PayPal would dominate the person-to-person payments world
Part 2 of 3
In the first post of our series on trends in virtual cash, we discussed a currency called Facebook Credits and its slow progress towards becoming a widely recognized payment platform inside the walled garden of Facebook. Now we move to PayPal, which began as an alternative payment system for people who were afraid to input their credit card numbers online back in the late 1990s – but which would love to be the defacto virtual cash for payments between individuals.
We took PayPal for granted throughout the 2000s, particularly following its purchase by eBay and subsequent integration on just about every major eCommerce store you might find. But PayPal’s world is still limited to its registered members and retailers, and most merchant partners are still far away from offering a fluid, flexible experience. Plus, forget about quick access to your money if you do happen to need real cash right away. PayPal is still a command-and-control model for people seeking maximum flexibility. And that’s a cause for frustration for many merchants with small bank accounts.
Looking ahead, PayPal appears to want to be the de facto payment method for all digital payments (i.e. much more than eCommerce). PayPal is playing nice with Facebook in order to build an offering for the social network’s e-commerce plays. In fact, PayPal is opening its APIs to developers in order to aggressively fill digital gaps in the person-to-person money transfer world.
Twitpay is a brilliant example of PayPal’s extensibility and offers a great use case for clearing small debts. Need to pay a friend back for your share of last night’s pizza? Just tweet the cash. It’s fun, easy and removes the tension from paying and collecting relatively small amounts. TinyPay is another example. No account required to sell any item on your own page, set a price as low as one cent, and collect your cash, all powered by PayPal.
For its part, PayPal recognizes that there’s big opportunity from facilitating payments of small amounts between people. PayPal updated its iPhone app this month, leveraging the accelerometer to allow for one-step “bump” payments between phones. Clearly, PayPal wants to move into payments between friends and family, further reducing the need of “cash haters” to stuff old-school money clips into trouser pockets. Have a look.
Will it work? As of last check, PayPal’s iPhone app is among the most downloaded, most rated financial apps in Apple’s store.
In our next and last look at the virtualization of cash, we’ll examine the emergence of ‘do-it-yourself’ virtual currencies, organized and backed by the entrepreneurial spirit of like-minded and similarly skilled digirati to back open exchanges of talent and insights. Stay tuned.
- Craig Konieczko and Hevan Chan