PayPal is rolling out basic banking features to its digital wallets in the United States, targeting the unbanked population in the country through partnerships with small banks and offering products such as debit card and consumer loans.
According to an announcement by PayPal’s Chief Operating Officer Bill Ready, the company introduced the PayPal Cash Mastercard, which allows users to access the money in their PayPal account to shop online or in stores anywhere Mastercard is accepted.
Users can also withdraw cash from ATMs worldwide.
The card is free to sign-up for and there are no monthly fees and no minimum balance requirement.
Targeting people who don’t have bank accounts, PayPal will allow customers to directly deposit their paycheck into their PayPal account for free.
Users will also be eligible to receive ‘FDIC pass-through Insurance’ on the funds held in their PayPal account, with no minimum balance required. The new features also allow users to deposit any check via simply a photo from a smartphone.
In an interview with the Wall Street Journal, Ready explained the company does not pay interest on balances of the PayPal accounts and is charging a one-percent fee on checks a customer deposits via a photo.
It also charges a fee for customers who withdraw money from ATMs which are not in PayPal’s network.
“We’re trying to bring more of those [unbanked] people into the digital economy,” Ready told TechCrunch, adding that there are billions of people in the world without bank accounts, including over 30 million in the US.
These people spend 9.5 percent of their income on interest and fees for alternative financial services, he notes.
Yet, in an interview with TheStreet, Ready said PayPal is not planning to become a bank.
“We are not a bank and we have no aspirations to become a bank. We’re not looking to move into banking at all,” Ready said. “what we are doing is democratizing access to financial services.”
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