I was EVP/Engineering of PayPal for a while - something of which I'm quite proud, although the company was already on path for major success before I joined - and at that time, 2001, we used the slogan "PayPal, the new world currency". This is something we actually believed, even back when everything was done in dollars; all the conference rooms were named after currencies. (As I recall "Yuan" and "Won" were adjacent, leading to a bit of confusion :)
Anyway the latest issue of the Economist has an interesting survey of international finance, and I was curious to see where, in the eyes of this magazine's London editors, PayPal fit in. They don't get it, at least, not yet...
From: Ole Eichhorn [mailto:email@example.com]
In your otherwise excellent and accurate recent survey of international payments, your correspondent notes “Even PayPal, which is used for payments on eBay, an internet auction site, is only an intermediary between the bank accounts of the buyer and seller.” This is false. PayPal is an online transaction system where account holders make deposits and withdrawals, and transfer funds from one to another in payment for services entirely outside conventional financial institutions. There are currently 71M accounts held by users in 45 countries, and funds may be held in any of six currencies. PayPal pays interest on deposits, offers debit cards, and facilitates online bill payment, among other banking services. PayPal is indeed useful on eBay for settlement, and this is its largest market, but an estimated 42,000 websites accept PayPal as an alternative to credit cards.
To those who thought “the internet would come to replace the simpler parts of the banking system”, this has indeed come true. It is only a matter of time before this disruptive technology’s attack from the bottom of the market upward becomes felt by major banks.
Thanks for your attention.
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