PayPal Archives

PayPal Onboarding Email Messages

By Jim Bruene on March 5, 2013 9:16 PM | Comments

image As a followup to last week's post on the signup process at PayPal, I thought I'd share the onboarding messages received during the first 10 days. There have been three so far (see screenshots below):

1) Day 0: Welcome message

2) Day 3: General message about PayPal benefits

3) Day 4: More specific message about shopping with PayPal

I've yet to link a credit card or bank account, so I expect more messages in the near future.

Bottom line: Onboarding is one of those areas that is impossible to perfect. It's an art and you'll be forever tweaking it. That said, there are some basics tenets to follow: a friendly, immediate welcome message and prompt followups with benefit-laden messages. PayPal ticks the boxes here, though they could add a bit more visual punch and tighter copy.


Initial confirmation message from PayPal (24 Feb 2013)


Day 3: Followup message outlining PayPal benefits


Day 4: Followup details shopping opportunities with PayPal



PayPal Integrates Bill Me Later "Application" into New Account Signup Process

By Jim Bruene on February 26, 2013 9:35 PM | Comments

image As I was researching yesterday's post on PayPal's "plastic wallet," I attempted to sign up for the company's Anywhere card. Surprisingly, you are unable to get one if you have a business designation on your PayPal account.

So, I signed up for a new PayPal personal account. The process has changed considerably since I last signed up, 13 years ago. One of the most interesting improvements is how it positions the Bill Me Later credit option.

After putting in my name, mail address, mobile number, email address and desired password in the first screen, I was instantly set up with a new PayPal account. At the top of the confirmation page (see below) was a prominent, "Use your account instantly." Then, users are prompted to add their birth date and Social Security Number, and to agree to the terms.  

This Bill Me Later add-on is not required to use PayPal. There is a small gray button in the lower right to defer the credit app. But the application is so seamless, and so painless, I bet most users complete it (note 1).

Bottom line: This could be an effective way for banks and credit unions to upsell overdraft credit lines or credit cards during the checking account opening process. 


Bill Me Later option presented during new PayPal (U.S.) account signup (22 Feb 2013)

Bill Me Later application served in-line with PayPal new account signup


1. In my case, I left my computer for some time and my session timed out, so I lost the opportunity.

Categories: Loans & Credit, PayPal

PayPal's "Plastic Wallet" May be a Popular NFC Work-Around Model for Next Few Years

By Jim Bruene on February 25, 2013 10:01 PM | Comments

imagePayPal has been working on enabling in-store payments for much of its corporate life. It launched a debit card in January 2001, less than 18 months after the company launched. The card was used to tap funds held in PayPal accounts. 

Fast-forward 12 years. We are now entering the era of the digital wallet which features the ability to store multiple payment cards that can be changed manually or automatically at the point of sale. PayPal is well positioned here, since its core product has offered that capability for a dozen years. 

It's easy to see how PayPal becomes a major, if not dominant, mobile-payments player. But it's still a few years before NFC (or whichever) handsets and POS terminals become mainstream (see our latest report for more info, note 1).

So what can the company do now to make more inroads at the point-of-sale?
Plenty, it turns out:

  • PayPal Anywhere is a plastic debit card attached to an individual's PayPal account. But unlike the company's previous debit card, this one can facilitate PayPal Anywhere brochure at LA Jamba Juicepayment from any bank account, debit card or credit card linked to the user's PayPal account. Users can even change the routing of the charge later that same day.
  • Partnership with NCR: In an announcement made at January's national retail tradeshow, PayPal will be made available to more than a million locations using NCR's POS system.
  • Marketing at the point-of-sale: Last week, we noticed PayPal brochures at the counter of an LA-area Jamba Juice (see inset).

And, the big one, still in the planning stages:

Bottom line: PayPal, Google, Moven(bank), UMB (powered by Dynamics), Wallaby, and others aren't waiting for NFC. It's work-around time, at least in the United States. A promising tactic, at least for users, is the "plastic wallet," a traditional mag-stripe card (MasterCard, Visa or Discover) for point-of-sale use. Then, like PayPal Anywhere, the user routes the transaction to an outside deposit account, or another card, pre-registered in the system (note 2).


Landing page for PayPal's plastic wallet "PayPal Anywhere" (23 Feb 2013)

PayPal Anywhere landing page

Pitch for in-store payments served after logging out 

Paypal anywhere pitch after logout

Landing page after clicking the "start" button above

Beginning of PayPal signup process for payment card

1. See our Online Banking Report on Digital Wallets (published Feb 2013, subscription).
2. The business model of the plastic wallet is a challenge. It could be workable if all transactions are routed directly to deposit accounts via ACH (aka "decoupled debit"). Also, advertising (Google Wallet) and/or interest charges (PayPal's Bill Me Later) can prop up the P&L.


Mobile Wallet Providers Woo Retailers at Annual Convention

By Jim Bruene on January 22, 2013 12:44 PM | Comments (1)

image Last week I was just at ground zero of the mobile wallet battle, the National Retail Federation annual convention in NYC. It was a great opportunity to see what the folks from MCX, ISIS, PayPal and Google were telling the audience of 25,000+ retailers.

No one has won the war, but a few winners emerged at the skirmishes I witnessed:

  • Best Tradeshow Branding: ISIS absolutely owned the show in terms of branded impressions. They had their name on the bags (inset), on the registration desk, ISIS brand on NRF convention bagat two lounges and at their purple booth. Congrats to its Seattle-based marketing/PR team who made quite a splash with that six-figure buy. 
  • Best Product Launch: Google was the only one of the four which launched a new product, its digital coupon/POS initiative, Zavers. The new service isn't solely a mobile wallet, and the Google Wallet is a key piece of enabling technology. Although its booth was buried in the back, Google had a lot of traffic when I stopped by on day two.
  • Best Partnering: PayPal was the clear winner, announcing a huge partnership with NCR. (NCR, which owned the front of the show floor, seemed to have a huge buzz going at all times, and I don't think it was a coincidence that the color scheme of the whole show seemed to revolve around the NCR booth). See the post at our Finovate blog for a summary of the deal making.
  • Retailer BFF award: The MCX panel featured execs from Walmart, Gap Inc., Lowe's, Dunkin Donuts, and WaWa doing some serious bonding for an hour. It made me want to become a retailer, just so I could join MCX. It was impressive.
  • AWOL award: The bank networks, Visa and MasterCard, had virtually no presence, neither exhibiting nor speaking. Square was not represented either, unless you count the keynote by Howard Schultz of Starbucks, which owns a small chunk of the startup.  

Bottom line: Things are still wide open and it's impossible to see the winners yet to emerge. Silicon Valley remains enthralled with Square (which is partly owned by Visa), valuing it at around USD3 billion. NFC technology is hotly debated, and so far ignored by Apple, PayPal and MCX. There are 280 mobile payment startups hoping to become relevant. And all eyes are on PayPal and Google to further their partnerships with Discover.  

Comments (1)

Design: PayPal's New Website (with before and after screenshots)

By Jim Bruene on July 9, 2012 12:05 PM | Comments (1)

PayPal has always had one of the better financial sites. It started out very simple in 1999, but over the years it became a bit bloated with competing messages for its various constituencies. And the overall look, while true to its roots, looked a little 2007-ish, which makes complete sense since that's when the company last remodeled.

So a major overhaul was due. Here's a quick look at the biggest changes. It's a good roadmap for any financial website, though PayPal's status as a payments platform makes some of its design decisions different than what a retail bank should do.

The main homepage makes a better first impression now that it mimics the trendy design feature of a large peaceful background image (used by Citibank, Square, Salem Five and many others). The page is also significantly simplified.

But the biggest change is in the primary action words used for transactions:

Before: Pay Online | Send | Get Money
Now: Buy | Sell | Transfer

The new verbs are short and to-the-point, but regular users will miss the Send (originally it was called Beam Money) and Get Money (aka Request Money prior to 2007) names which have been around for more than a decade.

Overall, it's a great change and helps PayPal maintain parity with Square and a number of other hip payments upstarts. 


Personal homepage

In addition to the above, there are a number of other changes:

  • Instead of tabs, PayPal now uses text to indicate top-level navigation of Personal and Business (it also eliminated the redundant Home tab)
  • Moved login from an upper-left box (typical for banks) to the top line in the upper right (typical for newer ecommerce sites)
  • Dropdown arrows are used to uncover sub-navigation items below Buy/Sell/Transfer
  • Moved the utility functions (Contact Us, Search, etc. down to the bottom instead of along the top)

Before (19 June 2012)

PayPal homepage before July 2012

After (9 July 2012)

New PayPal personal homepage (July 2012)


Business homepage

The Business page changes weren't as dramatic because it's mostly a marketing page:

  • The three main navigation items changed from Solutions | Industries | Partners to Sell | Grow | Fundraise, a nice improvement.
  • There is now a direct login on the page in the exact same spot as on the Personal page
  • The PayPal Here dongle is now pictured in the middle


PayPal business homepage before July 2012


PayPal new design business homepage (July 2912) 


Other functions
Note: Click on any of the thumbnails to enlarge

Before: Pay Online                       After: Make a Payment

PayPal pay online page before July 2012   

 Before: Send Money        After: Transfer | Send Someone Money

PayPal Send Money page before July 2012    PayPal new Transfer funds page July 2012

Before: Get Paid                         After: Request a Payment

PayPal Get Paid page before July 2012     PayPal new request a payment page July 2012

Before: Get to know PayPal            After: Account Features

PayPal products page before July 2012      PayPal new Account Features page July 2012


Note: We cover financial website and mobile design issues periodically in our Online Banking Report (subscription).

Comments (1)

First Look: The Application & Onboarding Process for PayPal Here

By Jim Bruene on June 28, 2012 2:06 PM | Comments

image I put my name on the list for PayPal Here (its response to Square) when it was announced in the spring. Yesterday, I received my invitation to "apply" for the service.

I was a little surprised that I still had to apply given that I've had this PayPal account since 1999, and have run many thousands of dollars through it, both as a buyer and a merchant. But I understand the enormous risks in payment acceptance, so I will happily oblige some hassle. 

Interestingly, the process must be done via the mobile PayPal Here app. You cannot simply complete the application via PayPal's normal online system. Again, this is slightly inconvenient for me, but it's good to see PayPal enabling the mobile app for signup. This may be the first financial product from a major U.S. company that has a mobile-only app process.

The mobile signup process is a little confusing. First, you must download the separate PayPal Here app (it in not integrated with the regular PayPal app). Then when launched, if you press "register" on the opening screen (screenshot below), instead of being allowed to register, you are asked to put yourself on the PayPal Here waitlist

I thought I'd hit a dead end, so I went back to the invitation email (below). What you must do instead is login to the app with your PayPal credentials (note 1). Once in, users go through a quick account verification, then a merchants services mini-application, and ID check against credit bureau data.

At the end of the process, a reader is mailed to your business address and an optional debit card is mailed to your primary address on file. But you are immediately allowed to begin accepting payments through by scanning a card with the mobile camera or keying it in. That's impressive.

The next day, I received an email with a tracking number for the reader (screenshot below).

Bottom line: The process seemed a little convoluted for an existing customer. But, in all it took 4 to 5 minutes and required no supporting info and I was able to accept a credit card immediately. Had I not had trouble logging in, I could have completed it in closer under 3 minutes. Overall, I score it a B+.   


Email to apply for PayPal Here (26 June 2012)

PayPal here email invitation


PayPal Here login screen
Note: Invited users must login, NOT try to register (which won't work)

PayPal here login screen mobile

Pre-populated account                 Card reader
                                              confirmation screen

PayPal here application mobile    PayPal Here card reader confirmation

Confirmation email the next day (28 June 2012)



1. The email said to login with my PayPal email address and password. I got an odd error message doing that, saying to "append my code to the password." I think this is because I have second factor authentication turned on for my PayPal account. But I could not see any way to get a code sent to me through the PayPal Here app, so I was stuck. I then tried logging in with my PayPal mobile credentials, and that worked fine. It seems like there might be a bug here. 


Out of the Inbox: PayPal Advantage Congratulations (2011 version)

By Jim Bruene on December 7, 2011 6:19 PM | Comments

imageLast year I highlighted PayPal's frequent shopper program, PayPal Advantage. I just received my second annual congratulatory email (see first screenshot below), confirming that I qualified for another year of membership by spending at least $5,000.

While the program seems relatively unchanged, one addition is a 3% discount on StubHub tickets, also owned by eBay (see second screenshot). It's a nice perk, if you remember to use it (tickets must be purchased via a link from within PayPal).

image Bottom line: While I can't evaluate the ROI from the outside, I can say that as a customer, I appreciate being recognized. And access to Priority Customer Support, though I've never tested it, provides added peace of mind.


Marketing aside: PayPal is featuring actual users in their ads. Customers, like Randy H., below, can apply to be featured in PayPal advertising by submitting a story at (see third screenshot).


Congratulatory email from PayPal (1 Dec 2011)


StubHub offer (link)


PayPal testimonials (link)


Note: We cover email marketing, payments and much more in our subscription publication, Online Banking Report.


PayPal Launches Advantage Program for Frequent Buyers

By Jim Bruene on December 1, 2010 5:46 PM | Comments

image When it comes to online marketing, I'm a sucker for rewards programs, sweepstakes, and the rarest of the rare (at least at financial institutions), premium/VIP services. So I was pretty thrilled when I got an email from PayPal two weeks ago with this headline (see first screenshot):

Jim, welcome to PayPal Advantage

According to the email, I qualified by spending $5,000 in the past 12 months (no problem considering we use PayPal to pay several business suppliers). The email included a $10 gift certificate for use with any eBay purchase (through 20 Dec.).

Taking a page from airline companies, PayPal's main account page now contains a progress bar showing how much you need to spend to qualify for another year of Advantage membership (see last two screenshots).

The website lays out the PayPal Advantage benefits (link):

  • Cut to the front of the line when calling customer service
  • "Advantage hotline" phone number
  • Premium support via "most senior U.S.-based customer service specialists"
  • Faster dispute resolution
  • Exclusive events with executives meet-and-greets
  • Advantage member community/forum (coming soon)
  • Advantage member email newsletter (received one issue on 19 Nov.)
  • First to hear about the best shopping deals

Analysis: While none of the above is as exciting as the free travel rewards big-spending credit-card customers are accustomed to, these softer benefits are not as expensive either. And receiving recognition, combined with the red-carpet treatment from your financial provider, is an unexpected surprise and excellent customer-retention tool.

Welcome email with $10 certificate for any eBay purchase (17 Nov. 2010)

PayPal advantage Welcome email with $10 certificate for any eBay purchase

 Interstitial displayed at login (27 Nov 2010, 1 Dec 2010)

Interstitial displayed at PayPal login

PayPal Advantage landing page (link)

 PayPal Advantage landing page
PayPal Advantage benefits page (link)

PayPal Advantage complete benefits page

Widget on main page shows progress towards Advantage status

Widget on main page shows progress towards PayPal Advantage status

Details page showing specific progress

Details page showing specific progress towards PayPal advantage qualification

Summary box close up



PayPal Announces a Slew of Developer Tools and Two Major Banking Partners: USAA and Discover Financial

By Jim Bruene on October 26, 2010 6:47 PM | Comments (1)

After seeing The Social Network and reading yet another post about the ramifications of Facebook's ubiquity, I sent this out via Twitter last week:


Today, the "PayPal dial-tone" got louder with the launch of a handful of new initiatives at the company's second annual developer's conference in San Francisco (which drew 2,500):

  • PayPal for Digital Goods: Two-click checkout for low-value digital goods eliminates the hassle of logging in
  • PayPal Embedded Payments: Pay without leaving the merchant's app
  • PayPal Apps: Allows companies to embed applications into the PayPal website: Finovate alums Credit Karma, Expensify, and are participating
  • PayPal Business Payments: Electronic payments (non-credit card) of any size for just $0.50 per transaction 
  • PayPal Mobile enhancements:
    -- Express Checkout provides similar two-click process
    -- VeriFone integration
    -- v3.0 iPhone app

Unless you are a developer, most of those programs mean little to you other than it's obvious that PayPal is really pushing on the gas right now. But the banking alliances revealed today are quite interesting, assuming they make it to market:

I'm sure there will be much speculation on whether these powered-by-PayPal services will disrupt payments, or even catch on for that matter. But it's clear that PayPal has made important new alliances in the banking world. The dial-tone appears to be catching on, even with the establishment.   

