PayPal Archives - Page 37 of 39

Mobile Firsts: PayPal Launches Bump to Pay

By Jim Bruene Posted on March 18, 2010
Categories: Mobile Banking, Mobile Payments, PayPal

This month we’ve explored several new features that promise to propel mobile banking into the mainstream market. Unlike developing nations, where mobile is the ONLY way to conveniently bank, in the U.S. and other online-centric countries, mobile has to compete with online for awareness and usage.

There doesn’t seem to be a single killer app for mobile. But a growing list of things that mobile does better than online will eventually tip the scales in favor of the new channel. Here’s what we’ve seen so far:

Location-based ATM/branch finders (here)
Remote check depositing (here)
Simple login with 4-digit pin (here)
Insurance discounts after graduating from iPhone-based program (here)

The latest addition to the list:

PayPal’s Bump to Pay (see video below): Users of PayPal’s latest iPhone app can transfer funds to each other merely by entering the amount and moving their phones within close proximity of each other (see screenshots below).

PayPal demos bump to pay

As David Eads points out at Mobile Manifesto, bumping to pay has some drawbacks in the real world:

…..most of the time I want to send money to someone, I’m not standing beside them. And if I am, most of the time I would feel awkward actually touching the person. Imaging bumping someone for admission to a high school football game. Imagine bumping a street vendor for a newspaper or flowers. Imagine bumping a scalper for tickets outside the game.

My take: I agree with David that physically placing iPhones next to each other seems awkward today. But then again, so was writing paper checks back in the day when everything was paid for in cash/coins.

If so-called bump pay is super-convenient, fairly priced, and the perceived security issues are overcome, there’s no reason why it couldn’t become the predominant method of person-to-person payments. While it’s way too early to make any kind of prediction, I’m just saying, don’t dismiss it yet.

David’s closing remark is spot on:

The key for P2P is getting people comfortable with the idea of transacting electronically between individuals. Bumping and Zooming makes it more fun.

Bumping is now an integral part of PayPal’s iPhone app

—————————–

Off-topic addendum: As much as we like new bells and whistles, bump pay pales in comparison to the really big news at PayPal this week: the announcement that it’s teaming with China UnionPay and Singapore’s DBS Bank to offer payment services. The 2-year DBS deal will put PayPal in the hands of the bank’s four million customers, 1.3 million of whom are currently banking online.

How big are these deals? A good indicator is PayPal’s plan to double its staff in the region to 2,000 employees. Wow, has any financial company anywhere in the world added 1,000 to its staff in the past two years?

——————————-

Note: For more coverage of mobile banking and payments, see the most recent issue from Online Banking Report.

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Out of the Inbox: Costco Email Gives PayPal’s Bill Me Later Top Billing

By Jim Bruene Posted on December 21, 2009
Categories: Alt Payments, Email Samples, PayPal

I rarely open emails from retailers, especially around the holidays. As someone who has checked the “send me offers” box on registration forms for a decade, I’m inundated. But every once in a while I check out the Costco email to see what outrageous deals they are offering and, more importantly, whether any financial services are being showcased. For example, in March we wrote about the $90 Sharebuilder promo from Costco.

Last Friday, the big-box giant did not disappoint. It had two financial offers above the fold:

Extended-payment option: A surprisingly large and prominent pitch for PayPal’s extended-payment program, Bill Me Later (see inset and upper-right corner in screenshot below). The BML option allows Costco customers to defer payment for an unspecified amount of time interest-free if paid in full by the due date (typically a few months out), or to pay the amount back over time at an 18.99% APR.
Costco cash cards: While it’s no surprise that the retailer is pitching store cards 7 days out from Christmas Day (see landing page below), I was surprised they weren’t merchandising them more aggressively. The problem was that even with rush delivery, the plastic card wasn’t guaranteed to arrive before Christmas, so it wasn’t a great gift option. The retailer could use an online giftcard option for instant delivery.

