Business Internet

PayPal – is the internet giant a force for good?

A look at PayPal and its position in the market.

PayPal, its an internet giant – you can’t really argue with that. 110 million active users worldwide and counting.

Facebook, Twitter, Amazon, Google+, PayPal, Instagram and eBay ranked by active number of users
The number of active users top internet sites have – PayPal ranks among them with 110 million.

PayPal claims that 59% of purchases are completed using its service, however on average in the US, 88% of users abandon their virtual cart before the checkout.

The debate is still open as to whether people user PayPal because it offers the best service, or because it has a market monopoly – so like with Windows and Facebook, it is hard for people to choose another company, as everyone seems to be using it.

One cannot argue that PayPal offers a useful service. Users can exchange funds, send gifts and purchase goods from an account which gives additional security and guarantees, and doesn’t hold the key to an individuals personal life savings – as a bank account does. PayPal will also convert [many] foreign currencies into your local one, taking a small commission.

PayPal is easy to use, just get someone’s email address, and you can send money to them, or request funds from them. PayPal is also integrated with eBay (well, eBay owns PayPal) and many other sites, making buying online very easy. That said, Amazon still refuse to support it – maybe because eBay is one of its major competitors? Who knows.


One of the [major] downsides of PayPal are the charges. If one individual transfers money to another individual via a bank transfer, then there are usually no charges. PayPal however does charge.

PayPal's logoIf you use sterling, 3.4% of your transaction and an additional 20 pence will go to the folks at PayPal. So if you get a payment of £150, after fees you will have £144.70; so you lose £5.30. If you trade in US dollars, then the fee is 2.9% and $0.30 – slightly more reasonable. All the Scandinavian countries are charged 3.9% in addition to a fixed fee, as is Japan.

If every month you have a large inflow of money into your PayPal account, your fees do get reduced, and in the UK your fees can drop as low as 1.4% if you receive over £55,000 a month.

You could argue that these charges are fair, as PayPal is a business and needs to make a profit. However you could also argue that users are a little overcharged for the service PayPal provide.

PayPal Here

You can do almost anything on your mobile these days. In terms of business, there are mobile payroll apps, contact managers, and even mobile trading apps, so is it any surprise that PayPal has a mobile application? Probably not. It has several in fact, one for Android, one for iPhone and another for Windows mobiles. As the firm boasts:

“You don’t have to be at a computer to use PayPal – you can shop or send money securely wherever you are.”

But the PayPal app is no longer the only connection between your smartphone and the internet giant.

Last month, PayPal announced that it had developed and was launching a chip and PIN device, called PayPal Here, which (as they put it) provides “a simple, secure way, to accept payments on your mobile device“.

The PayPal Here device wirelessly connects to the sellers smartphone, which hosts a PayPal app, and gives the user the security of a wired chip and PIN, via the phone. So, the seller inputs the amount they want to charge, links their phone to the device, gives it to the customer, who inserts their card, enters their PIN, and the sale is complete.

This could potentially allow anyone to take a payment from virtually everywhere. Industries which were previously solely reliant on cash like taxi services and market stalls, can now potentially take payments by card.

Debit Card

Late last year, PayPal launched its own debit card, so users can directly access their funds via a card. Users can also earn 1% cash back when enrolled in PayPal’s Preferred Rewards Program.

These recent changes are leading me to wonder whether PayPal might choose to move into the banking industry soon? A debit card and an easy access ‘current’ account are both features of most high street banks.

Do you think PayPal will (in the near future) be launching a savings account? Could it start to offer users an overdraft facility, or even short-term loans? I believe it is a possibility – and not an unlikely one either.

0 replies on “PayPal – is the internet giant a force for good?”

I have abandoned things in my cart many times due to problems with PayPal. They are mainly caused by my nomadic life with problems of debit cards registered in different countries and multiple addresses. It is like all of the others a monopoly, in the end we are forced to register and use it as some (many) transactions only accept that form of payment. As the graph shows the Internet does not necessarily increase choice, but it certainly createsd large corporations.

Naively, I never really considered the mobility issues.

I believe PayPal was probably set up with good intentions, however like most things that get ‘big’ it lost its way. I am sure most project are started with good intentions, or is that just me being naive – again?

PayPal goes where the money is … so it’s likely they will add whatever services will generate the most income for PayPal. But it is a useful alternative for merchants not wanting to pay the high fees to maintain a merchant account in order to accept credit cards.


Good for users, yes, but they have only spent the money innovating it, as it will be very profitable!

Here in Sri Lanka PayPay is send only, meaning you can send money but you can’t receive money. One thing I don’t like about the service is it’s restricting and freezing policies. Sometimes it can take weeks to lift restriction, even though it’s a send only account.

My business uses Paypal exclusively for customers to pay for their purchases. One issue we have is in that we sell digital products, once the payment goes through the customer can download their purchase. The downfall is, if for whatever reason they decide it wasn’t worth their money (and we are talking as low as $2.99!) they can and have (I believe a few times in 6 years) contacted their credit card company and then WE the ones accepting PayPal for payment are charged a fee. I think this is unfair, especially when it comes to people who claim that they didn’t authorize the purchase. That is something PayPal should absorb the cost of after all they were the ones that let the payment go through. Also we have noticed that somewhere/somehow certain individuals are able to get an account very quickly. Over and over again in a hacking situation people from over seas are able to snatch up an account almost over night. While there are many good points to PayPal, there are a few they could tweak and work on before and if they ever do get into more of a banking aspect.

I am sure it is people like you Ron, who wonder why the fees are so high, when the service they provide could clearly be improved!

Thanks for adding your view, great to have you join the community 🙂
Christopher – Admin Team

I haven’t used PayPal much but as the figure goes, it sure is gaining a lot of popularity. Its charges are a bit high. But the upcoming features PayPal Here sounds great. It will be very useful for customers. Thanks for all his info. Great post.

The Paypal transactional charges are not much different to the fees charged by credit card companies. In addition, if you are a small business and you want to process credit cards the banks will try to lock you into a 2 year contract with cancellation fees. On the downside, as Jonny has pointed out the Paypal process can be quite clunky and cause people to abandon shopping carts.

Hi Christopher,

Indeed Paypal may seem to be too strict with most of their policies but considering what they offer, most of these things have be in place to guide against fraud. Also, on the prohibitive charges, they are not really different from what merchant account providers offer. I think for a small online business using paypal may be more economical in the long run.

Btw. it’s great to be here and seeing that you are still going great is a pleasure!

Thanks for the comment Chadrack 🙂

“Btw. it’s great to be here and seeing that you are still going great is a pleasure!” – I’m not planning on going anywhere any time soon 😉

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