Update: More context on these announcements from Russ Jones, Glenbrook Partners, here.

Comments (1)

US Bank Adds Remote Deposit Capture to Online Banking Menu

By Jim Bruene on August 16, 2010 4:54 PM | Comments (1)

imageI saw a new option today when I logged in to my U.S. Bank account:

Make a Deposit

Clicking on the link brings up a screen (see below) promising that DepositPoint, a desktop-scanner-based service, is "Coming Soon!"

From the little info provided, I can see that it's targeted to home users using existing equipment (all-in-one printer/scanners) and allows checks to be deposited through 6 PM central time for (I assume) same-day credit.

The webpage shown below is the only info available. There's nothing posted on pricing, when it will launch, or other terms and conditions. And a search for "depositpoint" on the main website comes up empty. Interested customers are asked to "please stay tuned to this page for more exciting information!" While not exactly state-of-the-art lead capture, at least the bank is getting the word out (note 1).

In other news, PayPal moved one step closer to becoming a bank/credit union replacement with the revelation that it will add remote deposit capture to its iPhone app later this year.

U.S. Bank online banking primary navigation (16 August 2010)


1. I'm putting this in the footnote since it's not the focus of this post. But seriously, U.S. Bank, this is the best you could come up with from a design and copywriting standpoint? It looks like a webpage from 1996. All that's missing is the "under construction" sign. How about some color? Graphics? Links to an FAQ? This is a great development, but the customers drawn to this page from the "NEW" button are unlikely to be impressed.

Comments (1)

Innovations Don’t Always Work: PayPal to Discontinue Browser Plug-in

By Jim Bruene on August 12, 2010 3:48 PM | Comments

image For years I’ve longed for a financial institution-delivered browser plugin that would help manage receipts, verify available funds, complete online forms, and provide secure payment options at legitimate ecommerce sites. The PayPal browser plugin, launched less than three years ago, offered most of that, in theory. 

I used it successfully a few times, but too often it popped up offering assistance when I didn’t need it. So I disabled it. Evidently, I wasn’t the only one who found it not worth the hassle (for more insight into the problems, read the comment thread and updates to the original announcement post). The company is pulling the plug on the service next month.

Now that PayPal’s plugin is off my computer, it's time to give Billeo’s another try. I used previous versions in the past, but hadn’t given it a thorough test since I moved to a Mac for most Internet browsing.

PayPal login splash screen (link, 9 August 2010)



Note: We wrote about plugins, toolbars, and tools in Online Banking Report: Grabbing Desktop Mindshare (published Aug. 2002).


The Need for Context-Sensitive Login Security

By Jim Bruene on August 10, 2010 5:58 PM | Comments (1)

image I'm a frequent PayPal user and need access to it on the road while logged in to who-knows-how-secure coffee-shop WiFi. Whenever I entered my password, I was hit with the unsettling realization that this could be the time I handed over my credentials to a hacker.

So a few months ago I began using PayPal's optional out-of-band, one-time password solution. Each time I log in, a random six-digit code is sent to my mobile phone. That code must be entered to complete the login. And while I feel much more secure, the extra 20 to 30 seconds it takes is a hassle, especially after a decade of password-only access (note 1).

To improve the user experience, while maintaining the extra authentication security, I'd like to see PayPal make the following changes: 

  • Instead of requiring the user to press the "send SMS" button after logging in, just send the SMS code automatically. I've logged in at least a dozen times since enabling this feature and I still forget to press the button. I usually look at my phone for 10 seconds waiting for the code until I remember that I must click the button.
  • Allow low-risk transactions to be authorized without the extra SMS code. I bought some iPhone chargers on eBay today for a total of $30. I would have preferred to skip the out-of-band authorization on this low-risk transaction, a small purchase made on eBay through my authenticated eBay account. 

Relevance for Netbankers
The second suggestion (above), what I call "context-sensitive security control," is an important part of the tradeoff between security and usability. As long as customers are hassled for extra info only when the risk is higher, there's a much better chance of gaining their cooperation, and attention, in security monitoring. Many banks feed an extra security question when customers log in from an unrecognized computer. That's a great use of context-sensitive extra security.

Another situation where context-sensitive security controls can be deployed is for determining when an account is locked for excessive login attempts. If a user is logging in from a recognized computer, they should get far more leeway in the number of password attempts before the nuclear option, full lockout, is deployed. Unfortunately for me, Chase Bank has not yet taken this step (notes 2, 3).


1. When we go shopping for a new business-banking relationship, out-of-band authorization capabilities will be a non-negotiable requirement.
2. Yesterday, Chase locked me out, without warning, after just 4 attempts (or was it 3?) from my main computer, which the bank knows very well. That's ridiculous, from a recognized computer I should be able to try at least 7 or 8 times. I have multiple Chase accounts with different usernames and passwords and with a typo or two it's easy to surpass 3 or 4 attempts.
3. Yes, I've whined about this before, but it's been 3 years, so I was due.

Comments (1)
Categories: PayPal, Security & Privacy

Logout Marketing: PayPal’s 20-Word “Bill Me Later” Sales Pitch

By Jim Bruene on May 14, 2010 1:24 PM | Comments

image Although it usually takes me 40 pages or more to get my points across in Online Banking Report, I am a strong believer in succinct online copy. I especially love online pitches that take no more words than Google’s homepage (the gold standard).

Today I found a great example after logging out from my PayPal account:

You are Pre-Approved to use Bill Me Later!
One Click. Two Questions. No Third Degree.

Choose Bill Me Later when you checkout with PayPal.

20 words. Point made. Give the copywriter a bonus.

PayPal’s logout pitch (14 May 2010)


Landing page (link)


Note: I’m counting Bill Me Later as one word since it’s a brand name.


Mobile Firsts: PayPal Launches Bump to Pay

By Jim Bruene on March 18, 2010 6:12 PM | Comments

imageThis month we've explored several new features that promise to propel mobile banking into the mainstream market. Unlike developing nations, where mobile is the ONLY way to conveniently bank, in the U.S. and other online-centric countries, mobile has to compete with online for awareness and usage.

There doesn't seem to be a single killer app for mobile. But a growing list of things that mobile does better than online will eventually tip the scales in favor of the new channel. Here's what we've seen so far:

  • Location-based ATM/branch finders (here)
  • Remote check depositing (here)
  • Simple login with 4-digit pin (here)
  • Insurance discounts after graduating from iPhone-based program (here)

The latest addition to the list:

  • PayPal's Bump to Pay (see video below): Users of PayPal's latest iPhone app can transfer funds to each other merely by entering the amount and moving their phones within close proximity of each other (see screenshots below).

As David Eads points out at Mobile Manifesto, bumping to pay has some drawbacks in the real world:  

.....most of the time I want to send money to someone, I'm not standing beside them. And if I am, most of the time I would feel awkward actually touching the person. Imaging bumping someone for admission to a high school football game. Imagine bumping a street vendor for a newspaper or flowers. Imagine bumping a scalper for tickets outside the game.

My take: I agree with David that physically placing iPhones next to each other seems awkward today. But then again, so was writing paper checks back in the day when everything was paid for in cash/coins.

If so-called bump pay is super-convenient, fairly priced, and the perceived security issues are overcome, there's no reason why it couldn't become the predominant method of person-to-person payments. While it's way too early to make any kind of prediction, I'm just saying, don't dismiss it yet.

David's closing remark is spot on:

The key for P2P is getting people comfortable with the idea of transacting electronically between individuals. Bumping and Zooming makes it more fun.

Bumping is now an integral part of PayPal's iPhone app

image   image   image


Off-topic addendum: As much as we like new bells and whistles, bump pay pales in comparison to the really big news at PayPal this week: the announcement that it's teaming with China UnionPay and Singapore's DBS Bank to offer payment services. The 2-year DBS deal will put PayPal in the hands of the bank's four million customers, 1.3 million of whom are currently banking online.

How big are these deals? A good indicator is PayPal's plan to double its staff in the region to 2,000 employees. Wow, has any financial company anywhere in the world added 1,000 to its staff in the past two years?


Note: For more coverage of mobile banking and payments, see the most recent issue from Online Banking Report.


Out of the Inbox: Costco Email Gives PayPal's Bill Me Later Top Billing

By Jim Bruene on December 21, 2009 4:23 PM | Comments

imageI rarely open emails from retailers, especially around the holidays. As someone who has checked the "send me offers" box on registration forms for a decade, I'm inundated. But every once in a while I check out the Costco email to see what outrageous deals they are offering and, more importantly, whether any financial services are being showcased. For example, in March we wrote about the $90 Sharebuilder promo from Costco

Last Friday, the big-box giant did not disappoint. It had two financial offers above the fold:

  • Extended-payment option: A surprisingly large and prominent pitch for PayPal's extended-payment program, Bill Me Later (see inset and upper-right corner in screenshot below). The BML option allows Costco customers to defer payment for an unspecified amount of time interest-free if paid in full by the due date (typically a few months out), or to pay the amount back over time at an 18.99% APR.
  • Costco cash cards: While it's no surprise that the retailer is pitching store cards 7 days out from Christmas Day (see landing page below), I was surprised they weren't merchandising them more aggressively. The problem was that even with rush delivery, the plastic card wasn't guaranteed to arrive before Christmas, so it wasn't a great gift option. The retailer could use an online giftcard option for instant delivery.

Costco holiday email (Friday, 18 Dec. 2009)

Costco email 18 Dec 2009

Bill Me Later landing page (link)

BillMeLater landing page

Costco prepaid card landing page (link)



New Online Banking Report Published: Making the Case for Person-to-Person (P2P) Payments

By Jim Bruene on December 15, 2009 3:13 PM | Comments


We just published the latest Online Banking Report:

Making the Case for Person-to-Person Payments
Does mobility provide the tipping point for bank-branded P2P?

Author: Jim Bruene, Editor & Founder
Published: 10 Dec. 2009
Size: 40 pages, 10,000 words
Author: Jim Bruene, Editor & Founder
Cost: For OBR subscribers: $0, all others US$495
Abstract/Table of Contents: Here (PDF)
Download or purchase: Here

If you've been around the industry a while, you probably remember the last time there was a lot of hype around person-to-person (P2P) payments. It was ten years ago and PayPal had just launched and was competing with three well-funded efforts from large banks: Wells Fargo, Bank One (now Chase) and Citibank.

The battlefield at the time was eBay, which desperately needed a trusted payment mechanism, to remove the friction from person-to-person commerce. Well, PayPal won that battle, taking out all three bank competitors and becoming the payment standard at eBay.

But the incumbent banks and credit unions have not lost the war, yet. They still own the customer payments relationship. And even though more than 70% of U.S. online shoppers already have a PayPal account, there are millions of customers that still want an easy way to transfer money to family members, friends, or acquaintances. And increasingly, they will want to send the money via their mobile phone.

While PayPal can handle that type of transaction, it's not necessarily top of mind with consumers when considering how to send $65 to their sister to pay their share of mom's birthday party. 

This is something PayPal recognizes, so they are actively pursuing bank partners to offer co-branded Powered by PayPal P2P payment services. Just last month, PayPal announced deals with S1, FIS, and First Data to make PayPal solutions available to their thousands of clients. The first S1 client to publicly announce the program is Mercantile Bank of Michigan, which is already telling customers about its Q1 2010 launch of PayPal-powered mobile payments (see previous post).

About the report: Published last week, the latest Online Banking Report includes: 

  • An overview of the product and market size
  • Analysis of features and benefits
  • A look at potential revenue streams
  • Forecast for online and mobile P2P payment usage (United States only)
  • Review of the offerings from key solutions providers and financial institutions, including the latest launch from Univest National Bank & Trust, which just launched a home-grown P2P payments service (see screenshot below)
  • Project priority guidance for various types of financial institutions

Companied mentioned: Amazon Payments, American Express, Bank of America, Bank One (Chase), BECU, CashEdge POPmoney, CircleUp SmartPay, First Hawaiian Bank, Fiserv, Geauga Credit Union, ING Direct, iPay Technologies, MasterCard MoneySend, Mercantile Bank of Michigan, Mobile Money Ventures, mPayy, MoneyGram, Obopay, Nokia Money, Patelco Credit Union, PayPal, Revolution Money, TwitPay, Univest Bank & Trust, US Bank, Wells Fargo, Western Union

Univest's new P2P service featured on its homepage (15 Dec 2009)


Note: The report will be mailed to subscribers later this week.


Sneak Peek at Mercantile Bank's Powered-by-PayPal Mobile P2P Payments

By Jim Bruene on December 11, 2009 5:25 PM | Comments (1)


Mercantile Bank of Michigan is riding the wave of free publicity from being first to market (probably) with iPhone-based P2P payments powered by PayPal. That's a triple play in both imagealliteration and PR value. See the teaser ad on the bank's website below (first screenshot).

The new service, a joint effort from PayPal and S1, is expected to go live in early 2010. It will allow customers to send money directly from their iPhone to any other individual on the worldwide PayPal network. All the sender must know is the recipient's mobile phone number or email address. According to the five-question FAQ on the landing page (see second screenshot), the service will be available to all MercMobile customers and will be free of charge.

Mercantile Bank has become one of the most innovative banks we follow. Congratulations to CIO John Schulte and his team for leading the industry on several fronts and providing great material for Netbanker (previous posts here; note 1).


For more on the P2P payments market, see our latest Online Banking Report, published earlier this week, Making the Case for Person-to-Person Payments

Mercantile Bank's powered-by-PayPal mobile P2P app (7 Dec. 2009):

image   image   image

Mercantile Bank of Michigan homepage (8 Dec. 2009):
Note: MercMobile P2P Payment teaser in lower left and home-based remote-deposit capture on the top banner.


P2P payments landing page (link)


1. Mercantile even earns its very own category at Netbanker: <>. 

Comments (1)

Happy 10th Birthday PayPal!

By Jim Bruene on November 19, 2009 12:45 PM | Comments (1)

image In preparation for our upcoming report, I re-read our first report on P2P payments published almost 10 years ago to the day (29 Nov 1999). Although written early in the game, I was very impressed with PayPal, a service launched two weeks earlier (15 Nov 1999) by Confinity, the original name of its parent company.

We've made our share of incorrect predictions over the years, but this one we got right (note 1), annointing PayPal with one of the first OBR Best of the Web awards. Here's our take from that original report, when PayPal was available as a payment option on just nine eBay auctions:

image(PayPal) is not as well known as BidPay....but as soon as (eBay) participants discover (PayPal) is free and real-time, it should catch on quickly.

PayPal was originally developed as a payment mechanism between Palm Pilots, which explains the "beam money" call-to-action on top of the original user interface (below). But I wasn't a Palm user, so what got me excited about the service was the use of the email address to facilitate payments:

Much of (PayPal's) press coverage has focused on the Palm application...(but) it's the email-payment program that has the huge potential.

The rest, as they say, is history.

PayPal "send money" interface at its 1999 launch (15 Nov 1999)


PayPal "send money" today (19 Nov 2009)


1. And truth be told, we predicted  that PayPal would need to hook up with an existing payment player to get past trust issues. But luckily for them, the extremely deep-pocketed VCs in the bubble days floated PayPal a massive amount of cash so it could buy its way into the wallets of consumers.  

