Is PayPal on the Ropes?

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The hits are coming fast and furious to PayPal in what's adding up to be the most serious threats to the payment system giant to date.

Three of the most powerful banks in the U.S. – Bank of America N.A., JPMorgan Chase & Co. and Wells Fargo – have come together to create clearXchange, a person-to-person mobile payment system. Customers can transfer money using a mobile phone number or email address. This is a direct shot at PayPal, which has been the only real game in town for person-to-person payments; most notably on eBay but used in many other ways. Convenience and security are the selling points for clearXchange, and a massive customer base will help, too. Chase alone has 26 million active checking accounts.

"Our customers want easy, safe and innovative ways to send and receive funds electronically," the Wells Fargo spokesman says. "The most natural way to do that is with your bank, where you keep your money."

Then Google jumped into the fray by partnering with MasterCard to release Google Wallet, a mobile payments system that allows consumers to use credit and debit cards to pay on the go. Soon, all credit and debit cards will be integrated into the system. Whenever Google launches a competing product, the target is wise to worry.

But PayPal will not go down without a fight. They are suing, claiming Google stole trade secrets and employees, as well as reneged on a signed deal to use PayPal to process payments in the Android app store. Some of those former employees are also named in the lawsuit for providing Google with trade secrets.

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3 comments

MichaelF 05-27-2011 8:23 PM

I kind of like PayPal. I really don't appreciate when BIG business smash out  the little guys. I'm a little guy, I work hard. Big Corps and government backed Banks have an unfair advantage. It would be a shame if Google is proven to be involved. Didn't they start out as the little guy?

JenC 05-29-2011 12:25 PM

Paypal is NOT a little guy....by any means. They also are not FDIC insured and can "freeze" your account at any time, for any reason. Many people have lost money to Paypal because of these underhanded practices. I'd much rather have my money in the bank where it's FDIC insured....no risk of "freezing" for some random reason....and I don't have to wait 4-5 days to use it while Paypal is transfering to my bank! If you search the web, you'll find horror stories about people losing money to Paypal.

Google has had the google checkout for email and website payments for several years now, only logical that they would bring in mobile payments as well. Google doesn't "hold" the money like Paypal does. It's time that Paypal had some competition, maybe they will fix the "issues" they have.

JonathanG 06-01-2011 1:25 AM

Sorry, but the ethical practices of PayPal are very un-ethical. I have had a few very bad experiences with them and it's not hard to find other friends of mine with the same problems such as freezing thousands and tens if thousands of dollars for 6 months just because they decided!! I hope PayPal as a corporate bully suffers a withering death.

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