PayPal is hoping to expand itself into something like a traditional bank. It recently started rolling out more traditional banking services like - ATM compatible debit cards, direct depositing cheques, and FDIC insurance to its customers.
Achieving this humongous task is a challenge for PayPal since it does not have a banking license in the U.S, yet. PayPal is coming around this problem by teaming with a number of small banks which can provide all the banking facilities on PayPal’s behalf. The debit cards of PayPal are handled by a Delaware bank, a bank based in Georgia handles the deposited cheques and a bank in Utah provides loans to customers and small businesses.
Although users have to pay ATM fees for using the ATM machines, and pay over 1% of any cheque they deposit through the smartphone camera system, PayPal isn’t charging any monthly fee or minimum balance to avail these services. For now these services are available to a small group of customers.
According PayPal’s COO, Bill Ready, the company isn’t looking to replace the traditional banks anytime in the near future. Instead, PayPal is trying offer banking services to its customers who haven’t been able to make the most of PayPal. According To Bill, if your bank account is already connected to PayPal then this service isn’t for you.