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Quotes: Mercantile Bank on Using PayPal for P2P Payments

By Jim Bruene on November 11, 2009 11:08 AM | Comments

image The biggest surprise of the year in the world of alt-payments is PayPal's newfound reach into banking circles as evidenced by their agreements with S1, FIS, and FirstData announced at last week's Retail Delivery conference.

But a huge question remains: Will banks play ball with PayPal or will they provide the same functions via home-grown solutions or non-PayPal alternatives such as CashEdge, Fiserv, or Visa/MasterCard?

I don't think anyone has that answer yet. There are simply too many variables. But if you believe there's no way a bank would use a "powered by PayPal" solution, read this quote by Mercantile Bank of Michigan's CIO, who plans on launching the S1/PayPal person-to-person mobile service next year (note 1):

"(PayPal) is a network, it doesn't scare me at all. They're never going to steal significant deposits out of our bank and keep [them] in PayPal accounts. Visa and MasterCard probably look at PayPal as the enemy, and they probably should, but that's their problem, not mine."
   -- John Schulte, CIO Mercantile Bank of Michigan in a
Nov. 10 article from Digital Transactions

1. You might remember Mercantile Bank from our May post lauding its fee-based consumer positive-pay service.


SunTrust Partners with Moneta to Test the Alt-Payment Waters

By Jim Bruene on November 3, 2009 7:20 PM | Comments

imageI've been waiting 10 years to write this story. A major U.S. bank has finally dared enter the space PayPal has all-but-owned since the first part of this decade (see note 1, 2): secure, non-card-based payments at the point-of-sale, which do not require handing over private info to the merchant. 

imageYes, Bank One, Citibank and Wells Fargo all failed at person-to-person payments in 2000/2001, but this is much different. Those were payment services between individuals, not a point-of-sale option like PayPal, Google Checkout, and most recently,

SunTrust's partner Moneta is an Atlanta-based startup that debuted its alt-payment system at FinovateStartup earlier this year (video here). The joint effort was announced at BAI Retail Delivery in Boston earlier today (press release).

The program is already being tested on a large group of SunTrust online banking customers who recently received an email offering a $10 cash-back incentive to make a purchase of $50 or more from one of the handful of merchants currently accepting Moneta-powered ACH payments. The biggest merchant is Delta.

Moneta's appeal to merchants is relatively straightforward: Incremental sales from customers unwilling or unable to pay via credit card online AND reduction in interchange costs by moving card-based transactions to Moneta transactions, with much lower interchange.

For banks, the business case is not as obvious. The hope is that Moneta-issuing banks share of interchange revenue will more than offset what the bank might lose in card-based interchange. While that may turn out to be the case, the more compelling benefit for banks is the brand and relationship value of offering a new payment choice with more perceived security and privacy advantages. There are also intriguing possibilities to add other revenue-producing value to those transactions.

image Last year in my notes from the BAI conference, I named Moneta as the "most audacious business plan." Right now, it's too early to say whether Moneta can become a legit competitor to PayPal. But with SunTrust on its side, that audacious plan is MUCH closer to realization.   
1. For the historical perspective, see our first report on person-to-person payments (published, Nov. 1999). 
2. In somewhat-related news: A year after PayPal CEO Scott Thompson made a keynote appeal to bankers at last year's Retail Delivery, FIS and PayPal announced a partnership today (press release) as did S1 (press release) that could bring PayPal-powered peer-to-peer payments to hundreds of financial institutions.


Off-topic: Seth Godin is a Marketing Genius and Only Accepts PayPal

By Jim Bruene on November 3, 2009 4:36 PM | Comments

image Seth Godin is a true marketing guru. And unlike some authors, he also practices what he preaches.

Case in point: At 10:49 AM Eastern today, he announced via post on his blog that he was selling a special boxed set of five of his books (here):

  • Limit one per customer
  • 800 total sets, with no more to be printed ever
  • Price = $64 + $10 shipping
  • Payment via PayPal only.

By 1 PM, when I ordered, only 176 remained. By the time I returned from this afternoon's BAI Retail Delivery program, they were all gone (note 1).

And of course, I received a clever thank-you note from Mr. Godin a few hours later (see below).

Relevance to Netbankers: This doesn't really have anything to do with financial services other than being one more bit of evidence of PayPal's ubiquity online. This is just a great example of how to create retail excitement with a combination of clear value, simple check-out process, a nice webpage (see screenshot below), and a blog entry. It's more challenging to do it in financial services, but it is possible. 

Seth Godin's webpage sold a limited-edition box set for a few hours (link, 3 Nov. 2009)


Thank-you email
(three hours after purchase)
Apparently, part one in a series


Note: If you must have it, there's one up for auction on eBay. Starting price $1.


PayPal Launches Drop-Dead Simple Teen Prepaid Card & PayPal Account

By Jim Bruene on August 12, 2009 5:33 PM | Comments

image Sometimes, banks forget the importance of simplicity, especially when it comes to less-than-crucial, ancillary services such as a prepaid teen account. Sure, I'd love to have a reloadable card that my son could stow in his backpack for emergencies. But I'm not going to spend a half-hour looking for one, applying for a new account, and then trying remember where and how to access it (see note 1).

But if the process was painless and integrated with my online banking, I'd buy a half-dozen prepaid cards, one for each child, one to toss in the glove box of each car, and another for my briefcase (note 2). 

It looks like PayPal is the first to step up to this challenge with its new student account (company blog post) which has been in beta testing since last November (beta site; note 3). The account is free of charge (note 4), and signup takes just 51 seconds.

Signup & funding
Current PayPal customers can sign up their kids for an account in under a minute. That includes clicking on the <> URL, completing the six-field app (see first screenshot), all the way to the approval screen confirmation (screenshot #2). And, half that time was simply logging in to my PayPal account. If I'd already been logged in, the total time to complete the application, process it, and receive approval would be just 23 seconds! That's the fastest financial services application I've ever completed by a factor of 10 (note 5).

The account, which shows up as a link at the top of the parent's PayPal account (screenshot #3) includes parental controls for all transaction types and comes with both an online account and a PayPal prepaid MasterCard debit card. Both will come in handy for today's teens, who cannot easily shop online without credit or debit cards of their own.

Transferring funds to the account takes mere seconds, and parents can choose from one-time loads or periodic transfers so the card can be used to accumulate an allowance (screenshot #4). Transfers show up in real time, with green color-coding, after hitting enter (screenshot #5).

Overall grade: I give it an A+ for ease of use and an A+ for value, a winning combination. Nice work. 

1. PayPal teen card application for current PayPal customers (12 Aug 2009)


2. Congratulations screen


3. Student account, and prepaid balance, shows up on the parent's main account overview page 


4. Funds transfer screen 


5. The funds transfer is immediately displayed within the student account area


1. The final item is why the Visa Buxx card never worked for me. I bought one but could never remember how to access it or add more money.
2. Verient is doing some very cool things to help in this regard; we'll profile them here soon.
3. Hat tip to Payments News for the link.
4. ING Direct's system for creating a new savings sub-account is similar speedwise, but it's not technically a new account. 
5. The only major fees, besides PayPal merchant fees, are the $1 ATM withdrawal fee and a 2.5% foreign currency fee.
6. For more info on online account opening, refer to the latest issue of Online Banking Report: Improving Online Account Opening ROI.


PayPal markets its credit card to users at logout

By Jim Bruene on May 21, 2009 5:27 PM | Comments

image For many years PayPal has deposited users on its shopping portal when they log out of their PayPal account. This afternoon I saw something different at logout for the first time in recent memory, a pitch for the PayPal Plus MasterCard (screenshot below).

Although the company has marketed this card to me dozens of times immediately after logging in, it's the first time I remember seeing it after logging out. The hook is the card's new personalized photo option.

But a funny thing happened when I clicked on the Get Started button: I was dropped on to PayPal's homepage where an error message explained:

You must log in before you can access this page.

A very odd requirement for an offer made after logging out. I followed the instructions and logged in, but there was no mention of the credit card. I just ended up at the regular account management page.

I guess it was PayPal's turn for a programming glitch (see yesterday's post on Rudder). Luckily, this problem doesn't impact anything but PayPal's online marketing results (see note 1). When I logged out this time, I was shown the usual PayPal shopping portal (see third screenshot). 

PayPal pitched its PayPal Plus MasterCard at logout
(21 May 2009, 3:30 PM Pacific)


 Error message after clicking "Get Started" on offer page
(21 May 2009)image

 PayPal logout offer a few minutes later (21 May 2009)


1. For more info, see our most recent Online Banking Report: Selling Behind the Password


eBay Acquires Bill Me Later for Almost $1 Billion

By Jim Bruene on October 6, 2008 12:09 PM | Comments

image I won't belabor the irony that the nearly $1 billion ($945 million) paid by eBay for Bill Me Later values the alternative payment and credit provider at more than Washington Mutual Bank and nearly half as much as Wachovia, at least before Wells Fargo entered the bidding.

The underlying credit product is relatively simple, a 19.99% credit account underwritten by Utah-based industrial bank CIT (terms and conditions here, see also note 1). But the distribution system, providing quick-and-easy delayed payment at the point-of-sale at 1000 online merchants, is what created the billion-dollar valuation. To use Bill Me Later at checkout, consumers simply provide their birthdate, last four digits of their social security number, and their billing address (see screenshot below).

According to today's investors presentation the company will do more than $1 billion in transaction volume in 2008 and serves 4 million customers (see note 2).

I was initially surprised at the price ($945 million), but given that eBay is projecting $150 million in revenues and $50 million in profits, it makes some sense, especially if CIT is taking most/all of the credit risk. Hoped-for synergies with PayPal, which already operates a similar program, is the stated upside for the deal.

Ebay says Bill Me Later earns 4.1% on each payment transaction, which amounts to $10 per $250 purchase (note 3).  

Bill Me Later's simple signup demonstrated at Amazon's checkout
(5 Oct 2008)

Bill Me Later signup at (5 Oct 2008)

1. CIT is not without its own problems with a market cap that has dropped more than 80% from a year ago. The company is now valued at $2 billion, just double the purchase price of BillMeLater.

2. Some historical usage numbers: An undated entry on the CIT website says that BillMeLater has served 2.5 million consumers. In a Dec. 2006 press release announcing $640 million debt-financing from Citigroup, Bill Me Later said it had served 2 million consumers.

3.  Here are the revenue and cost numbers taken from today's investor's presentation (expressed as percent of transaction amount):

Transaction fee from merchant = 2.4%
Customer interest = 6.5% (note APR is 19.99%)
Customer fees = 3.6% (note late fees are generally $29 or $39 depending on balance)
Total revenue = 12.5%

Acquisition and servicing = 2.9%
Net credit/fraud losses = 3.4%
Cost of funds = 2.1%
Total cost = 8.4%

Net profit = 4.1% of transaction amount

Categories: Ebay, Epayments, PayPal

Login, Logoff Marketing Messages from Bank of America, PayPal, US Bank, WaMu and Wells Fargo

By Jim Bruene on August 1, 2008 1:44 PM | Comments (2)

image After returning from some R&R in Iowa and Kansas, I logged into my banking and credit card accounts to see what I'd forgotten to attend to before leaving town. Luckily, everything seemed in order this time.

Always on the lookout for online marketing examples, I thought it would be  interesting to compare and contrast the marketing messages presented to users as they logged in and logged out of five major banking sites. 

  • Bank of America (business and personal credit cards): BofA typically has a marketing message at login and logoff.
    Login  The bank's brokerage division is pitching free Morningstar mutual fund research. I haven't seen this one before, and it seems a bit wordy, so it may be the first time for this offer (see screenshot #1 below)
    Logout  A pitch for a cash-back business credit card. It's a good offer, but perplexing, given that I already have a business and personal card with BofA. Not sure why they want me to have three (screenshot #2).
  • PayPal (verified account): PayPal has used log-in splash-screens almost since it began in 1999 with a mix of marketing and service messages. But they don't overuse the technique, so it's noticeable when they have a new splash-screen running.
    Login  No marketing, just direct entry to main screen
    Logout  No marketing, just a landing at the usual PayPal merchant emporium (screenshot #3)
  • US Bank (multiple accounts): I don't think I've ever seen a marketing message from US Bank at login or logoff. I believe I've seen a service message at login a few times over the years, but it's extremely rare.
    Login  No marketing, just dropped on main account page as usual
    Logout  No marketing, just a brief "you've been logged out" message
  • WaMu (business checking): I've had the account only a few months, but WaMu has frequently posted marketing messages at login, and they've been relatively creative, as you'd expect.
    Login  Pitching its WaMu Live concert promotion which provides exclusive access to summer events to WaMu credit and debit card holders (screenshot #4). 
    Logout  No marketing, just a solid recap of security precautions, a good message to leave with online banking users (screenshot #5).
  • Wells Fargo (credit card): Wells uses marketing messages frequently at both login and logout.
    Login  Electronic statement (paper turnoff), something I've not done yet (screenshot #6).
    Logoff  Home equity loans (screenshot #7)

What's Innovative?
There wasn't anything particularly enlightening in these examples. The WaMu Live pitch was the only truly unique message. For the most part, they were typical, well-crafted marketing messages you'd expect from these major players. That's fine now, since most customers don't yet have "banner fatigue" at their online banking site. But going forward, the messages will need to be more targeted and more interesting to get attention and action from jaded online users.

The other issue is frequency. You'll figure this out through testing, but there's a line you don't want to cross where a splash-screen message presented at every login ceases to be effective and is just plain annoying.

Finally, for financial institutions, such as US Bank, still not using this login real estate for sales messages, your customers thank you; however, quick-loading, targeted messaging, used with discretion, should benefit your bottom line.   

1. Bank of America login screen for business-credit-card only account (1 Aug 2008)image

2. Bank of America logoff screen (1 Aug 2008)


3. PayPal logout (1 Aug 2008)


4. WaMu login screen (31 July 2008)image 

5. WaMu logout screen (1 August 2008)image

6. Wells Fargo login splash screen (1 Aug 2008)


7. Wells Fargo logoff screen (1 Aug 2008)


Comments (2)

Bank of America and PayPal are Only Financial Brands in Apple's App Store at Launch

By Jim Bruene on July 10, 2008 12:43 PM | Comments

Bank of America once again proved its mobile mettle as the only financial institution to have a native app available at the launch of Apple's new App Store (note 1). PayPal also launched an app on Day 1 (see screenshot below). Both are free.

Bank of America iPhone 2.0 App in Apple App Store in iTunes (10 July 2008)

Bank of America iPhone native app in iTunes App Store (10 July 2008)

Apple launched the store today within iTunes (see note 1). There are 552 apps at launch according to Pinch Media, Here's the price breakdown:

  • Free - 135
  • $0.99 - 85
  • $1.99 to $3.99 - 110*
  • $4.99 - 62
  • $5.99 to $8.99 - 35*
  • $9.99 - 82
  • more than $10 - 40*

The new Finance category in the App Store has 23 entries at launch. Most are small utilities for calculating tips or splitting the dinner check. Only two recognizable brands are available, PayPal (lower left) and Bank of America, which by design or omission, is listed not with its name but as simply "mobile banking."

Finance listings in Apple App Store in iTune 7.7 (10 July 2008)

23 Finance apps in Apple's App Store (10 July 2008)


PayPal App (10 July 2008)

PayPal app in iTunes Apple App Store (10 July 2008)


*Interpolated from graph, plus or minus 3%

1. To view the App Store, download iTunes v. 7.7. Some users including myself (Windows bug?) have reported not being able to see it even after updating iTunes. I was able to access through this link published by TechCrunch.


PayPal Offers $50 Rebate at Northwest Airlines

By Jim Bruene on March 26, 2008 12:27 PM | Comments (2)

image In the richest alt-payment bonus we've seen in a long time, PayPal users earn a $50 account credit for purchasing airline tickets at Northwest Air's between March 13 and March 27.

