Finally, someone wants to spice up things around here.
I never thought I would see the day where I was thanking Bank of America, Wells Fargo, and JP Morgan Chase for challenging a big tech company, but here I am. Thanks Bank of America, Wells Fargo, and JP Morgan Chase for challenging Paypal (and eBay for that matter).
That doesn’t sound like a very normal competitive occurrence to have does it? What could these major financial institutions want with Paypal? Online person to person payments of course.
Banks and credit cards already have a strong presence online with the millions of different payment gateways that exist. So they don’t really need to try and target more of the same business. Their biggest issue has been getting involved in the smaller payment processes that run from one person to another without any sort of business intermediary.
Owe your friend $100? Sure, you can send it via Paypal. Need to make a payment to a company that doesn’t accept credit cards and you want to pay with a credit card? You Paypal it. That’s the type of market that the banks want to get into, and with all the extra money they earned during the recession, now is a perfect time to get in.
Paypal has long had its foot on the throat of this market and really hasn’t faced a major challenge from a well funded counterpart. But nobody, and I mean nobody, can match the ruthlessness, financial backing, and powerful connections of the financial sector. Just look at these three companies! Almost every one of them owns a few Senators or bureaucrats and managed to use the recession to get bigger and wealthier. There are few other businesses that can make that claim.
I think its good to have competition, and I think Paypal is in for it. It will be interesting to see how they encourage existing Paypal customers to integrate with ClearXchange or how they force them to.
If I were a Paypal investor, I’d be hedging my bets and looking to get out of dodge.