PayPal added more ways for users to add money to their accounts as part of changes announced on Monday to help serve the “unbanked” – those users who are financially underserved.
PayPal is making the new features available in collaboration with financial institutions in the US and said they would be less expensive, less time-consuming, and more convenient than offerings currently available to those types of users.
People who don’t have a bank account can choose to directly deposit their paycheck into their PayPal account at no charge. Customers who enroll will be eligible to receive FDIC pass-through Insurance on the funds held in their PayPal account, with no minimum balance required.
“Eighty-five percent of today’s transactions are still happening in cash and checks,” PayPal executive Bill Ready wrote. “One service we’ve had for some time lets consumers load cash into their PayPal balance at over 20,000 CVS, 7-Eleven and Rite Aid retail locations in the U.S. to do activities like shop or pay their bills online. Additionally, people can now deposit checks via a mobile device more affordably and conveniently.”
Ready said it’s also free to sign up for the PayPal Cash Mastercard and there are no monthly fees and no minimum balance requirement. The card will let users access the money in their PayPal account to shop online or in stores anywhere Mastercard is accepted or users can withdraw cash from ATMs worldwide, including over 25,000 free MoneyPass ATMs nationwide.
Ready told the Wall Street Journal why the new services likely won’t tempt users served by traditional banks, but would be attractive to the underbanked:
– PayPal isn’t paying interest on balances.
– It’s charging a fee of 1% on any check a customer deposits via a photo.
– It’s charging fees for taking money out from ATMs other than the 25,000 inside PayPal’s network.
– PayPal is not charging a monthly fee.
– PayPal is not requiring customers to keep a minimum balance.
The Journal noted that PayPal doesn’t have a US banking license, so it turned to small banks that stay anonymous and behind the scenes: “It cut deals with a Delaware bank to issue debit cards, a Georgia bank to deposit checks instantly after users take a photo of them and banks in Utah to make loans to consumers and small businesses,” the newspaper reported.