The bonus was prominently featured in a promotional email sent to WorldPerks members yesterday (see below). Only one bonus per PayPal account is allowed, and the fare must be at least $250. 

PayPal is also accepted at Southwest, AirTran and US Airways.

Airline Number of PayPal Transactions*
Northwest 9,018
US Airways 3,825
Southwest Air not listed
AirTran not listed

*Source: PayPal, 26 March 2007, online shopping center

Email message to Northwest WorldPerks members (25 March 2008)


Landing page (link)

image fare search
The PayPal logo featured in regular fare search at, but there is no mention of the $50 bonus.


Comments (2)

Revolution Money Adds Facebook App for P2P Payments, Pays $25 Bonus

By Jim Bruene on January 27, 2008 1:49 PM | Comments

image As Facebook and other social networks move into various ecommerce activities, payments will take a larger role. There are rumors that Facebook may be developing its own payment capabilities, but that seems outside its core business, so I'm skeptical. 

There are several payment companies already vying for attention at Facebook:

  • PayPal launched a Facebook app in July; it allows users to collect funds from friends or to raise money for a cause (previous coverage here).
  • PayMe is a service that uses the PayPal engine for person-to-person payments (previous coverage here).
  • Chip-In also uses the PayPal engine to gather group donations for a specific goal (previous coverage here ).

imageThe latest on Facebook is Revolution Money, the credit card alternative backed by AOL founder Steve Case. In December, the company launched a Facebook application to support its person-to-person service, MoneyExchange, which is aimed squarely at PayPal's lucrative franchise (screenshot below). Users that sign up on Facebook receive a $25 bonus (through Feb. 29), an offer that is not available on the main MoneyExchange website.

So far, the Facebook is light with only 16 daily users listed today. But as social network users find out how easy it is to settle their debts with friends through the network, we expect a significant volume of funds flowing through the social networks. 

For more information, read our Social Personal Finance report (Online Banking Report #142/143). 

Revolution Money's MoneyExchange App on Facebook



eBay Pitches Co-branded MasterCard to Bidders

By Jim Bruene on November 20, 2007 11:07 AM | Comments (2)

Given how many times I've had to tell clerks, "no, I really don't care to save $18 on my purchase today" (by adding yet another revolving credit product to my life), the come-on at checkout must work pretty well. Amazon has used this approach at online checkout for years, offering up to $30 in savings if approved for its co-branded credit card.

eBay recently began pitching its eBay MasterCard to bidders in its online auctions. As you can see below, a small "up to $25 back" is presented to users as they consider what bid amount to enter. The card is issued by GE Money and requires a PayPal account. Customers can opt to display their eBay userid on the no-annual-fee card.


I also received an email offer last night (7:34 PM Pacific) for the card (see screenshot below). It's an attractive holiday-themed message with the slightly misleading email subject line, "Get 10% off eBay purchases through Dec. 15." I clicked on it wondering why eBay would offer me, a frequent buyer, such a substantial savings. It turns out to only apply to the first $250 spent, for a $25 savings, not so rich compared to other credit card offers I typically receive in the mail. But with the tight integration and 30-second loan application, it should provide a reasonable flow of new applications.  

The online application is simple and fast with pre-populated personal info and a 30-second approval promise. All I had to do on the first page (note 1) was decide whether to put my eBay ID on the plastic and enter my birthdate (see screenshot below). However, the process is marred by the upsell of credit insurance disguised under the seemingly innocuous heading (see closeup below):

Yes, enroll me in the Account Security program.

Granted, the cost is clearly disclosed, however, many applicants will check the box thinking they are protecting themselves from fraud, and only later find out they are paying an extra 1.5% per month (that's $900 per year on a $5,000 balance) for an insurance product they probably don't need. With all the problems its had with phishing and fraud, eBay should NOT trick customers into signing on for credit insurance under the guise of "security." 

Email solicitation from eBay (19 November 2007)

Landing page for email solicitation of eBay MasterCard
(19 November 2007


1. I did not proceed past the first page because I could not tell if hitting "continue" at that point would trigger a credit application. They may ask income and employment questions on the next page.  

Comments (2)

Splash Screens: PayPal Promoting its Debit Card at Login

By Jim Bruene on October 10, 2007 2:17 PM | Comments

Logging in today at PayPal, I was greeted with a full-screen message promoting its debit card (see screenshot below). Note the prominence of the yellow Apply Now button compared to the Go to my account in the lower right. The company has offered a debit card option for more than five years and promotes it from time to time within its site.

Speaking of PayPal, the melodramatic headline on the front page of this month's Bank Technology News grabbed my attention (see upper-left corner of October issue here and inset):

Electronic Payments are a Knifefight.
PayPal's Bringing a Gun.

Evidently, there is at least one headline writer trying to make it logk like a major war is brewing between PayPal and the banking industry. Sure, they are a tough competitor, but they also facilitate a large number of profitable credit card transactions that directly benefit issuers. And I don't see how PayPal is any more of a threat now than they were last year, or the year before. 

PayPal is not going away anytime soon. Rather than worrying about the "gun" the company is wielding, banks should be looking for ways to leverage the PayPal payments platform. For example, recent Facebook apps such as Geezeo's iWant (coverage here) or ChipIn (coverage here).

Categories: Epayments, PayPal

PayPal Revives Domain for its Lab Site

By Jim Bruene on October 9, 2007 2:48 PM | Comments

Last century, serial entrepreneur Elon Musk launched what he expected to be a top-10 bank by now. And in true late-1990s dot-com fashion, it was simply called In retrospect, maybe not the best name for a bank, but it certainly was more memorable than First Security Bank of Whatever. The company soon merged with PayPal, dropped the single-letter name, and eventually took over the world of alt-bank payments.

For most of the past eight years, if you typed into your browser, you simply ended up on the PayPal homepage. But recently, PayPal has opened a new area under the URL called PayPal Labs. This is a place where competitors, developers, analysts, and anyone with too much time on their hands can see the latest new "beta" services under development at PayPal.

With just two services listed (see below), it's no Google Lab, but it shows that PayPal still has Silicon Valley DNA at its core, despite five years working within the shadow of the larger eBay brand.

My take: More financial institutions should open "lab sites" to demonstrate their commitment to innovation. The only one I remember was JPMorgan's LabMorgan, which was really was part VC, part incubator. But its URL only shows an error message these days, a shame. 

Update (10 Oct): A reader reminded me about Fidelity's lab site,

In the PayPal Lab

  1. PayPal Request Money for Facebook (see previous coverage here)
  2. MySpace Fundraising Badge



Geezeo iWants Facebook Users

By Jim Bruene on September 26, 2007 10:27 PM | Comments


I check Facebook about once or twice per week to see what new financial apps have been posted. So far the ones we've looked at include (see previous coverage here):

  • Lending Club's P2P marketplace
  • Prosper's Fantasy Banker
  • PayPal
  • Wesabe
  • Buxfer
  • TD Bank's Split It
  • Obopay's BillMonk

The latest entrant, iWant from online personal finance specialist Geezeo (see screenshot below). iWant is an application that allows Facebook users to share with friends their wants and needs, such as "buy an iPhone" or post more goal-oriented items such as, "pay off my student loans" or "throw a graduation party." And Geezeo ties it up nicely by tapping PayPal's API to facilitate "contributions" to the financial goals. It's also integrated into Geezeo's online personal finance application so users can track their goal progress in real time. ChipIn offers similar payment functionality in its Facebook app (previous coverage here).

I wonder if Geezeo will make a P2P lending play here? If Geezeo's software included a repayment option, the iWant "donors" could easily become iWant "lenders" and a whole new market might open up. 

If you are attending our upcoming FINOVATE conference next week in New York, you'll be able to ask co-founders Peter Glyman and Shawn Ward yourself. We are fortunate to have not only Geezeo, but two other early Facebook innovators, Prosper and Lending Club on the DEMO stage. If you can't make the event, check our website in two weeks for full length videos of each DEMO.


Finally, a Major U.S. Financial Services Company Not Named Wells Fargo is Blogging (PayPal)

By Jim Bruene on September 4, 2007 1:14 PM | Comments (2)

Update: Quicken Loans has also published a recruiting blog for the past year (thanks Ann-Marie, see comments below and NetBanker post here).

I've been a big proponent of blogging. In my Online Banking Report on the subject published last fall (here), I predicted there would be 300 financial institution blogs by the end of this year. While there is no definitive listing, OpenSource CU's blogroll lists just 15 CU company blogs. Even if you add the CU employee blogs, MySpace pages, and four blogs from Wells Fargo, the grand total is less than 100 today, and unlikely to get much higher than that by year-end.

Why the slow start? Having worked inside several banks, I do not underestimate the difficulty in creating a new communication channel. And from what I've heard, many banks and credit unions just don't believe the benefits, which are largely intangible, will outweigh the costs. And with so few banks blogging, Wells Fargo being the only major in the U.S., it's hard to show examples to demonstrate the power of the blog.

That's why we were happy to see one of our favorite companies, eBay's PayPal unit, launch a blog a few weeks ago (here). As you can see it's not too fancy, and they post to it only a few times each week. But it really hits the mark, in my opinion.

Here's why:

1. Humanizes the organization: The initial posts are by various department heads or senior staff and discuss briefly what they do and a major initiative each is involved in. Each post has a small head shot in the upper left that increases the credibility of the posting (see screenshot below).

2. Educates in a more interesting way: PayPal managers are obviously excited about their projects as their enthusiasm comes across in the writing and makes the reader interested in the subject. For instance, last week CIO Michael Barrett posted seven paragraphs (here) on improving the safety of your online computing experience. It's a good way to get a simple message across, that users should use up-to-date operating systems and browsers. Usually, that advise is buried  five layers deep in a security FAQ.

3. Sells with a more "consultative" approach: Several of the blog entries are designed to "sell" but again, when the head of consumer marketing blogs about the latest program, as Hillary Mickell did about PayPal's back-to-school shopping portal (here), it's much more believable than a banner ad slapped onto the homepage (see screenshot below).

4. Communicate during an outage or severe service problem: The most recent entries (here and here), both posted on the Sept. 2 holiday, informed and reassured customers about the problems with subscription services.

The challenge is generating readership. Would I subscribe to the blog if I was a consumer making an occasional PayPal purchase? Unlikely. But if I'm a merchant, and the PayPal system is an integral part of my livelihood, you can bet I'll pore over every word (note 1).

So, financial institutions, if you want to get into blogging, find the communities where you really make a difference and start speaking to them (see note 2).


1. The press and analysts will subscribe, spurring articles on your company such as this one.

2. Although perhaps just a shade too critical of the industry for my tastes (see the first comment for some balance), Verity Credit Union's latest post (here) speaks from the heart about the sub-prime lending fiasco and the CU's "Keep the Dream" fund to help at-risk borrowers keep their homes. Great post. Great program. Unfortunately, I couldn't find anything on the website about it.

Comments (2)
Categories: Bank 2.0, Blogs, PayPal

PayPal Unveils New Homepage (beta)

By Jim Bruene on August 9, 2007 4:43 PM | Comments

link to paypal PayPal is offering visitors the option of using a newly designed homepage, calling it a beta version. A small link notched into the top of the screen handily allows users to switch back to the original look.

The design change was needed. PayPal's homepage, which had been so good I often used it as an example of how to focus on user needs, became cluttered over the years. The company now uses "personal" and "business" tabs, a common banking convention that allows the very different constituencies to more easily find what they need. 

The new homepage (below) is dominated by a safety theme, with a large blurred image of a credit card number meant to reinforce its point of being a "safer, easier way to pay without exposing your credit card number." It's a good idea, but the huge blurred image makes me feel like I'm having eye trouble. 

PayPal has also pulled the credit card logos out of the main graphic and put them on their own line. They are easier to see now and will help new users understand they can use PayPal with their existing payment cards.

They also made two subtle changes in the login area:

  • Changed the wording from "member login" to "account login," a more accepted phrase. Most people don't really feel a membership bond from their payment device, and it probably confused a few infrequent users.
  • Added "PayPal" in front of "password," again to make it more obvious to novice users as to what to enter here.

Finally, PayPal finally added a search box (top right), ending its reign as one of the last major holdouts for this common website utility.

Overall, it's a great improvement. And should help with navigation, sales, and support. Given its position as one of the busiest financial destinations on the Internet, we recommend taking a look and comparing it to your own website design. 

For more info on financial institution homepage design, see our Online Banking Report on the subject here.

New PayPal homepage (beta)

New Paypal homepage beta

Current PayPal homepage

Current Paypal homepage


PayPal Really Launches on Facebook

By Jim Bruene on July 9, 2007 10:25 AM | Comments

PayPal application shown within a Facebook profile Two weeks ago I heard from PayPal corp communications who felt that my "PayPal launches on Facebook" title was misleading. They had a point. As I explained in the post, the new Facebook app was PayPal-powered but developed by Australia's Yellow Media. The title could have been better.   

However, that's moot now since PayPal has now launched its own app on Facebook (here). It appears to have been posted on July 3 and has 218 users as of this morning. The application provides a simple interface to request and track money requests from Facebook friends (see inset above). Additional functionality is said to be on the way.

Categories: Epayments, Facebook, PayPal

ChipIn, Another PayPal-powered Application Launches on Facebook

By Jim Bruene on July 9, 2007 9:37 AM | Comments (1)

Link to company Watching the explosion of content, and users, at Facebook, may be the most interesting thing we've seen since the rise of the commercial Web in 1995/1996. Marc Andreessen, not know for hyperbole, had this to say in a lengthy blog posting (here) that should be required reading for all content providers, including banks and credit unions:

(Facebook Platform) is an amazing achievement -- one of the most significant milestones in the technology industry in this decade.

Every time we head over to the Facebook application directory, there's an interesting new financial app. Friday we found ChipIn, a nifty little widget that allows users to post a badge on their Facebook page or website that allows users to contribute money for a certain event or cause. It can be a charitable event such as Vancity's Bike Share program or a private event such as pooling funds for someone's birthday party. ChipIn is the second developer to launch on Facebook using PayPal's engine. The first was PayMe (see our coverage here).

ChipIn <> is a Honolulu-based firm formed in mid-2005 with seed funding from CommerceNet. The company emerged from stealth mode in Feb. 2006 and launched its service on the Web in November 2006. The Facebook app launched June 24 and has 415 downloads as of 9 AM this morning, impressive growth compared to the 134 it had on Friday.  

Initially, ChipIn was a full-service payments company, actually holding and managing the funds for users. However, after a few months of those headaches, it outsourced all payments-related functions to PayPal. Check out the Chipin blog for the full company history.

How it Works
Sample chipin badge ChipIn uses the PayPal engine to do the heavy lifting similar to PayMe that we wrote about two weeks ago (here) (see note 1). To create a ChipIn badge on Facebook, users select a Facebook event (created separately within the social network), set the fundraising goal, then customize the text and colors of the widget.

In our test, we created a ChipIn badge with the goal of raising $100 to donate to Vancity's Bike Share program (see screenshot #1 below). Although, we were able to successfully install the widget on our Netbanker Facebook page (see screenshot #3 below), we had trouble with the customization. Every time we moved from the customization step to installation, our changes were lost (note 2).

To use the widget, visitors click on the "chip in" button to launch a PayPal window. Users choose an amount to pay, then login to PayPal, to complete the transaction. A progress bar on the Chipin widget shows the progress towards the fundraising goal. 

With a single click the badge can be placed within an individual's Facebook page (see screenshot #2 below). ChipIn also provides cut-and-paste code to load the badge on any blog or website. ChipIn badges can also be built directly through its website without the need for a Facebook account.

Financial Institution Opportunities
PayMe and Chipin are cool little apps that can and should be sponsored by banks, credit unions, or card issuers. Although the PayPal brand name makes Chipin relatively trustworthy, a widely recognized financial brand would be even better. At this point, ChipIn is still a tiny, relatively unknown company. If I were at a major bank, I'd write them a $50,000 check and have them rename their Facebook app, "Chipin by YourBank," instantly becoming the first bank with an official Facebook app. The company will also build white label versions you could provide to customers for use outside Facebook.  

