PayPal and Bill Me Later offer banking-type services, services that would be more appropriately and competently carried out under the auspices of the banking community via their credit card company partners.
The simple fact is that without the bankers’ knowledge of the entities involved in the transactions, PayPal, or any other provider, will always be handicapped. Such non-bank providers can never guarantee anything for the buyer or seller.
The head turkey at eBay, “Noise” Donahoe, has occasionally talked of the possibility of offloading PayPal because he is just barely smart enough to know that when the major credit card companies do get off their butts and introduce a like card/terminal-less payments system to complement their credit card system, they will do it properly, and the dysfunctional and “clunky” PayPal will then sink like a stone—other than, possibly, on what is by then left of the Donahoe-ever-shrinking eBay marketplace.
If this turkey Donahoe has any brain at all he will be actively trying to sell PayPal to the banks to complement their credit card system; but I doubt the banks would want to lower their image any further by associating themselves with the likes of PayPal; not even for a peppercorn consideration would the banks touch such an incompetent amateur operation as PayPal, I suspect.
But, does anyone think that “all the banks” are not watching this market segment with interest, and is it possible that it (along with the upstart “Bill Me Later”) could well be having a negative effect on their credit card business? Why would “the banks” not be considering a like system to complement their existing card systems? After all, every internet banking user is already set up to receive such a service directly, efficiently and securely, from their bank. The simple fact is that anything that PayPal can do “the banks” can do better.
Do we then need to offer the banks and the major credit card companies another such monopoly-type situation? Ideally not. But, having said that, within the credit card system the individual banks do compete with each other on interest rates, etc.
Regardless, it would be nice to have a card/terminal-less system that worked effectively—as does the banks’ credit card system. Regrettably (or thankfully, some would say), PayPal does not have such a partnership with “all the banks” and so PayPal can never offer that same effectiveness.
My only surprise is that “all the banks”, via their credit card partners, have not yet announced their own system. When they do, it will be bye, bye, PayPal—you most ugly of children. And, more importantly, we will then have a system that works effectively, just like our credit cards do!
PayPal: Systemically dysfunctional to the core.