Costco holiday email (Friday, 18 Dec. 2009)

Bill Me Later landing page (link)

Costco prepaid card landing page (link)

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New Online Banking Report Published: Making the Case for Person-to-Person (P2P) Payments

By Jim Bruene Posted on December 15, 2009
Categories: Alt Payments, Online Banking Report, P2P Payments, PayPal

We just published the latest Online Banking Report:

Making the Case for Person-to-Person Payments
Does mobility provide the tipping point for bank-branded P2P?

Author: Jim Bruene, Editor & Founder
Published: 10 Dec. 2009
Size: 40 pages, 10,000 words
Author: Jim Bruene, Editor & Founder
Cost: For OBR subscribers: $0, all others US$495
Abstract/Table of Contents: Here (PDF)
Download or purchase: Here

Background:
If you’ve been around the industry a while, you probably remember the last time there was a lot of hype around person-to-person (P2P) payments. It was ten years ago and PayPal had just launched and was competing with three well-funded efforts from large banks: Wells Fargo, Bank One (now Chase) and Citibank.

The battlefield at the time was eBay, which desperately needed a trusted payment mechanism, to remove the friction from person-to-person commerce. Well, PayPal won that battle, taking out all three bank competitors and becoming the payment standard at eBay.

But the incumbent banks and credit unions have not lost the war, yet. They still own the customer payments relationship. And even though more than 70% of U.S. online shoppers already have a PayPal account, there are millions of customers that still want an easy way to transfer money to family members, friends, or acquaintances. And increasingly, they will want to send the money via their mobile phone.

While PayPal can handle that type of transaction, it’s not necessarily top of mind with consumers when considering how to send $65 to their sister to pay their share of mom’s birthday party.

This is something PayPal recognizes, so they are actively pursuing bank partners to offer co-branded Powered by PayPal P2P payment services. Just last month, PayPal announced deals with S1, FIS, and First Data to make PayPal solutions available to their thousands of clients. The first S1 client to publicly announce the program is Mercantile Bank of Michigan, which is already telling customers about its Q1 2010 launch of PayPal-powered mobile payments (see previous post).

About the report: Published last week, the latest Online Banking Report includes:

An overview of the product and market size
Analysis of features and benefits
A look at potential revenue streams
Forecast for online and mobile P2P payment usage (United States only)
Review of the offerings from key solutions providers and financial institutions, including the latest launch from Univest National Bank & Trust, which just launched a home-grown P2P payments service (see screenshot below)
Project priority guidance for various types of financial institutions

Companied mentioned: Amazon Payments, American Express, Bank of America, Bank One (Chase), BECU, CashEdge POPmoney, CircleUp SmartPay, First Hawaiian Bank, Fiserv, Geauga Credit Union, ING Direct, iPay Technologies, MasterCard MoneySend, Mercantile Bank of Michigan, Mobile Money Ventures, mPayy, MoneyGram, Obopay, Nokia Money, Patelco Credit Union, PayPal, Revolution Money, TwitPay, Univest Bank & Trust, US Bank, Wells Fargo, Western Union

Univest’s new P2P service featured on its homepage (15 Dec 2009)

Note: The report will be mailed to subscribers later this week.

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Sneak Peek at Mercantile Bank’s Powered-by-PayPal Mobile P2P Payments

By Jim Bruene Posted on December 11, 2009
Categories: Alt Payments, Mercantile Bank of MI, Mobile Banking, Mobile Payments, P2P Payments, PayPal, S1

Mercantile Bank of Michigan is riding the wave of free publicity from being first to market (probably) with iPhone-based P2P payments powered by PayPal. That’s a triple play in both alliteration and PR value. See the teaser ad on the bank’s website below (first screenshot).

The new service, a joint effort from PayPal and S1, is expected to go live in early 2010. It will allow customers to send money directly from their iPhone to any other individual on the worldwide PayPal network. All the sender must know is the recipient’s mobile phone number or email address. According to the five-question FAQ on the landing page (see second screenshot), the service will be available to all MercMobile customers and will be free of charge.

Mercantile Bank has become one of the most innovative banks we follow. Congratulations to CIO John Schulte and his team for leading the industry on several fronts and providing great material for Netbanker (previous posts here; note 1).

————

For more on the P2P payments market, see our latest Online Banking Report, published earlier this week, Making the Case for Person-to-Person Payments.