For more on how to use social networking in financial services, see our Online Banking Report on Social Personal Finance.


1. Simple ChipIn Widget Creation
Using an existing Facebook account and an existing Facebook event, in this case Vancity's Bike Share (thanks to William Azaroff), a new widget can be created and posted to your Facebook profile in about a minute.

2. Facebook Promotion
Once the badge has been created, the Facebook integration provides simple ways to promote the cause. You can invite up to 10 friends each day, post it on your Facebook profile, or cut and paste the code onto your own website or blog. But the key to viral growth is the Facebook mini-feed which automatically notifies all your friends about any Facebook activities, including the addition of the Chipin badge to your profile.

Posted on the NetBanker Facebook Page
Here's how the ChipIn badge looks on my Facebook profile page (here). Note, you'll need to be logged in to Facebook to view.


1. PayPal is not the developer of Chipin, nor do they have any financial interest in the company. Chipin is an independent developer using PayPal APIs.

2. Tests conducted on July 5 using Firefox 2.0.

Comments (1)
Categories: ChipIn, Facebook, PayPal

PayPal Launches on Facebook: Who Wants to be the First Bank?

By Jim Bruene on June 22, 2007 10:42 AM | Comments

The social networking phenomena has entered a new phase: eCommerce. It has always been a bit hard to visualize mainstream businesses, like banks, book sellers, or phone companies making a profit on MySpace. It's been a great place for musicians and online dating companies to grab market share, but a MySpace Checking Account didn't seem just around the corner (see MySpace coverage here).  

All that changed May 24, when Facebook opened its network to outside developers, making its service more like Windows than MySpace. Already the service has grown by 3 million users, more than 10%, in the past 4 week, to 27 million (see Facebook profile in today's Wall Street Journal).

More interesting are the 893 new services have opened their doors on the platform. The most popular, Top Friends by Slide, already has 6.4 million users. Yes, that is no typo, in one month a Facebook service grew to more than 6 million users. With traditional marketing, it would have cost a bank or card company as much as $1 billion to attract that many customers assuming acquisition costs of $100 to $150 per new account. 

And it's not just the one app. A new Seattle-based music preference service, iLike, has added 3.8 million. There's not a whole lot happening in commerce apps YET, the first financial company with a service offering, Lending Club (see previous coverage here), is the most popular business app, with just under 10,000 users. That's about what iLike attracts in a busy hour, but for a financial services company, and especially a startup, that's huge, a grand slam using tired baseball metaphors.

For many reasons, it takes longer for traditional companies to pounce on new opportunities. But over the summer we'll start seeing hundreds of businesses launch on Facebook. By next year at this time, the Facebook apps directory will probably look like the New York City Yellow Pages (or at least San Jose).  

Financial Institution Opportunities

Searching the site, we only see four financial services that have launched on Facebook:

  • Lending Club's person-to-person loan marketplace
  • Prosper's lending game
  • Wesabe's personal finance groups
  • Pay Me, a payment service developed by Australian Ad Agency, Yellow Media using the PayPal engine (screenshot below, we'll provide more details once we finish testing it)

But so far there is no:

  • Bank
  • Credit union
  • Credit card issuer
  • Mortgage lender
  • Brokerage (although there are several stock monitoring service including Forbes, Yahoo, and Social Picks)
  • Rates tracking service
  • Credit report monitoring service (though Identity Guard is advertising heavily today)
  • Identity theft protection service

Let the race begin. But you better move faster than you've ever moved before, if you want to get the huge first-mover advantage on the Facebook platform. Good luck.

For more information, see our latest Online Banking Report, Social Personal Finance.

Pay Me on Facebook using PayPal


PayPal Email: Simple Steps to Protect Against Fraud and ID Theft

By Jim Bruene on November 1, 2006 3:30 PM | Comments (1)

Despite calls for banks to stop marketing via email (see here) to help reduce fraud, PayPal, probably the most phished brand in the world, shows that the technique can still be effective. 

It requires a professional layout, good personalization, and behind-the-scenes fraud monitoring to nip phishing attempts in the bud.

Here's the latest from PayPal. Note the 30-second credit card button (bottom left) and personalized greeting at the top of the message.

PayPal email


Type: Marketing email with educational focus

Product: Payments with credit card cross-sell

Customer Type: Active customer

Personalization: Hello <yourname> at top of message


Date received: Wed 11/1/2006 9:38 AM
From: PayPal []
To: Jim Bruene
Subject: Simple Steps to Protect Against Fraud and ID Theft

Comments (1)

Webby Award Deadline Oct. 27

By Jim Bruene on September 19, 2006 2:46 PM | Comments

Webby_logoThe 11th annual website beauty contest, The Webby Awards, is accepting entries for the best websites and interactive advertising campaigns. Financial institutions may compete in any of the advertising categories, or one of the three website categories:

  • Best Banking/Bill Pay
  • Insurance
  • Financial services (everything other than banking or insurance)

Allstate_nowwhat_1Last year the winners were Bank of America in Banking/Bill Pay; PayPal in Financial Services; and Allstate's in the Insurance category (see inset).

Early entry deadline is Oct. 27. Fee is US$125.


PayPal's 30-Second Credit Card Application

By Jim Bruene on September 15, 2006 3:07 PM | Comments

Paypal_card_ad_1 PayPal is advertising its PayPal Plus card with this box located in the upper-right of the main account start-page within the secure area (click screenshot below for a closeup).

With the falloff in response to traditional direct mail raising acquisition costs to $200 or more, a pitch delivered within an online banking session can be far less expensive. And with online banking users typically wanting to get in and out quickly, the 30-second response shows that the company is sensitive to the time constraints of its customers (notice they did NOT say that it was a 30-second process).

Paypal_pluscardThe PayPal card is issued by GE Money Bank, the same company behind PayPal Buyers Credit used by sellers to offer longer-term financing of major eBay purchases. The Plus card includes a free rewards program offering 1 point per dollar purchased. The current rewards structure includes three levels:

  • 1,000 points – Free shipping up to $7 on a PayPal purchase
  • 2,500 points – $25 voucher (for merchandise at most PayPal merchants)
  • 9,500 points – $100 voucher (for merchandise at most PayPal merchants)

The card carries a variable rate from 14.24% to 24.24% and has no annual fee.

Here's the main account page displayed after login:


Here's the landing page displayed after clicking on the apply button:



PayPal Mobile Promotion in Print this Fall

By Jim Bruene on July 24, 2006 10:35 AM | Comments

Paypal_mobil_luckymagConde Nast's Lucky magazine will use PayPal Mobile technology to allow users to buy products from 18 advertisers in its September issue (see inset). Using PayPal's Text2Buy technology, readers will be able to purchase products from magazine advertisers by simply sending a text message to the number in the ad, then confirming the purchase when PayPal automatically calls back a few seconds later (see NB June 5 for more on how it works).

This is believed to be the first major offline promotion of PayPal's new service. According to The New York Times, the following advertisers have signed on: Avon, Bulova, Dooney & Bourke, Estee Lauder, Ford, Le Tigre, Liz Claiborne, L'Oréal, Perry Ellis, Sephora, Target, and Unilever.

Readers will also be able to order online via a special website <> that was not operational at press time.

Banking applications
Paypal_mobile_texttobuy_unicefWhile spur-of-the-moment buying is not a major part of financial services, Text to Buy in financial advertising could be a simple way to order information, such as a loan application, mutual fund prospectus, or a new account kit. Advertisers would list a code in their print ad, billboard, or other offline promotional device (see UNICEF example in the inset; buyers simply text "water" to the 5-digit number to make a $10 donation). This would allow users to request info by simply entering 10 characters into their cellphones or mobile device. The information packet would ship to the "buyer's" PayPal address.

An even bigger application, especially around the holidays, would be ordering prepaid MasterCard/Visa/American Express gift cards. Different codes could be set up for different amounts. For example, text "card25" for a $25 gift card, "card50" for a $50 card and so on. A handling charge could cover the 3% processing fees due to PayPal.

Finally, financial institutions could use Text to Buy for non-financial items such as:

  • Donations to community causes
  • Entry fees for a community event such as 5k run
  • Signups for seminars
  • Schwag, e.g., t-shirts, hats and so on

More Free Credit Monitoring

By Jim Bruene on May 11, 2006 11:08 AM | Comments

Paypal_freeequifaxalerts_logo_2One day after SunTrust announced free credit monitoring for checking customers (see NetBanker May 8), PayPal launched a similar service for its 50+ million U.S. account holders (see landing page below for details). Both services use Equifax to power alerts based on credit bureau info. Paypal_freeequifaxalerts_landing

However, SunTrust includes one free look at the customer's credit report. PayPal users would have to pay for that, or sign up separately at <> to see their report free of charge.

While SunTrust bends over backwards trying to upsell users into a more comprehensive fee-based option, PayPal takes the high road, at least initially, simply redirecting users to an Equifax sign-up form devoid of sales pitches (click on screenshot below for closeup).

Paypal_freeequifaxalerts_signupHowever, we expect the upsell offers will be along shortly. We'll keep you posted. As a previous Equifax credit-monitoring customer, we've witnessed the company's aggressive email marketing schedule.



Financial Mashups like Billmonk

By Jim Bruene on April 30, 2006 5:06 PM | Comments

GreyalbumIn the musical world, a mashup combines music from one song with lyrics from another, often mixing two very different genres. One of the more famous examples is the Grey Album by DJ Danger Mouse that put words from Jay-Z's Black Album on top of chords from The Beatles White Album.

Programmers have their own definition: combining content seamlessly from two different sources. Kayak_mashupFor example, Kayak <> is a powerful travel site that pulls price quotes out of hundreds of websites and displays them in tabular format and locates them visually on a Google Map (click on the inset to see a Las Vegas hotel search). 

In online finance, we have seen mashups from Yodlee, uMonitor, and others that marry account information from a number of sources to create an aggregated view. But the most successful financial mashup yet is PayPal, which put an email/Web interface in front of two established electronic payment mechanisms, ACH and MasterCard/Visa.

Who will launch the next successful mashup? There is quite a bit of activity in the payments space, many trying to mimic PayPal's success using a cell phone interface. For example Obopay and TextPayMe (NetBanker, April 26), and BillMyCell from Black Lab Mobile <>.

Billmonk_logo_1Another company, BillMonk <> has created a Web-based system of sharing expenses designed for the work-hard, play-hard urban singles set. Users can send expenses to be shared to their account at BillMonk using text messages, and then log in later to finalize the payment split and let everyone know who owes what (see example right). The company doesn't yet facilitate the actual payment, but they are looking for a partner to power the financial transactions.

Billmonk_sharedbillWe're still not convinced the market for "splitting expenses among friends" is big enough to sustain one, let alone four service providers (see NetBanker, April 26). But we ARE sure the enterprising founders of BillMonk will find a niche somewhere in the payments space.

BillMonk has added more new features to its bill-sharing platform in the past four months than most companies implement in four years. It reminds us of the pace at another small payments company that we were watching closely six years ago as they morphed from a closed PDA-to-PDA payment system to the primary platform for eBay buyers (see Online Banking Report #54 for a view of PayPal in the early days).

To get an idea of the pace at BillMonk, read a few entries from their blog <>. Then realize that this is not the work of a vast team of programmers, PR agents, and marketers. It's just two guys in a Seattle apartment who are also answering customer queries, paying the bills, building the website, taking out the trash, and talking to reporters (see the profile in the Seattle Times, April 24).

Action Items
My advice for financial institutions:

  1. Hire these guys
  2. If that's not practical, then behave like them; constantly improving your website and to the extent you control it, your online banking and bill pay system

I will bring you an update on the company as soon as I can corner one or both of the founders in a coffee shop.



Take a Deep Breath About PayPal and Wal-Mart Banks

By Jim Bruene on January 25, 2006 11:54 AM | Comments

This week eBay reported that PayPal’s volumes were above $8 billion for the first time, and the Federal Deposit Insurance Corp. (FDIC) agreed to hold hearings this spring on whether to issue FDIC insurance to Wal-Mart Stores Inc. as part of the retail giant’s application to get a Utah industrial loan corporation.

Both companies are being watched almost microscopically by banks and other payment providers who are afraid that these companies are going to somehow walk away with their payments franchise. Our advice: Relax.

Sure, PayPal is doing well: Net revenues this past quarter grew 48 percent over the same period last year—they were $298 million—and gross volume was up 45 percent by the same measurements. But unnoticed amongst all the heavy breathing was that PayPal user accounts grew 51 percent in the same period. In other words, the growth in volumes and revenues was proportional to the growth of eBay’s core business, not some indication of a sinister plot for world domination.

The hysteria surrounding Wal-Mart’s moves is even worse. The suspicion in the payments industry, of course, is that once Wal-Mart has the license and the insurance, it’ll begin pushing into community banking, driving all those small institutions into the famous Wal-Mart meat grinder and emerging a coast-to-coast financial services colossus. And considering Wal-Mart’s history, it’s easy to succumb to those anxieties.

But we believe Wal-Mart when it says it only wants the license so it can be its own payment card acquirer. For one thing, the move makes sense for it: According to our calculations, it’ll save Wal-Mart at least $650 million a year, based on its 2004 revenues of $172 billion (see Electronic Payments Week, July 26, 2005). And for another, Wal-Mart’s application to the FDIC says on page one that this is their reason for wanting the bank, and we are skeptical that Wal-Mart executives would willingly commit perjury in such a closely-watched event; there’s absolutely no evidence that these guys are stupid.

There may be some logic to our view, but our belief, touching though it may be, hasn’t prevented over 1,500 comment letters to have been sent to the FDIC on the matter, nor has it discouraged the House Committee on Financial Services from scheduling hearings about Wal-Mart’s plans. And the FDIC has already agreed to delay any decision on the insurance application until the issue has been fully aired.

Those hearings will make interesting viewing on C-SPAN, but in our view, banks and payments processors would be better served in the case of both companies by studying what they’re doing, and drawing useful lessons from them. We can understand why the success of PayPal, and the motions of Wal-Mart, would arouse anxieties within the industry: It’s being swept by transformative change, and both companies represent what Harvard professor Clay Christensen calls disruptive technologies.

But aside from finding any irony in the spectacle of capitalists trying to stifle competition, there’s the deeper concern that the industry may be losing faith in itself. Banks began as counting houses, and unless they do something unreasonably boneheaded, they are unlikely to be driven out of their inner redoubt as long as they meet that competition head on.

Our recommendation: Remember what U.S. Grant said at the Battle of the Wilderness. Robert E. Lee had whipped the Union twice before on the same ground, and Grant’s staff was beside itself wondering how Lee would whip them again. “Stop worrying about what he’s going to do to you, and start thinking about what you’re going to do to him,” said Grant. That campaign ended with Lee's surrender at Appomattox.


Categories: PayPal, Wal-Mart

PayPal Launches Micropayment Pricing

By Jim Bruene on August 31, 2005 3:25 PM | Comments

Paypal_logoThe so-called micropayments market has been one of the most hyped non-issues of the Internet era. First, it's not a monumental problem; there are many workarounds available, such as ACH processing, monthly billing, and so on. Second, the market, by definition, is not huge. Even a billion 99-cent downloads generates just $100 million in interchange revenue at PayPal's new prices (see below).

Nevertheless, it's good to see solutions evolve. Today's PayPal announcement should help continue that natural progression. Ebay's online payment arm announced that it wil provide a micropayment option priced at 5 cents per transaction plus 5% of the transaction amount. That means a dime in interchage for a 99-cent song compared to closer to $0.25 to $0.30 under industry standard pricing today.

It won't change the world, but as they say, every penny counts.


