In servicing those without banks, PayPal could easily start a banking revolution. Currently, the company has offered some users a PayPal Cash Mastercard, a card with no sign-up fee, monthly fee, or minimum balance requirement which also allows users to access money in their PayPal account to shop anywhere Mastercard is accepted. Additionally, customers can withdraw cash from free ATMs across the country. But, perhaps, more importantly, it includes FDIC insurance for balances up to government-set limits thanks to a rather complex web of small, and for the moment anonymous, banks.
This might sound like a regular bank account, but PayPal’s Chief Operating Officer, Bill Ready, said that PayPal Cash Mastercard is not for those who already have a bank account. Instead, Ready said that PayPal is reaching out to those who can’t benefit from the digital economy due to not having a traditional bank account. “If you don’t have a bank account, you can’t take an Uber ride, can’t stay in a room on Airbnb,” he said to The Wall Street Journal.
The Fintech company has tried, since its inception, to offer an alternative to bank accounts, but failed to comply with FDIC requirements. Other Fintech companies, like Square, Amazon, TransferWise, and Monzo already offer bank-like features, especially targeting unbanked communities.
PayPal also announced a new partnership with Kenyan digital mobile payments company M-PESA, that will enable Kenyan customers to buy items from global PayPal merchants and sell items worldwide. Ready was adamant, though, that PayPal doesn’t want to become a bank, they simply want to give their costumers “first-class citizenship into the digital economy and into the world of financial services.”