Mercantile Bank’s powered-by-PayPal mobile P2P app (7 Dec. 2009):

Mercantile Bank of Michigan homepage (8 Dec. 2009):
Note: MercMobile P2P Payment teaser in lower left and home-based remote-deposit capture on the top banner.

P2P payments landing page (link)

Note:
1. Mercantile even earns its very own category at Netbanker: <netbanker.com/mercantile_bank_of_mi>.

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Happy 10th Birthday PayPal!

By Jim Bruene Posted on November 19, 2009
Categories: Alt Payments, Best of the Web, PayPal

In preparation for our upcoming report, I re-read our first report on P2P payments published almost 10 years ago to the day (29 Nov 1999). Although written early in the game, I was very impressed with PayPal, a service launched two weeks earlier (15 Nov 1999) by Confinity, the original name of its parent company.

We’ve made our share of incorrect predictions over the years, but this one we got right (note 1), annointing PayPal with one of the first OBR Best of the Web awards. Here’s our take from that original report, when PayPal was available as a payment option on just nine eBay auctions:

(PayPal) is not as well known as BidPay….but as soon as (eBay) participants discover (PayPal) is free and real-time, it should catch on quickly.

PayPal was originally developed as a payment mechanism between Palm Pilots, which explains the “beam money” call-to-action on top of the original user interface (below). But I wasn’t a Palm user, so what got me excited about the service was the use of the email address to facilitate payments:

Much of (PayPal’s) press coverage has focused on the Palm application…(but) it’s the email-payment program that has the huge potential.

The rest, as they say, is history.

PayPal “send money” interface at its 1999 launch (15 Nov 1999)

PayPal “send money” today (19 Nov 2009)

Note:
1. And truth be told, we predicted that PayPal would need to hook up with an existing payment player to get past trust issues. But luckily for them, the extremely deep-pocketed VCs in the bubble days floated PayPal a massive amount of cash so it could buy its way into the wallets of consumers.

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Quotes: Mercantile Bank on Using PayPal for P2P Payments

By Jim Bruene Posted on November 11, 2009
Categories: Alt Payments, Mercantile Bank of MI, Mobile Banking, Mobile Payments, PayPal

The biggest surprise of the year in the world of alt-payments is PayPal’s newfound reach into banking circles as evidenced by their agreements with S1, FIS, and FirstData announced at last week’s Retail Delivery conference.

But a huge question remains: Will banks play ball with PayPal or will they provide the same functions via home-grown solutions or non-PayPal alternatives such as CashEdge, Fiserv, or Visa/MasterCard?

I don’t think anyone has that answer yet. There are simply too many variables. But if you believe there’s no way a bank would use a “powered by PayPal” solution, read this quote by Mercantile Bank of Michigan’s CIO, who plans on launching the S1/PayPal person-to-person mobile service next year (note 1):

“(PayPal) is a network, it doesn’t scare me at all. They’re never going to steal significant deposits out of our bank and keep [them] in PayPal accounts. Visa and MasterCard probably look at PayPal as the enemy, and they probably should, but that’s their problem, not mine.”
— John Schulte, CIO Mercantile Bank of Michigan in a
Nov. 10 article from Digital Transactions

Note:
1. You might remember Mercantile Bank from our May post lauding its fee-based consumer positive-pay service.

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SunTrust Partners with Moneta to Test the Alt-Payment Waters

By Jim Bruene Posted on November 3, 2009
Categories: Alt Payments, BAI Retail Delivery, PayPal, SunTrust

I’ve been waiting 10 years to write this story. A major U.S. bank has finally dared enter the space PayPal has all-but-owned since the first part of this decade (see note 1, 2): secure, non-card-based payments at the point-of-sale, which do not require handing over private info to the merchant.

Yes, Bank One, Citibank and Wells Fargo all failed at person-to-person payments in 2000/2001, but this is much different. Those were payment services between individuals, not a point-of-sale option like PayPal, Google Checkout, and most recently, Amazon.com.

SunTrust’s partner Moneta is an Atlanta-based startup that debuted its alt-payment system at FinovateStartup earlier this year (video here). The joint effort was announced at BAI Retail Delivery in Boston earlier today (press release).