Categories: Epayments, PayPal

PayPal offers "eCommerce Safety Guide"

By Jim Bruene on January 25, 2005 4:34 PM | Comments

Paypal_ecommerce_guide_click_to_enlarge_1 PayPal's state-of-the-art Security Center has a new educational piece, the 20-page eCommerce Safety Guide (download 1MB file).

The handbook covers three areas:
- safe online shopping
- preventing identity theft
- phishing and spoofing

Naturally, it concludes with a section promoting PayPal and eBay as safe methods of buying online.

The booklet, authored by Robert Chesnut, eBay VP of Trust and Safety, uses Gartner and Javelin Strategy for its identity theft data.

Financial institutions looking to increase their educational efforts should consider posting a similar booklet, explaining the protection afforded by bank products. Total readership may not be high, but it demonstrates a commitment to the customer in an area of high anxiety these days. It would be an excellent summer intern project.

To learn more about how to promote online security and peace of mind to your customers, check out Marketing Security: The sensitive issue of publicizing security and authorization enhancements from our sister publication, the Online Banking Report.

Categories: PayPal, Security & Privacy

PayPal Offers Preapproved Credit Line to Members

By Jim Bruene on December 6, 2004 4:15 PM | Comments

PayPal now marketing Buyer Credit directly to buyers


Ebay’s PayPal unit already offers transaction accounts, interest and non-interest bearing, debit cards, credit cards (through First USA), online bill payment, person-to-person payments, interbank transfers, merchant transaction processing, investment accounts, insurance, and indirect lending. About the only thing missing from their line-up, revolving credit and mortgage lending (see Timeline, Table 4, opposite). Correction, make that just mortgage lending.  This summer the auction payments giant added a revolving credit option called PayPal Buyer Credit (see screenshot below). Until recently, it’s been mostly targeted to sellers who are encouraged to offer it as a financing alternative on their auction listings. Depending on the program sellers pay 0.50% to 3.75% of the selling price to fund the financing. The most common offer on eBay during the pre-holiday rush is no payments/no interest until April 2005 (see screenshot opposite). If the buyer takes advantage of the offer, it will cost the seller 0.50% of the purchase price, and the seller will receive the entire purchase price, less PayPal fees, immediately (see Table 5, for more seller costs).

Users are encouraged to apply for Buyer Credit in advance. Assuming they are approved PayPal users can select Buyers Credit as their funding source when checking out or sending money from PayPal. Buyer Credit can be used to pay anywhere that accepts PayPal, it could even be used to send money to an individual, but they must be a Premier or Business member. Buyer Credit is provided by GE Capital Consumer Card Co. at an annual percentage rate of 20.8%, which increases to 24.75% if the user becomes delinquent (late twice during a six-month period). The rate is variable at prime plus 15.5%, with a 20.8% minimum. Late fees vary from $15 to $35 depending on outstanding balance.


Table 4

Product Timeline

PayPal’s moves into banking


Table 5

Seller’s Cost to Offer Special Financing

Cost*     Purchase              Offer

0.50%      $199                     No payments for 3 months and no interest if paid in 3 months

1.75%      $199                     No interest if paid in 6 months

3.75%      $199                     No interest if paid in 12 months

0.60%      $999                     12 fixed monthly payments at 12.9% APR

1.50%      $1999                  24 fixed monthly payments at 12.9% APR

Source: PayPal, 12/13/04             *Percent of purchase price




For more information


Table 6

Recent PayPal Stats

million unless otherwise stated


Source: Ebay financial statements, Online Banking Report, 11/04

Categories: Credit/Debit Cards, PayPal

PayPal Users Scammed Again

By Jim Bruene on April 11, 2003 8:10 PM | Comments

If you bothered to peruse your spam folder a couple weeks ago you probably received this fraudulent email on March 6, 2003. The email, sent under the name, was relatively well written would easily fool the average customer.

After the seemingly polite thief “apologized” for the inconvenience, the message directed recipients to login to their account to confirm their email address. A login screen was conveniently provided in the HTML message along with space for bank and credit card account numbers

After entering their username, password, and bank account info, users were redirected to the User Agreement at the real PayPal site (screenshot right), so there was no immediate realization you had just given up the keys to your account to some joker in Fresno or Timbuktu. Luckily PayPal confirms all transactions and profile changes with email messages, so those watching their email accounts would have seen unauthorized activity in time to notify PayPal before much damage occurred.

A bigger concern would be the bank account and/or credit card numbers provided in the lower half of the fake HTML email (see below). Hopefully, users naive enough to give those up contacted their financial institutions to close the effected accounts.

Full text of fraudulent email dated March 6, 2003.

After “logging in” via the fake email, the user was redirected to a legitimate PayPal page, though not the screen you would see if you had actually logged in. The scam artists could have written a script that would have actually logged users in to their own account, so there would be no suspicion

Categories: PayPal, Security & Privacy

Password Procedures at 15 Financial Institutions

By Jim Bruene on April 8, 2003 7:23 PM | Comments

Using our live test accounts, we changed passwords then subsequently “forgot” the new one to test how major financial institutions handle the situation. Overall, most received good marks, although everyone has room for improvement.  



Table 1

Password Scorecard

Safe Practices




Use a third password or challenge question




Disable Internet Explorer AutoComplete




Require 4 or more characters in passwords




Bank determines username




Require more than account number and social security number for online password reset




Send confirmation of password change to email address




Send confirmation of online password reset to email address




Send confirmation of password reset to mail address




Allow more than 3, but less than 11 unsuccessful password attempts*




Warn users in advance of account lockup




Source: Online Banking Report, 4/03
*We believe users should have at least 5 login attempts, with clear instructions before and after lockout


Testing process

1. Login with existing username and password

2. Change password or username

3. Logout

4. Use online password reset if available

5. Attempt to log back in 10 times with an incorrect password



American Express


Password Scorecard

Grade: Needs improvement

(1) Browser AutoComplete function not disabled
(2) No email confirmation of password change
(3) Account lockout too quickly, after third login try

Password structure: User defined, 6 to 8 characters with at least 1 letter and 1 number

Username structure: 5 to 20 characters with
at least 1 letter

Second password/challenge: No

IE 6 AutoComplete disabled: No

Online password change: Yes, with old password

Email confirmation of password change/reset: No

Online password reset: Yes, with card number, 4-digit card ID (on face of card), work phone number, last 4 digits of soc, and 5-digit zip code

Account lockout with excessive login attempts: Yes, after third attempt; red warning issued after attempt two

Online username retrieval: Depends, certain accounts can retrieve their username online, others must call; we were in the latter group so could not test this feature

AutoComplete is not disabled on the login screen.

User friendly: American Express warns users after their second unsuccessful login that they will be locked out after one more attempt.

Password reset, step 1: Enter userid, card number, and 4-digit code from back.

Password reset, step 2:
Enter personal info for authentication.


Bank of America Credit Card


Password Scorecard

Grade: Good

Weakness: No email confirmation of password change

Username structure: User defined, 9 to 20 numbers

Password structure: 4 to 7 characters; cannot repeat 4 or more in same sequence as username; cannot be same character repeated

Second password/challenge: No

IE 6 AutoComplete disabled: Yes

Online password change: Yes, with old password

Online password reset: No, must call

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, after 4 attempts; help section carries clear warning

Online username retrieval: No

BofA provides a helpful popup screen with each unsuccessful password attempt.






Centura Bank


Password Scorecard

Grade: Fair

(1) No email confirmation of password change
(2) No warning of account lockout
(3) No customer service link or HELP available from login screen

Username structure: Social security number (with dashes)

Password structure: 6 to 15 characters

Second password/challenge: No

IE 6 AutoComplete disabled: Yes

Password change: Online with old password; but neglected to provide an on-screen confirmation that the change occurred, an annoying usability flaw

Online password reset: No, must call; password sent via postal mail

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, after sixth unsuccessful attempt; no prior warning

Online username retrieval: Unnecessary (SSN)

Centura had the best login screen “security look and feel.” It also provides a link to disclosures, but not a single mention of customer service or online help, even after making an unsuccessful login attempt. Evidently the bank’s lawyers have been through the site, but where’s customer service?


Charter One Bank


Password Scorecard

Grade: Needs improvement


(1) Browser AutoComplete not disabled

(2) No email confirmation of password change
(3) No warning prior to account lockout
(4) No message after account lockout

(5) A bit too easy to gain read-only account access for new users; requires account number and social security number. However there is a crucial safeguard for bill payment which requires mother’s maiden name, date of birth, home phone number, and a 2-day waiting period.

Username structure: Social security number

Password structure: Must be at least 6 characters

Second password/challenge: No

IE 6 AutoComplete disabled: No

Online password change: Yes, with old password

Online password reset: No, must call

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, not sure when it happens, sometime before the tenth attempt; the bank does not provide a warning of impending lockout, nor does it let you know after you’ve been locked out, you only receive a cryptic
error message.

Online username retrieval: Unnecessary (SSN)


AutoComplete has not been disabled
at account login.


New users enroll with social security number and account number. Note the excellent use of security graphics during enrollment.


Chase Bank


Password Scorecard

Grade: Good

(1) No email confirmation of password change
(2) No warning of upcoming account lockout
(3) No message after account lockout

Username structure: User defined, must include one number

Password structure: 6 to 10 characters, 1 of which must be a number

Second password/challenge: No

IE 6 AutoComplete disabled: Yes

Online password change: Yes, with old password

Online password reset: Yes, with name, account type, account number, social security number, and two user selected challenge questions

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, sometime during the first 10 attempts; no warning message and no indication when account is lockout out, a “try again” message just keeps repeating

Online username retrieval: Yes, displayed online after entering name, account type, account number, social security number

Chase is one of the few banks offering online retrieval of forgotten usernames. After correctly entering name, account number, and social security number, the username is displayed. At that point you can login if you know your password. If not, you can retrieve your password online by answering two previously selected challenge questions. This is great from a usability standpoint, but the bank should send a confirmation via email and/or snail mail.

To reset the password, users answer two
previously established challenge questions. 



DeepGreen Bank


Password Scorecard

Grade: Needs improvement


(1) Browser AutoComplete not disabled

(2) No email confirmation of password change

(3) No minimum password length, can be a single letter or the same as the username
(4) No warning before account lockout
(5) No message after account locked out

Username structure: User defined, can be all alpha

Password structure: 1 to 14 characters, can be the same as the username or a single character

Second password/challenge: No

IE 6 AutoComplete disabled: No

Online password change: Yes, with old password and mother’s maiden name

Online password reset: Yes, with social security number and mother’s maiden name

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, but not sure when because the lockout is not disclosed until the user attempts to login with correct username/password.

Online username retrieval: No, must call, then wait
7 to 10 days to receive in the mail

A common security vulnerability: Failure to disable IE 6’s AutoComplete function.






Password Scorecard

Grade: Needs improvement

(1) AutoComplete not disabled
(2) No email confirmation of password reset, even though it can be reset with info available to an identity thief, SSN and mother’s maiden name
(3) No email or on-screen confirmation of p/w change
(4) No warning before account lockout
(5) No help on login screen for the memory challenged

Username structure: Initially set as social security # (with dashes); can be changed online one time; 8 to 24 characters, not similar to current username, not same as password, not offensive, at least 2 numbers and 2 alphas

Password structure: 8 to 16 characters with at least one number and one letter, not similar to username, not similar to prior password, not the same reading backward and forward

Second password/challenge: No

IE 6 AutoComplete disabled: No

Password change: Online with old password; no confirmation of the change provided on-screen

Email confirmation of password change/reset: No

Online password reset: No, must call; new temp password given over the phone after providing SSN, name, address, date of birth, and mother’s maiden name

Account lockout with excessive login attempts:
Yes, after fifth attempt, must call to reactivate; no warning prior to lockout

Online username retrieval: No, must call

Everbank provides no help at login for users that forget username or password, just a lengthy warning written by the lawyers.


First USA Credit Card (Bank One)


Password Scorecard

Grade: Fair

(1) No email confirmation of password/username change or reset; especially important given relative ease of resetting username/password
(2) No warning before account lockout

Username structure: User defined, 7 to 16 characters, case sensitive

Password structure: 7 to 32 characters, case sensitive,  must have at least 1 number, may not use the same letters consecutively, cannot match username or social security number.

Second password/challenge: No

IE 6 AutoComplete disabled: Yes

Online password change: Yes, with old password

Online username change: Yes, with old password

Online password reset: Yes, with credit card #, social security #, signature panel code, and expiration date

Online username reset: Yes, with credit card number, social security number, signature panel code, and expiration date

Email confirmation of password or username change/reset: No

Account lockout with excessive login attempts: Yes, locked out after four attempts, no warning given

First USA is the only financial institution tested which allowed usernames to be reset online; nice for usability but a confirmation of the reset should be emailed and/or mailed to the cardholder.


Harris Direct (brokerage)


Password Scorecard

Grade: Good

(1) No email confirmation of password change (thought there is for password reset)
(2) Only 3 login attempts allowed before lockout (but can reset online relatively painlessly)

Username structure: User defined, 6 to 15 characters

Password structure: 6 to 8 characters

Second password/challenge: No

IE 6 AutoComplete disabled: Yes

Online password change: Yes, with old password

Online password reset: Yes, a new disguised password is emailed after entering username and birth date; the new password is a created from the account holder’s mother maiden name and social security number but is not disclosed in the email, e.g. the first 2 letter of mother’s maiden name plus last 4 digits of social security number.

Email confirmation of password change: No

Email confirmation of password reset: Yes, confirmation also sent via snail mail

Account lockout with excessive login attempts:
Yes, after third attempt, but can be reset online; no warning before lockout

Online username retrieval: No, must call

HarrisDirect allows online reset after your account has been locked out for excessive login attempts. It was the only company which emails a disguised new password when resetting. For good measure, they also mail an identical confirmation.                    




ING Direct


Password Scorecard

Grade: Excellent

Username structure: Account number

Password structure: 4-digit number (called PIN)

Second password/challenge: Yes, one of 5 user-specified questions asked at login (see below)

IE 6 password remember disabled: Yes

Online password change: Yes, with old password

Email confirmation of password change: Yes; confirmation also sent via postal mail

Online password reset: No, must call

Account lockout with excessive login attempts:
No (not in the first 10 attempts)

Online username retrieval: Unnecessary (acct #)

ING Direct is the only bank we know of using a challenge question at login. In addition to account number and password, one of these five rotating questions must be answered correctly:

  •  first 4 digits of social security number

  •  zip code of mailing address (first 5 digits)

  •  birth year (4 digit)

  •  last 3 digits of social security number

  •  last 4 digits of social security number

We like the concept, but the implementation is weak. By simply refreshing the browser screen, the would-be thief can select which question to answer, one of which is zip code, which is trivial to ascertain. 




Password Scorecard

Grade: Fair

(1) AutoComplete not disabled on the password reset screen (it is disabled on login page)
(2) Username (email address) known to others

Username structure: Email address

Password structure: 8 to 24 characters case sensitive; recommended, but not required that it include upper and lowercase and at least one number or special character

Second password/challenge: No

IE 6 AutoComplete disabled: Varies; yes, on main login screen, no on password reset screen

Online password change: Yes, with old password

Online password reset: Yes, via email; must answer secret question via email link; if unable to access original email account the new password is sent via snail mail

Email confirmation of password change/reset: Yes

Account lockout with excessive login attempts:
Yes, after 10 unsuccessful attempts; a lockout warning appears after the seventh attempt

Online username retrieval: Not necessary since username is equal to email address


PayPal is one of the few financial companies using cookies to automatically insert usernames at login. The company has used this approach since inception, so they must feel that the improved usability more than compensates for the decrease in security.



PayPal’s online password reset process requires the user to have access to the email account registered with the service. If not, users answer one of four authentication questions (top screen) and the password is mailed to a one of the previously confirmed snail mail address (bottom screen).

