Paypal vs major banks

Paypal at present has over 120 million customers that use its services. Customers ranging from large companies who do thousands of transactions to individuals who just want to occasionally send and receive money on line. So how does paypal measure up to the banks we have been using for 100’s of years?

Well, at first glance, Paypal may seem to be the cheaper option. Yet payments are levied by paypal to receive or (bank) money. Converting from one currency to another will also cost you money, so what are the advantages over a traditional bank? Good question!

Accessibility may be one, although most major banks have been offering secure online banking for 10 years now, where money can be sent and received, accounts can be paid and payment orders arranged. So who needs Paypal.

Well for some transactions it may be cheaper. The one advantage a freelancer has, is that they can see imeadiately that someone has paid them, as they get an e mail, and must accept the funds. No checking at the bank.

 However, if I banked online, I could check after 48 hours that the swift payment had arrived. The person sending the funds can even arrange for my bank to phone me when the funds arrive.

I mentioned in a previous post, that for companies with multiple payments to make, it may be easier to send money to JohnSmith @yahoo.com, than to know and record all the banking co-ordinates for each person. That’s about it in terms of advantages as far as I’m concerned. So how has this company grown to have  over 120 million customers worldwide?

Well, initially they targeted the very people they are now getting tough on: those who don’t want to deal  with banks or credit card companies because of a bad credit record, dirty money or tax avoidance. Certainly at the outset these customers were “untraceable” and no one asked them how they made the money they were sending or receiving. However, eventually Paypal as a legally registered company, were also obliged to ask the same questions banks have been required  to ask customers for many years now. Of course there are many other non-regulated online payment companies, who don’t ask these questions and still operate by giving their non-traceable clients a payment card to access their cash, and who compete in the same market as Paypal.

So for freelancers who work online and may need to receive a salary ( they do not neccessarily want to spend it all buying things online), they have to have a normal bank account to receive money into when they need it, that’s traceable. A credit card  to secure the paypal account, is also needed, so that’s traceable.

So what are the advantages to their 120  million customers?

Paypal made their site more secure than others this year as the link shows.

http://www.bizzia.com/paypal-security-key-paypal-hangs-out-the-no-phishing-sign/

Pay pal also  recently added the paylater feature to attract ex credit card users. Be sure that they won’t advance you money that is not backed by funds in your account, and that a check will be done on you first.

http://www.thepaypalblog.com/weblog/2008/05/a-new-way-to-pa.html

But what are the real advantages to having a Paypal account?

Tell us digitalmoneyworld readers, what are the advantages for you over a bank account held at a traditional regulated bank? Leave your comments.

Moneypenny