The program is already being tested on a large group of SunTrust online banking customers who recently received an email offering a $10 cash-back incentive to make a purchase of $50 or more from one of the handful of merchants currently accepting Moneta-powered ACH payments. The biggest merchant is Delta.

Moneta’s appeal to merchants is relatively straightforward: Incremental sales from customers unwilling or unable to pay via credit card online AND reduction in interchange costs by moving card-based transactions to Moneta transactions, with much lower interchange.

For banks, the business case is not as obvious. The hope is that Moneta-issuing banks share of interchange revenue will more than offset what the bank might lose in card-based interchange. While that may turn out to be the case, the more compelling benefit for banks is the brand and relationship value of offering a new payment choice with more perceived security and privacy advantages. There are also intriguing possibilities to add other revenue-producing value to those transactions.

Last year in my notes from the BAI conference, I named Moneta as the “most audacious business plan.” Right now, it’s too early to say whether Moneta can become a legit competitor to PayPal. But with SunTrust on its side, that audacious plan is MUCH closer to realization.
Notes:
1. For the historical perspective, see our first report on person-to-person payments (published, Nov. 1999).
2. In somewhat-related news: A year after PayPal CEO Scott Thompson made a keynote appeal to bankers at last year’s Retail Delivery, FIS and PayPal announced a partnership today (press release) as did S1 (press release) that could bring PayPal-powered peer-to-peer payments to hundreds of financial institutions.

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Off-topic: Seth Godin is a Marketing Genius and Only Accepts PayPal

By Jim Bruene Posted on November 3, 2009
Categories: Advertising & Promotion, Email Samples, PayPal

Seth Godin is a true marketing guru. And unlike some authors, he also practices what he preaches.

Case in point: At 10:49 AM Eastern today, he announced via post on his blog that he was selling a special boxed set of five of his books (here):

Limit one per customer
800 total sets, with no more to be printed ever
Price = $64 + $10 shipping
Payment via PayPal only.

By 1 PM, when I ordered, only 176 remained. By the time I returned from this afternoon’s BAI Retail Delivery program, they were all gone (note 1).

And of course, I received a clever thank-you note from Mr. Godin a few hours later (see below).

Relevance to Netbankers: This doesn’t really have anything to do with financial services other than being one more bit of evidence of PayPal’s ubiquity online. This is just a great example of how to create retail excitement with a combination of clear value, simple check-out process, a nice webpage (see screenshot below), and a blog entry. It’s more challenging to do it in financial services, but it is possible.

Seth Godin’s webpage sold a limited-edition box set for a few hours (link, 3 Nov. 2009)

Thank-you email (three hours after purchase)
Apparently, part one in a series

Note: If you must have it, there’s one up for auction on eBay. Starting price $1.

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PayPal Launches Drop-Dead Simple Teen Prepaid Card & PayPal Account

By Jim Bruene Posted on August 12, 2009
Categories: Account opening, Credit/Debit Cards, PayPal, Prepaid/gift cards, Student Banking, Youth market

Sometimes, banks forget the importance of simplicity, especially when it comes to less-than-crucial, ancillary services such as a prepaid teen account. Sure, I’d love to have a reloadable card that my son could stow in his backpack for emergencies. But I’m not going to spend a half-hour looking for one, applying for a new account, and then trying remember where and how to access it (see note 1).

But if the process was painless and integrated with my online banking, I’d buy a half-dozen prepaid cards, one for each child, one to toss in the glove box of each car, and another for my briefcase (note 2).

It looks like PayPal is the first to step up to this challenge with its new student account (company blog post) which has been in beta testing since last November (beta site; note 3). The account is free of charge (note 4), and signup takes just 51 seconds.

Signup & funding
Current PayPal customers can sign up their kids for an account in under a minute. That includes clicking on the <paypal.com/StudentAccounts> URL, completing the six-field app (see first screenshot), all the way to the approval screen confirmation (screenshot #2). And, half that time was simply logging in to my PayPal account. If I’d already been logged in, the total time to complete the application, process it, and receive approval would be just 23 seconds! That’s the fastest financial services application I’ve ever completed by a factor of 10 (note 5).

