PayPal X – From the Garden to the Unbanked

Last month I traveled to my second favorite city, San Francisco (after New York, of course), for the Paypal X conference. In addition to getting to see game one of the World Series, I was treated to quite a surprise by attending the PayPal event. I expected nothing but geek-oriented sessions, which there were were plenty of, on the intricacies of PayPal API’s . But, what I also found were plenty of sessions driving the business benefits of the varied PayPal payment solutions in areas such as P2P, social payments, bill payments, and overseas remittances. I felt that this was a moment of real significance in the payments industry. What PayPal is doing with their wide open X-platform is “Opening up the Walled Garden of Payments.” (See the very excellent article by Patrick Gauthier: “Why PayPal May Do to Payments What Apple-did-to-the Mobile-Ecosystem”)

But what does PayPal, an ostensibly online platform for the eBay Internet age, have to do with the unbanked?

First, PayPal is removing the barriers for innovation that make it impossible for small, non-FIs to get into the payments and remittance game: MSB licenses, BSA/AML, NACHA compliance, Risk/Fraud, you name it. These are all acronyms that make me cringe when I think about bill payment processing or remittance transactions. But the real challenge is to get the underbanked the access to the same services you and I already have from our mobile phone or PC browser on the Internet. PayPal already lets consumers load cash onto their PayPal accounts with a Greendot Moneypak at over 50,000 retail locations, including Walgreens, Walmart, CVS, Kmart, and 7Eleven. So all that is left is to create enabling technology on a mobile phone, preferably for the customer to spend that money online, pay bills, and send money across the street or around the world.

Can you see the lines getting connected without the heavy lifting previously required? Thanks to PayPal, I can.

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