PayPal explains after the seventh incorrect password attempt that you have 3 more tries before lockout. This is a far more reasonable approach than many banks’ three-strikes-and-you-are-out policy.




Password Scorecard

Grade: Fair

(1) No email confirmation of password change
(2) Account lockout too quickly, after 3 login attempts, but can be reset relatively easily online

Username structure: Account number or social security number

Password structure: 6 to 8 characters including at least one number BETWEEN the first and last characters; cannot match or be a subset of username

Second password/challenge: No

IE 6 AutoComplete disabled: Yes

Online password change: Yes, with old password

Online password reset: Yes, in one of two ways;
(a) If logging in with account number, you must provide social security number, date of birth, home phone number, and correctly pick a security in your account from a list of 10 choices including “none of the above”
(b) If logging in with a social security number, you must only provide the answer to the secret question.

Can also reset via automated phone system.

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, after 3 attempts; no warning prior to lockout

Online username retrieval: Not necessary (acct. # or soc. #)

Schwab’s unique password reset process requires the usual social security #, birth date, and telephone, plus users must correctly choose one of ten securities in the portfolio (including “none of the above”).          



US Bank


Password Scorecard

Grade: Good

Weakness: No email confirmation of password change

Username structure: User defined, 8 to 24 characters

Password structure: 8 to 24 characters

Second password/challenge: No

IE AutoComplete disabled: Yes

Online password change: Yes, with old password

Online password reset: Yes, with ATM card number and ATM PIN; new password displayed online

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, after 6 attempts; can reset online or wait 24 hours; no prior warning

Online username retrieval: No, must call

Password change screen. Note the prominent placement of what happens next.


Forgotten password can be reset online with
ATM card number and PIN.


Wells Fargo


Password Scorecard

Grade: Good

(1) No email confirmation of password change
(2) Account lockout too soon, after 3rd login try

Username structure: Social security number

Password structure: 5 to 8 characters

Second password/challenge: No

IE 6 AutoComplete disabled: Yes

Online password change: Yes, with old password

Online password reset: Yes, with statement account number and ATM PIN; those without an ATM PIN are directed to call customer service.

Email confirmation of password change/reset: No

Account lockout with excessive login attempts:
Yes, after 3 attempts; user redirected to online password reset page; no prior warning

Online username retrieval: Unnecessary (SSN)

Wells offers six options for where to go
immediately after login.

After three unsuccessful login attempts users are directed to reset their password, which can be done online with account number and PIN.    


Using a “Splash Screen” to Promote Major New Features

By Jim Bruene on February 8, 2002 8:33 AM | Comments

The page is interactive with a button for those who want to check it out immediately

PayPal uses an effective technique to ensure that all users are aware of major product upgrades. The company inserts a one-time “splash screen” immediately after login. Users see the screen only once, subsequent logins go directly to the regular main page.

In this example, PayPal emphasizes the launch of all-electronic bill-payment through MasterCard RPPS. The splash screen began appearing in early March.

Categories: PayPal

PayPal Screen Scrapes Ebay to Present User Bills and Traditional Payments

By Jim Bruene on January 4, 2002 7:04 PM | Comments

PayPal knows how to make payments easier for its key market segment, eBay users. After winning an auction, users can call up the winning lot number in their browser and click on the yellow-and-red “Pay Now! with PayPal” button at the bottom of the auction listing.

Clicking on the button causes a PayPal window to open containing a “bill” created on the fly on behalf of the seller. Users merely supply their PayPal password, add shipping to the total if the seller had not provided a fixed amount, and press enter. 

Amazingly, this is done through clever programming without the cooperation of eBay, which would prefer everyone use its in-house system, BillPoint.


PayPal’s “Smart Logo” changes from a referral button (left) to a payment button (right) immediately after the auction closes. Sellers have the option of letting PayPal automatically add the buttons to all the seller’s auctions.

(Palo Alto, CA) continues to innovate at an unprecedented pace, at least for the payments business. Its venture-funded Silicon Valley roots help; so does it lack of regulatory oversight, so far.

The two latest developments are the launch of a limited-merchant “pay anyone” bill payment service and Auction FastPay, a new feature that allows users to automatically pay for eBay purchases from a single PayPal screen.1 The Best of the Web award is for the screen-scraping process used to present “bills” using Auction FastPay or Smart Logo (see Table 21).

1Auction FastPay was pulled off the site after a few days. Due to the quiet period surrounding the company’s impending IPO, it’s difficult to get an official response, but the Biz Dev analyst that answered my email said the new feature was “temporarily” offline.


Table 1
PayPal Screen-Scraping Billing & Payment Tools1


(1) Tools are optional for buyers and sellers

(2) Temporarily unavailable as of Feb. 14, 2002 (see footnote 1 at left)


Auction FastPay

PayPal has been using screen-scraping techniques for more than a year, primarily with tools aiding the seller. The Smart Logo works much like the ill-fated wallet schemes promoted by a number of companies during the past few years. Users clicking on the Pay Now! button launch a script that screen scrapes the eBay auction grabbing the relevant information and presenting it in a “bill” for the user to pay with a single click (login required). The drawback to this system is that it requires users to visit each winning lot on eBay to find the PayPal button.


Auction FastPay eliminates this problem by automating the process even further. Under the new system, after a one-time registration of their eBay username and password, eBay buyers simply log in to PayPal and select Auction FastPay.

PayPal then logs into eBay on behalf of the user, scrapes information on recent winning bids, matches them with seller information, and presents a bill for each item. The user need only confirm the information, choose a funding source (if different than their default), and press enter to pay their eBay obligations in a matter of seconds.

Email confirmations keep buyers and sellers apprised of the transaction. Someday, all bills will be this easy to pay.


PayPal provides a full-range of funding sources including all major U.S. credit cards, ACH (electronic) transfers from any deposit account, or from a prepaid PayPal balance.


Bill Payment

PayPal also added free bill payment to its program on Feb. 1. It becomes one of the few major companies to buck the industry trend of offering “pay anyone” bill payment. PayPal opted for a much simpler closed-merchant system offering payment to 1,000 fully electronic payees that are paid through MasterCard’s RPPS. Bill Pay payments must be funded with a PayPal balance or ACH from a bank account; credit card funds cannot be used.

Billers not on the RPPS list can still be paid through the normal PayPal system (e.g., email payment). The downside to this option is the cost, nearly 3% of the transaction charged to the recipient of the payment.

Because PayPal’s BillPay uses only preset merchants, adding new ones is a breeze. Users simply search the biller database, select a new biller, and add their account number. (see “biller add” screen below).




Gallery of Financial Institution Emails

By Jim Bruene on December 7, 2001 11:34 AM | Comments

Following are some of the better emails we’ve seen from financial providers in recent months. Because we only see those from financial institutions where we have established relationships, we would appreciate seeing others you’ve received. Send them to: .


Wells Fargo/ShareBuilder


This is our favorite holiday email. It was marketing NetStock’s ShareBuilder on behalf of co-branding partner Wells Fargo. It was sent the week after Thanksgiving (Nov. 28) and featured a engaging graphic of a young child and just 32 words of text (not including the mousetype fine print).

The pitch was for starting ShareBuilder accounts for children, with a $25 bonus for accounts opened prior to Dec. 31. A unique, if somewhat complicated, holiday gift idea for parents and grandparents.


First USA


This is a good example of a simple old-fashioned holiday greeting. FirstUSA punched it out on Christmas Eve and included a well-crafted P.S., “Maximize your holiday time by managing your accounts online at:





PayPal sent several emails during the holiday period promoting a usage sweepstakes that rewarded users for shopping with PayPal. Taking a page from Visa’s annual holiday promotion , winners received their PayPal purchase free of charge. This message kicked off the program on Nov. 30.

PayPal also provided shopping ideas and a link to a directory of PayPal shops (right-hand side of the screen). The look of the emails was crisp and clean like the company’s Web site, but we would have preferred a bit more holiday cheer in the graphics.



DeepGreen Bank


DeepGreen Bank sent this message on Dec. 10 promoting holiday usage of its Home Equity Line of Credit. The message was pretty straightforward and was signed by DeepGreen CEO Jerome Selitto.

It’s a good email overall, but it’s a bit boring. The usual, great rates, great convenience, yada, yada, yada. To increase readership, it would be better to put some of the info into eye-catching graphics.

The company made a serious error by not putting DeepGreen in either the email subject or sender field. Unless you know the CEO, it looks a lot like a SPAM until you open it.




We received our first holiday email from Intuit on Nov. 15, with a message entitled, “Holiday Gift and Sending Guide.”  The message had the usual format of Intuit’s monthly Money Matters email letter, with no holiday graphics. Beside the spending and gift advice, it featured a fifth anniversary sweeps for NetBank.

Although much of the advice is boilerplate, we like how it positions as a provider of thorough and timely advice about all aspects of your financial situation.

Normally, we don’t like to see outside advertising, but the NetBank sweeps added interest to the message.




The December installment of NextCard’s monthly email newsletter was full of shopping discounts. The full newsletter was a bit cluttered taking up about four screens (at 800x600 on a 19-inch monitor).

The newsletter also promoted the Visa Magic Moments sweepstakes that awarded cardholders free purchases at a randomly selected second every day (box on the right).

To help differentiate its message from in-box SPAM, NextCard incorporates the cardholder’s first name in the email subject field.


Side Effects of Viral Marketing

By Jim Bruene on April 15, 2000 6:04 AM | Comments

Bagging thousands of new accounts via email word-of-mouth, or viral marketing as it is now known, has a number of benefits. It also has some downsides. One of which is the spam generated by “affiliates” and others looking to refer accounts to your Web site to claim referral fees. Over the past four months, we’ve received dozens of spams sending us to or PayPal to sign up for email payments (none were sanctioned by the companies involved).

Most were pretty straightforward, “click on this link to signup.” But the spam we received on Mar. 15, was unique because it combined the PayPal $5 referral fee, a solicitation to rent a spam list (the Yabadabbado Safelist), and a classic pyramid scheme which called for the recipient to send each of the five names on the list $5. And how was the $5 to be delivered? Via PayPal of course. If you use referral fees to boost viral marketing, make sure there is a no-spam condition (not that it will help that much).

Pyramid Scheme Using PayPal for the Payment Mechanism (and Additional Incentive)


Subject: Absolutely FREE way for you to make BIG CASH!!!

Date: Wed, 15 Mar 2000 16:22:10 -0500 (EST)




This new twist to an old internet idea is really amazing. It will take 5 minutes of your time and the amount of money you could make is huge. Best of all it will cost you nothing.

I know your time is valuable so let me quickly explain...

There's too much stress in the Internet rat race so why not have some FUN! And what's More Fun Than Making Money On The Internet?

This is a FUN and perfectly legal that you could make thousands of dollars this month and every month thereafter. Here's how it works.

1. Go to PayPal and join if you haven't yet at: PayPal is a great new online service that allows you to transfer and receive money quickly, safely and securely on the internet. As soon as you are a member of PayPal, PayPal will put $5 in your account as a bonus for signing up, then you can "beam" $5 to the e-mail address in the #1 position on the list below. The person you beam the $5 to will send you the secret subscriber e-mail that gets your name on the Yabadabbado Safelist. This will allow you to post to it as often as you like! This is the legal service that you are paying $5 for. Since you get a $5 bonus for signing up with Pay Pal participating in this program costs you nothing! You will also be able to use PayPal to accept credit card payments for all your other Internet businesses!! Even if you for some reason chose not to take part in this opportunity I still suggest you take a look at PayPal and the services they offer.

2. After you have done that, delete the e-mail address in the #1 position, move the other four e-mail addresses up and enter your e-mail address in the #5 position, then place your PayPal URL in the message, then copy the new list and message and mail it to other e-mail addresses, more you send to the larger your potential becomes (use the spamfree safelists!). In fact, mail to as many people as you can! You should keep mailing until PayPal notifies you that you have at least 100 people that have joined Paypal through your advertising! If you do this, PayPal will pay you $500 as they offer a $5 referral bonus for the first 100 people that you refer. If you achieve this you have the opportunity to make "BIG CASH" in the next few weeks and months ahead with the Yabadabbado Safelist!

3. When your name reaches the #1 position, you could easily have 10,000 people sending you $5 = $50,000, and you can join as often as you like!

This is perfectly moral and legal. You are selling information and a GREAT safelist service for $5!

Have a great time with this! It works, and it's fun! Remember you have nothing to lose. Do It Now!!

Here's the list:






Remember: You could also make $500 from PayPal referrals if you put your PayPal URL in this message! When you sign up Pay Pal will let you know what your referral URL is so just replace the 2 links to pay pal in this message with your URL.

Remember that cheating will never be blessed! You Get The Most MONEY when you enter in the #5 Spot. Just do the math, if you send to ten people and then they each do the same what will the 5th level will be. That would be the number of people sending you $5. Try the math at 5 people each, still not to bad right. Do the right thing, and wait for the beams of cash to come your way! Promote this program for fun among all your e-mail associates. It will not interfere with any other program you're in! And use some of the money for a good cause! Have a great time!


If you wish to receive no further e-mails from me please just reply with the word "Remove" in the SUBJECT LINE and you will not hear from me again. Thank You.


Categories: PayPal, Viral Marketing

Bank One Strikes Back with eMoneyMail

By Jim Bruene on April 9, 2000 5:43 AM | Comments

In October, David Sacks, VP at PayPal asked me how much of a lead I thought they had in the P2P payments market. Given that Checkfree was planning a Q2 2000 entry, I guessed PayPal had at least six months on the pack. I was wrong.

Since October, a half-dozen competitors have emerged: (merged with PayPal), from idealabs (purchased by, dotbank (purchased by Yahoo!), and the latest, eMoneyMail from Bank One. Also, eCash Technologies, which purchased DigiCash’s intellectual property, announced that it is positioning Digicash as a free money transfer product aimed squarely at Banks will be encouraged to “ecash enable” their checking accounts.

eMoneyMail is significant because it’s backed by the fourth largest U.S. bank, Bank One (Chicago, IL; $264 billion). The others are startups that must fight security and trust issues. PayPal/ has moved beyond that problem, the others have not.

eMoneyMail differs from in two major ways:

  •  eMoneyMail costs $1 per payment (paid by the sender); is free
  •  eMoneyMail recipients can choose to have the money credited to their credit card; that option is not currently supported by

See the following chart to for a detailed comparison.

eMoneyMail vs.


How it Works

New users will often be introduced to a new email payment system when someone sends them money (see email #1 below). To make sure that initial payment ends up in the right hands, Bank One added a clever security enhancement not currently used by Recipients must first respond correctly to a security question set by the sender before claiming the money. In the case below, the sender’s security question was, “What company do I work for?” See Step 1 right.


Email #1

Email to Recipient

Subject: Alan Martin has sent you an eMoneyMail

Date: Wed, 15 Mar 2000 16:15:13 -0500 (EST)

From: Alan Martin

To: jim bruene

Dear eMoneyMail Recipient:

Alan Martin has sent you money using eMoneyMail.

eMoneyMail, powered by Bank One, is the safe, easy way to send money over the Internet. You can now send money electronically to anyone in the United States by simply sending the person an e-mail message.

To receive your money, simply click the link below that takes you straight to the eMoneyMail web site.

If you have used eMoneyMail before, just sign in and get your money. If you have never used eMoneyMail, you will need to create a profile first. You do not need to set up a new bank account to claim your money. You can put your money in an existing checking account, credit your Visa card, or have a printed check mailed to you.

If clicking the link to visit eMoneyMail doesn't work, simply copy and paste it into your browser's address window and press ENTER. For more detailed instructions, please consult the

FAQ's at .

If you have any questions, please e-mail us at

We hope you enjoy eMoneyMail. Please let us know what you think about eMoneyMail and be sure to tell your friends about us!

Thank you for using eMoneyMail. Have a great day!