The account, which shows up as a link at the top of the parent’s PayPal account (screenshot #3) includes parental controls for all transaction types and comes with both an online account and a PayPal prepaid MasterCard debit card. Both will come in handy for today’s teens, who cannot easily shop online without credit or debit cards of their own.

Transferring funds to the account takes mere seconds, and parents can choose from one-time loads or periodic transfers so the card can be used to accumulate an allowance (screenshot #4). Transfers show up in real time, with green color-coding, after hitting enter (screenshot #5).

Overall grade: I give it an A+ for ease of use and an A+ for value, a winning combination. Nice work.

1. PayPal teen card application for current PayPal customers (12 Aug 2009)

2. Congratulations screen

3. Student account, and prepaid balance, shows up on the parent’s main account overview page

4. Funds transfer screen

5. The funds transfer is immediately displayed within the student account area

Notes:
1. The final item is why the Visa Buxx card never worked for me. I bought one but could never remember how to access it or add more money.
2. Verient is doing some very cool things to help in this regard; we’ll profile them here soon.
3. Hat tip to Payments News for the link.
4. ING Direct’s system for creating a new savings sub-account is similar speedwise, but it’s not technically a new account.
5. The only major fees, besides PayPal merchant fees, are the $1 ATM withdrawal fee and a 2.5% foreign currency fee.
6. For more info on online account opening, refer to the latest issue of Online Banking Report: Improving Online Account Opening ROI.

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PayPal markets its credit card to users at logout

By Jim Bruene Posted on May 21, 2009
Categories: Advertising & Promotion, Credit/Debit Cards, PayPal

For many years PayPal has deposited users on its shopping portal when they log out of their PayPal account. This afternoon I saw something different at logout for the first time in recent memory, a pitch for the PayPal Plus MasterCard (screenshot below).

Although the company has marketed this card to me dozens of times immediately after logging in, it’s the first time I remember seeing it after logging out. The hook is the card’s new personalized photo option.

But a funny thing happened when I clicked on the Get Started button: I was dropped on to PayPal’s homepage where an error message explained:

You must log in before you can access this page.

A very odd requirement for an offer made after logging out. I followed the instructions and logged in, but there was no mention of the credit card. I just ended up at the regular account management page.

I guess it was PayPal’s turn for a programming glitch (see yesterday’s post on Rudder). Luckily, this problem doesn’t impact anything but PayPal’s online marketing results (see note 1). When I logged out this time, I was shown the usual PayPal shopping portal (see third screenshot).

PayPal pitched its PayPal Plus MasterCard at logout
(21 May 2009, 3:30 PM Pacific)

Error message after clicking “Get Started” on offer page
(21 May 2009)

PayPal logout offer a few minutes later (21 May 2009)

Note:
1. For more info, see our most recent Online Banking Report: Selling Behind the Password

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eBay Acquires Bill Me Later for Almost $1 Billion

By Jim Bruene Posted on October 6, 2008
Categories: Ebay, Epayments, PayPal

I won’t belabor the irony that the nearly $1 billion ($945 million) paid by eBay for Bill Me Later values the alternative payment and credit provider at more than Washington Mutual Bank and nearly half as much as Wachovia, at least before Wells Fargo entered the bidding.

The underlying credit product is relatively simple, a 19.99% credit account underwritten by Utah-based industrial bank CIT (terms and conditions here, see also note 1). But the distribution system, providing quick-and-easy delayed payment at the point-of-sale at 1000 online merchants, is what created the billion-dollar valuation. To use Bill Me Later at checkout, consumers simply provide their birthdate, last four digits of their social security number, and their billing address (see Amazon.com screenshot below).

According to today’s investors presentation the company will do more than $1 billion in transaction volume in 2008 and serves 4 million customers (see note 2).

I was initially surprised at the price ($945 million), but given that eBay is projecting $150 million in revenues and $50 million in profits, it makes some sense, especially if CIT is taking most/all of the credit risk. Hoped-for synergies with PayPal, which already operates a similar program, is the stated upside for the deal.

