Somewhere along the line, PayPal became a bank. Your bank. You probably missed it, but it happened.
And somewhere else, PayPal started acting like a bank, too. Now, when PayPal uses your money or profits off you, they talk as though they’re doing you a favor.
While I don’t store the kind of money Louis CK money has at PayPal, we do use PayPal to handle receivables at Answer Guy Central. Mostly, this is because PayPal started up in the business they’re in before anyone else, and having settled on them a long time ago we find that it would be painful to leave them. This in spite of PayPal eliminating their money market fund, and there being some pretty good PayPal alternatives, like Square and WePay.
Nobody like business change, right? Not even us.
But this isn’t a “shoemaker’s children have no shoes” situation. As time has gone on PayPal has become competitive in all ways that make sense. So now that I have a PayPal Here device charging the same amount Square charges us to use their service, why would I bother using both? What looked like a business change worth considering when PayPal stopped paying interest on the balances we kept with them no longer matters.
Yesterday, PayPal offered me a gift. Sort Of.
I have a PayPal debit card. When we leave money in our PayPal account, it’s accessible from anywhere using the PayPal debit card just as you’d use any other debit instrument. This is convenient, but the main incentive for keeping money in a PayPal account—that aforementioned, now-eliminated money market fund—was the real reason we started leaving money under PayPal’s umbrella and we’ve stopped doing that very much since that incentive went away.
Now, PayPal is giving some money back.
Of course, if you check out the terms of that money coming back you’ll see that we need to jump through hoops to get it; “The PayPal Debit MasterCard offers 1% cash back whenever you sign for purchases”.
It’s a debit card. I CAN sign for purchases, but I don’t. And I’m betting you don’t, either.
It’s a brilliant shell game. PayPal makes more money on credit card transactions than they do on debit card charges, so if they can encourage their cardholders to use them as credit cards and collect fees approaching 3% instead of the few cents they get when the cards are used with a PIN code, you bet they’re happy to give 1% to their customers.
Now to be fair, I recommend using your debit card in this way when you can because doing so provides you with some extra consumer protections. But now that we’re all conditioned to tapping in a PIN when we use debit cards, we . . . just do. And if you use NFC it’s inherently a debit transaction.
So in the name of customer service, PayPal is now paying a 33% bounty on fees that you collect for them by doing something that neither you nor the merchants you buy from want you to do. THERE’S business change! Thanks for the gift, PayPal!