posted on November 16, 2000 07:17:26 AM new
I'm kinda puzzled about something.
More than a few observers have noted that PayPal simply cannot make money on their float, that is the total cash balances of all PayPal accounts, and that the charging of fees is resonable.
Then these same people turn around and open an FDIC-insured checking account with an online bank that charges NO FEES!
How can an FDIC-insured online bank provide account maintenance for free while a non-FDIC-insured PayPal cannot?
posted on November 16, 2000 08:27:51 AM new"How can an FDIC-insured online bank provide account maintenance for free while a non-FDIC-insured PayPal cannot?"
If you are just sending funds from your account and accepting funds from others that is out of their account (non credit card funds) you can use PayPal for free and get interest. You don't need a business account for that.
If you think PayPal should provide unlimited credit card acceptance for free then expect to be disappointed. The new companies are the ones offering the unlimited credit card acceptance for free, hurry before the offer ends, because it will.
posted on November 16, 2000 08:36:36 AM newHow can an FDIC-insured online bank provide account maintenance for free while a non-FDIC-insured PayPal cannot?
The FDIC insured bank isn't eating VISA/MC fees on each credit card transaction.
posted on November 16, 2000 10:42:07 AM new
<i?
abingdoncomputers:
"The FDIC insured bank isn't eating VISA/MC fees on each credit card transaction."
</i>
Except that PayPal apparently has a float, enough so that they are offering those with cash balances a 5.2% interest rate.
One would think they are themselves earning an interest rate that's well above 5.2%, otherwise they would not be in a position to offer that rate to their accountholders.
And if they do have a float, then how many transactions are actually being processed through Visa/MasterCard? Is the interest on that float sufficient to offer both a modest interest rate to accountholders and offset Visa/MasterCard fees?
posted on November 16, 2000 11:27:17 AM new
I don't think there is much float. PayPal's actions and policies have most users afraid to leave any money in their account at all. Most sellers withdraw the cash ASAP after receiving it and I believe that most buyers are funding their accounts for each purchase on the fly with their credit cards.
IMO the 5.2% interest that PayPal says they'll pay is a last ditch effort to try to convince (beg?) users to start leaving a balance in their PayPal account. And given the fact that most users won't even bother with the interest since it means they have to give PayPal their SSN, it's really just a ruse on PayPal's part to look good in advance of the impending IPO (if and when it takes place).
posted on November 16, 2000 03:47:32 PM new
<i>
abingdoncomputers:
I don't think there is much float.
IMO the 5.2% interest that PayPal says they'll pay is a last ditch effort to try to convince (beg?) users to start leaving a balance in their PayPal account.
</i>
That could well be it. One has to wonder why Confinity would jettison the X.com banking operations from which they could generate income (at least before their ill-conceived announcement of $12 per month service charge, followed by the annoucement that there would be not $12 per month service charge because there will be no more accounts) to concentrate on a PayPal online payment service that's bleeding red ink.
posted on November 17, 2000 07:27:57 AM new
<i>
vargas:
"X.com plans to offer all of those "banking" services through PayPal."
</i>
If you're correct, PayPal "checks" will be floating around in the pile of real checks drawn on FRB-member banks. I don't think the FRB nor their member banks will be too keen on the idea.
