits set in place by the government, and image capture for deposits. In addition, employers can direct-deposit wages into accounts, while debit cards can withdraw cash at ATMs.
According to the report, the options on offer from PayPal may “be a better option for consumers who tend to be overlooked by traditional banks. Those individuals tend to rely on check cashing and other conduits toward getting cash and conducting other financial activities.”
The form is not charging monthly fees, and also is not setting requirements for minimum balances.
In addition, PayPal is not paying interest on balances. In terms of fees levied on checks deposited by photo, PayPal is charging 1 percent, said The WSJ, via commentary by Bill Ready, PayPal’s chief operating officer.
Ready said the company wants to include those excluded from banking in the digital economy, noting that “if you don’t have a bank account, you can’t take an Uber ride, can’t stay in a room on Airbnb.” The most recent additions to financial features come on the heels of consumer loans and cross-border remittances debuted by the company.
As the report noted, PayPal does not have a banking license, and thus some of the company’s functions depend on a “hodgepodge” of smaller banks to help offer services. The firm has deals in place with a Delaware bank to issue debit cards, as well as another agreement with a Georgia bank to deposit checks via photo, and Utah-based banks for lending activities.