I’m a big fan of the online payment processor PayPal. Even after having my account hijacked and thousands of dollars worth of computer equipment shipped to somewhere in the Philippines, I continue to use the service. It’s fast, easy, and cheap. Reasons thousands upon thousands have also relied upon the payment processor to handle everything from eBay payments to reimbursing Frank for lunch this afternoon.
However, many of eBay’s top executives used their keynote speeches during the recent eBay Live! conference to announce new PayPal security initiatives, including a service for eBay sellers that will alert them to potentially risky buyers. PayPal has, admittedly, done a vigilant job of trying to prevent online theft and identity theft. One of my favorite new features is PayPal’s new Security Key. The key is similar to corporate products from companies like RSA but is targeted at helping consumers prevent fraud. The key generates a unique six-digit security code about every 30 seconds. You enter that code when you log in to your PayPal or eBay account with your regular user name and password. Then the code expires â€“ so no one else can use it.
Feeling comfortable within the digital world, but not content to simply help you pay for your winning bids, PayPal has begun to spread its wings. With an admirable 143 million user accounts, PayPal still pales in comparison to the likes of Visa or Mastercard who have over than a billion accounts. So, to compete among the “big boys,” PayPal is becoming more like a bank.
For the past year, PayPal has tested a virtual debit card enabling users to make purchases with PayPal on Web sites that do not offer it as a payment option. The service, which PayPal plans to launch broadly before the holiday shopping season, provides a one-time MasterCard number for a given purchase. The money is then debited from the user’s PayPal account.
Also like a bank, PayPal has long doled out interest on balances left in PayPal accounts. The rate, often more than 4%, is typically higher than that offered by brick-and-mortar banks. It also offers actual plastic credit cards, through a partnership with GE Consumer Finance (GE), for which it gives buyers 1% back on transactions. In addition, PayPal allows users to wire money through eBay’s Skype online phone service. There also are plans to give users the ability to view receipts for past transactions online, says Thompson.
So the question is, how much do you trust PayPal? Do you trust it enough to use it as your main banking account? Or have the security issues of the past tainted its image so much that it will never become the great online bank it wants to be?