Ebay says Bill Me Later earns 4.1% on each payment transaction, which amounts to $10 per $250 purchase (note 3).

Bill Me Later’s simple signup demonstrated at Amazon’s checkout
(5 Oct 2008)

Notes:
1. CIT is not without its own problems with a market cap that has dropped more than 80% from a year ago. The company is now valued at $2 billion, just double the purchase price of BillMeLater.

2. Some historical usage numbers: An undated entry on the CIT website says that BillMeLater has served 2.5 million consumers. In a Dec. 2006 press release announcing $640 million debt-financing from Citigroup, Bill Me Later said it had served 2 million consumers.

3. Here are the revenue and cost numbers taken from today’s investor’s presentation (expressed as percent of transaction amount):

Income
Transaction fee from merchant = 2.4%
Customer interest = 6.5% (note APR is 19.99%)
Customer fees = 3.6% (note late fees are generally $29 or $39 depending on balance)
Total revenue = 12.5%

Expense
Acquisition and servicing = 2.9%
Net credit/fraud losses = 3.4%
Cost of funds = 2.1%
Total cost = 8.4%

Net profit = 4.1% of transaction amount

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Login, Logoff Marketing Messages from Bank of America, PayPal, US Bank, WaMu and Wells Fargo

By Jim Bruene Posted on August 1, 2008
Categories: Advertising & Promotion, Bank of America, PayPal, US Bank, Washington Mutual, Wells Fargo

After returning from some R&R in Iowa and Kansas, I logged into my banking and credit card accounts to see what I'd forgotten to attend to before leaving town. Luckily, everything seemed in order this time.

Always on the lookout for online marketing examples, I thought it would be interesting to compare and contrast the marketing messages presented to users as they logged in and logged out of five major banking sites.

Bank of America (business and personal credit cards): BofA typically has a marketing message at login and logoff.
Login The bank's brokerage division is pitching free Morningstar mutual fund research. I haven't seen this one before, and it seems a bit wordy, so it may be the first time for this offer (see screenshot #1 below)
Logout A pitch for a cash-back business credit card. It's a good offer, but perplexing, given that I already have a business and personal card with BofA. Not sure why they want me to have three (screenshot #2).
PayPal (verified account): PayPal has used log-in splash-screens almost since it began in 1999 with a mix of marketing and service messages. But they don't overuse the technique, so it's noticeable when they have a new splash-screen running.
Login No marketing, just direct entry to main screen
Logout No marketing, just a landing at the usual PayPal merchant emporium (screenshot #3)
US Bank (multiple accounts): I don't think I've ever seen a marketing message from US Bank at login or logoff. I believe I've seen a service message at login a few times over the years, but it's extremely rare.
Login No marketing, just dropped on main account page as usual
Logout No marketing, just a brief "you've been logged out" message
WaMu (business checking): I've had the account only a few months, but WaMu has frequently posted marketing messages at login, and they've been relatively creative, as you'd expect.
Login Pitching its WaMu Live concert promotion which provides exclusive access to summer events to WaMu credit and debit card holders (screenshot #4).
Logout No marketing, just a solid recap of security precautions, a good message to leave with online banking users (screenshot #5).
Wells Fargo (credit card): Wells uses marketing messages frequently at both login and logout.
Login Electronic statement (paper turnoff), something I've not done yet (screenshot #6).
Logoff Home equity loans (screenshot #7)

What's Innovative?
There wasn't anything particularly enlightening in these examples. The WaMu Live pitch was the only truly unique message. For the most part, they were typical, well-crafted marketing messages you'd expect from these major players. That's fine now, since most customers don't yet have "banner fatigue" at their online banking site. But going forward, the messages will need to be more targeted and more interesting to get attention and action from jaded online users.

The other issue is frequency. You'll figure this out through testing, but there's a line you don't want to cross where a splash-screen message presented at every login ceases to be effective and is just plain annoying.

Finally, for financial institutions, such as US Bank, still not using this login real estate for sales messages, your customers thank you; however, quick-loading, targeted messaging, used with discretion, should benefit your bottom line.

1. Bank of America login screen for business-credit-card only account (1 Aug 2008)