PayPal is essentially an online bank. It farms out the actual holding of deposits to registered banks, but, like a bank, its main asset is the funds which it controls on behalf of its users. These deposits allow it to guarantee payment to merchants without effecting an inter-bank transfer. Internal transfers are cheaper than and not subject to the geographical limitations of transfers that occur through the banking system, giving PayPal an advantage in ecommerce payments.
Bitcoin could allow PayPal to expand its role as an online bank. By giving its users even more parties they can make payments to, the value of depositing funds to a PayPal account increases. More funds in PayPal accounts means a greater number of transactions, which means more revenues and a more valuable payment network for PayPal, so it's a win-win.
I don't doubt that they see it as competition, but they might also see a potential opportunity to grow their revenues by reaching more buyers and sellers. Also, if they conclude that peer-to-peer digital currency is inevitable, they may prefer to take the lead in integrating Bitcoin into their site, rather than waiting for a competitor to do so first and gain a market advantage over them.
Anyway, this is just food for thought. No one knows what PayPal will do or what their management is really thinking, but it doesn't hurt to share thoughts on how they could integrate it into their service.
+1
Good point.
Bitcoin could allow PayPal to expand its role as an online bank. By giving its users even more parties they can make payments to, the value of depositing funds to a PayPal account increases. More funds in PayPal accounts means a greater number of transactions, which means more revenues and a more valuable payment network for PayPal, so it's a win-win.
I don't doubt that they see it as competition, but they might also see a potential opportunity to grow their revenues by reaching more buyers and sellers. Also, if they conclude that peer-to-peer digital currency is inevitable, they may prefer to take the lead in integrating Bitcoin into their site, rather than waiting for a competitor to do so first and gain a market advantage over them.
Anyway, this is just food for thought. No one knows what PayPal will do or what their management is really thinking, but it doesn't hurt to share thoughts on how they could integrate it into their service.
Offering zero risk of chargeback fraud to services and people who previously were not eligible to use paypal, thus massively increasing their userbase, is hardly damaging their business model. This action would only go to improve their market share and hedge against further (and inevitable) use of digital currencies.
Paypal have one and only one chance to win from the bitcoin competition, and that is to adapt and intertwine it alongside their current system before it is too late and one of their competitors does it first.
End of story
Paypal have one and only one chance to win from the bitcoin competition, and that is to adapt and intertwine it alongside their current system before it is too late and one of their competitors does it first.
End of story
+1
The problem with paypal is that they always want to play "safe", especially for being a u.s company. Just take for example the donations to Wikileaks or others where instead of simply doing their job by getting a donation from A to B they get involved in politics.
Good point.