Your eMoneyMail Team

Source: Bank One, 3/00


Receiving Money

Step 1: New users must correctly respond to a security question before claiming the money.

Step 2: Receiving money confirmation screen.

Step 3: Users select a method to receive payment.

Step 4: To deposit funds to a credit card, users enter the card info, including Card Verification Value on back.

Step 5: Users verify their deposit choice,
and can send a thank-you to the sender.

Step 6: Confirmation of transaction
and link to “refer a friend.”

Sending Money

Step 1: Enter recipient’s name, email address, and optional message in a familiar email interface.

Step 2: Select or compose a security question that the recipient must answer correctly within 3 guesses.

Step 3: Draw funds from checking or credit card. Card payments are immediate, checking takes 3 to 4 days.

Step 4: Confirm information and hit send.

Final transaction confirmation.

Email Flow

Another positive feature of email payments is the informative flow of emails keeping both sender and recipient informed. This corrects an underlying weakness of most bill payment products, lack of payment tracking capabilities. Following is a description of the emails generated during an eMoneyMail transaction.

Email Flow






1 sender recipient announces payment


2 bank sender confirms payment sent


3 bank recipient confirms payment retrieval


4 bank recipient reminder to retrieve payment


5 bank sender payment not retrieved notice


6 bank sender notification that payment not claimed and has been reversed


7 sender referral optional referral


Email #2

Confirmation to Sender

Subject: Your eMoneyMail is on its way to Kate Schultz

Date: Wed, 15 Mar 2000 18:06:48 -0500 (EST)

From: eMoneyMail

To: Jim Bruene

The eMoneyMail you sent to Kate Schultz is on its way.

Confirmation Number: 4530

Recipient's E-mail Address:

Type of Payment: Credit/Debit Card

Amount: $1.00

Service Charge: $1.00

Amount charged to your account: $2.00

You can see further information about this money transaction by accessing the Transaction History function at .

If you have any questions, please e-mail us at

Please visit us again at and be sure to tell your friends about us!

Thank you for using eMoneyMail. Have a great day!

Your eMoneyMail Team


Email #3

Confirmation to Recipient

Subject: Your money is on its way!

Date: Wed, 15 Mar 2000 17:51:47 -0500 (EST)

From: eMoneyMail

To: jim bruene

The money sent to you by Alan Martin has been cleared and is on its way as you requested.

Confirmation Number: 4502

Type of Receipt: Credit/Debit Card

Amount: $1.00

You can see further information about this money transaction by accessing the Receive Money function at .

If you have any questions, please e-mail us at .

Please visit us again at and be sure to tell your friends about us!

Thank you for using eMoneyMail. Have a great day!

Your eMoneyMail Team


Email #4

Reminder to Recipient

Subject: eMoneyMail Reminder

Date: Wed, 29 Mar 2000 03:00:07 -0500 (EST)

From: eMoneyMail

To: Kate Schultz

Jim Bruene sent you money using eMoneyMail 14 days ago and you have not yet picked it up. In case that e-mail was lost, you may pick up the money by clicking below:

If you have used eMoneyMail before, just sign in and get your money. If you have never used eMoneyMail, you will need to create a profile first. You do not need to set up a new bank account to claim your money. You can put your money in an existing checking account, credit your Visa card, or have a printed check mailed to you.

If clicking the link to visit eMoneyMail doesn't work, simply copy and paste it into your browser’s address window and press ENTER. For more detailed instructions, please consult the FAQ's at

If you have any questions, please e-mail us at .

eMoneyMail, powered by Bank One, is the safe, easy way to send money over the Internet. You can now send money electronically to anyone in the United States by simply sending the person an e-mail message.

We hope you enjoy eMoneyMail. Please let us know what you think about eMoneyMail and be sure to tell your friends about us!

Thank you for using eMoneyMail. Have a great day!

Your eMoneyMail Team


Email #5

Notice to sender that payment has not been claimed

Subject: eMoneyMail reminder

Date: Wed, 29 Mar 2000 03:00:07 -0500 (EST)

From: eMoneyMail


Regarding Confirmation Number: 4530

Kate Schultz has not yet picked up the money you sent. You may want to contact that person to make sure they get their money.

You can see further information about this money transaction by accessing the Transaction History function at .

If you have any questions, please e-mail us at .


Your eMoneyMail Team


Email #6

Automatic transaction cancellation after 21 days

Subject: eMoneyMail Cancellation

Date: Wed, 5 Apr 2000 03:00:07 -0500 (EST)

From: eMoneyMail

To: : Jim Bruene

Confirmation Number: 4530

Type of Payment: Credit/Debit Card

Amount: $1.00

Service Charge: $1.00

Kate Schultz did not pick up their money within the maximum time-frame of 21 days. Consequently, the transaction has been cancelled.

On 03/15/2000, $2.00 was charged to your account for your eMoneyMail. On 04/06/2000, $1.00 was returned to you without the $1.00 service charge.

You can see further information about this money transaction by accessing the Transaction History function at .

If you believe this transaction is in error or if you have any questions, please e-mail us at .


Your eMoneyMail Team


Email #7


Subject: eMoneyMail: for sending money over the Internet

Date: Wed, 15 Mar 2000 17:53:57 -0500 (EST)

From: Jim Bruene

To: Kate Schultz

Hi Kate Schultz!

I was just at the site , and I thought you'd like to hear about it...

eMoneyMail, powered by Bank One, is the safe, easy way to send money over the Internet. You can now send money electronically to anyone in the United States by simply sending the person an e-mail message.

Please visit to learn more and to start sending money to people you know!


eMoneyMail will offer fee-free payments
on April 22 in celebration of Earth Day.

Categories: Bank One, PayPal

Truly Virtual Banking Arrives via PayPal and

By Jim Bruene on February 1, 2000 11:33 AM | Comments


Question: What do you get when you integrate wire transfers with email, then pay everyone $10 to try it?

Answer: Approximately 600,000 users in 100 days, PayPal and’s combined user bases at the end of February. An impressive total, considering the rest of the Net-only bank industry numbers about 400,000.


Finally, a bonafide ebanking hit. PayPal is adding 10,000 new users per day and it hasn’t even advertised yet., despite a well-publicized fraud incident , is the largest Internet bank based on number of accounts, with more than 250,000 after just 90 days in business; and it too has yet to place its first banner ad. (Note: As we went to press, PayPal and announced their merger, 3/2/00.)

Oh, but we repeat ourselves. This report is about Net-only banks, not new-fangled payment schemes. But you can’t separate the two: Internet banking is all about electronic payments, loans, and trust. (Hmm…sounds a lot like a credit card, doesn’t it?). Payments drive traffic. Loans are used to monetize the traffic. And trust provides the establishment a temporary edge over the Web-based, non-bank upstarts such as PayPal, eBalance and PayTrust.

The best Net banks score highly in only two of the three areas. The missing ingredient at most? Easy-to-use e-payments. But, as banks and platform vendors scramble to emulate the success of PayPal and, it’s only a matter of months before you’ll be able to zip $20 across the Net from many (most?) leading banks. See our other year 2000 predictions for more on what’s on the horizon.


Categories: PayPal,

Person-to-Person Email Payments Launched

By Jim Bruene on December 1, 1999 12:43 PM | Comments

Powered by PayPal from Silicon Valley’s Confinity

PayPal is the biggest online “wow” we’ve experienced since NextCard’s real-time credit card balance transfer in April 1998 (OBR 5/98).

PayPal’s just-launched Web service allows users to “email” money to anyone by simply typing their email address. And it’s free.

Note: shortly before press time, the format of this screen changed, see screenshot.



The Company: Yet another Silicon Valley start-up is eyeing the banking franchise. Launched just one year ago, Confinity (Palo Alto, CA) is a promising new payments company that bears watching closely, very closely. The company is handing out $10 referral fees and sign-up bonuses like candy. The fine print says that only the first 50,000 users earn $10 bonuses. (Users can earn up to $1,000 in referral fees by signing up a maximum of 100 new users). But we doubt the company’s investors will want them to stop at 50,000. The opportunity is huge, and it looks as though Confinity has at least a six-month head start on the competition.

The company won’t say how many employees they currently have, but there are at least 14 job openings listed on their Web site (Nov. 29).
Red Herring reported that the company had 14 employees in July when they received $5 million in funding from investors Nokia Ventures; Deutsche Bank Tech Ventures; Bill Melton, founder of Verifone and Cybercash; and Stanford professor Martin Hellman.

The Product: The company currently has three person-to-person (P2P) products in various stages:

1. Email payment service launched Nov. 15 that can be used to send money instantly to anyone with an email address.

2. Palm-to-Palm payment application currently in beta with full release scheduled for December. The estimated four to five million Palm users will be able to send money to other Palm users either through email as described above, or through Palm-to-Palm infrared communication using software that can be freely downloaded from the PayPal site. The software can also be sent to new users in 15 seconds using the infrared connection.

3. Cell-phone-based payments, a modified version of email payments, scheduled for release in
Q1 2000.

Much of the press coverage has focused on the Palm application, which is useful if you live in Silicon Valley or work in a high-tech Palm-toting company. But for the rest of the world, it’s the email payment program that has the huge potential.


Business Model: Originally, Confinity was looking at earning revenues from float, abandoned funds, and a 4.5% withdrawal fee (after first $500 each six months), among other things. But prior to its Nov. 15 launch, the company dropped the withdrawal fee and instituted a policy that will significantly limit the amount of abandoned funds. The PayPal system will automatically return money to the sender if not claimed within 180 days. Senders can also reverse transactions before the 180-day mark by requesting a reversal from customer service.

The company is planning a number of programs to boost usage beyond the one or two P2P payments the average user would make each month (our estimate). For example, a program targeting merchants is planned that would put the company into the ebilling market.

PayPal’s “Quick 1-Page Registration” really is.

How it Works:

Registration Process:

1. User goes to

2. Selects sign-up button on top right.

3. Completes mini-application including name, address, phone number, and email address

4. Chooses username, password, and secret question (for password resets).

5. Enters credit card info for authorization.

6. Checks email for confirmation message (timing will vary, we had to wait about 30 seconds).

7. Clicks on the link in the email, or manually inputs the 20-digit confirmation number.

8. After step seven, users are given a temporary charge limit of $100 against the pre-registered credit card.

9. An additional confirmation is sent to the user’s postal address. On subsequent logins, users are prompted for their snail-mailed confirmation number. After entering the 20-digit number, users’ credit card charge limit is raised to $5,000. The charge limit, which is currently the same for all users, is the maximum amount that can be charged to credit cards in a six-month period, with no single charge higher than $2,000.

The charge limit guards against fraud, but mostly it prevents users from quickly running through large volumes of credit card transactions for the float and/or miles. Nevertheless, it’s an appealing way of bagging an extra 10,000 miles every year.

We expect Confinity will eventually process card transactions as cash advances instead of purchases. That will effectively transfer the cost of the card transaction from Confinity to the user, which will give users a monetary incentive to fund their account via ACH instead of credit card deductions. The company won’t have to worry about the tedious and mildly confusing charge limit tracking either.

Elapsed time: 5 minutes, 18 seconds*

*Time in takes to completely the online portion of the registration process: Includes typing the URL, completing the application, scanning the agreement, and confirming the email message (with a 30-second wait for the email to arrive). It does not include confirming the snail mail address a week later, which took less than a minute.

Sending Money (called “beaming” by Confinity):

1. User logs in to PayPal site.

2. Selects Beam Money from menu.

3. Enters email address of recipient (who does not have to be a registered Confinity user until they want to withdraw the money) and dollar amount of the payment; presses enter.

4. Confirms transaction; presses enter. The transaction immediately appears in the Transaction Log for reference.


Elapsed time: 59 seconds*

*Time in takes to completely perform the transaction: Includes typing the URL, logging in, entering the information, including an optional 10-word memo. Assumes you know the recipient’s email address and have available funds sitting in your PayPal account. Otherwise the payment amount is charged to your credit card adding 15 to 30+ to the entire process.

Shortly before we went to press, Confinity added a number of improvements to the main “beaming” screen including an important (albeit short)
32-character memo field.

Receiving Money:

1. A few seconds after money is sent (previous page), the recipient receives an email saying “Joe Jones has beamed you money” (see email right).

2. User clicks on imbedded link to retrieve money.

3. New users must register using the process outlined on; existing users simply log in.

4. Selects Withdraw Funds.

5. Users can leave the money in their PayPal account, have it electronically transferred via ACH to any bank**, or have a paper check sent. Either way, there are no fees assessed to either party in the transaction.

Elapsed time = 32 seconds*

*Time in takes to completely perform the transaction: Includes typing URL, logging in, selecting a pre-registered bank account to deposit the funds, entering the amount to transfer, and pressing enter. New users must first go through the five-minute registration process (previous page).

**Each bank account must be registered by entering bank name, routing number, and account number; then confirming that info. emailed to the address-of-record. This process takes 1 to 2 minutes.

Transaction logs make it easy to see what you’ve just done, or look back to activity many months ago. Users can search on any date range using the optional fields at the top of the screen.
The memo line is also captured in the log.


Email to Recipient of Funds

Subject: Jim Bruene Beamed You Money with PayPal!

Date: 5 Nov 1999 20:28:48 -0000



Jim Bruene ( has just Beamed you Money! You now have $11.05 waiting for you at PayPal.

Visit to sign up for your PayPal account today! And remember to sign up with this email address in order to claim your money.

PayPal is a free service that lets you Beam Money to anyone using your credit card. Today, you can Beam Money online to anyone with an email address. In the near future, you will be able to Beam Money with your Palm, Handspring, and Windows CE organizers, Internet-enabled cell phones and two-way pagers.

Welcome to PayPal!

If you wish to thank your friend, reply to mailto:

Source: Confinity, 11/99

Adding Funds:

1. User selects Add Funds from the main menu.

2. Selects an account to debit from a drop-down list of previously entered bank accounts. Note: users also have the option to, (a) mail a paper check to fund their account, or (b) not funding it in advance, in which case any necessary funds are charged to the user’s credit card entered during the registration process.

3. Enters the amount to be added to the PayPal account; presses enter.

4. Confirms transaction; presses submit.

Elapsed time = 36 seconds*

*Time in takes to completely perform the transaction (the same process as withdrawing funds): includes typing URL, logging in, selecting Withdraw Funds, selecting an account to debit, typing an amount, and confirming the transaction.


Transferring Funds:

A practically undocumented, but potentially interesting product feature, is the Web-based interbank funds transfer engine built into the system. In a matter of seconds, users can register multiple bank accounts to move money in and out of their PayPal account. Currently, you cannot move money directly from one bank account to another. You must first transfer funds into your PayPal account, wait for them to arrive, then move the money out. It’s a bit convoluted and can take
3 to 5 days, but it still beats mailing a paper check.

1. After logging in to PayPal, user selects Add Funds and follows the procedure outlined above (selecting bank account, then entering the amount to be debited from that account).

2. User waits up to 48 hours for money to be transferred into their PayPal account.

3. User selects Withdraw Funds and follows the procedure outlined on the previous page (selecting bank account, then entering the amount to be transferred). Again, up to 48 hours later the amount will be credited to the receiving bank account.

Elapsed time: 3 to 5 days*

*Total time it takes to move money from bank account A into bank account B. The two transactions only take about 30 seconds each to perform, however users must wait up to 48 hours for each of the two separate ACH transactions to post.

Marketing Strategy: The company’s Nov. 16 press release <> contains a hodge-podge of potential marketing strategies, from everyday person-to-person payment needs such as settling a dinner bill, to specialized merchant applications such as ordering and paying for a coffee drink prior to arriving at the coffee shop.

But the company’s main emphasis right now is viral marketing, hoping that the process of friends beaming money to each other will spread like wildfire across the Net. And to fuel the fire, the company is throwing money to its early adopters in the form of $10 sign-up and referral bonuses. Users can earn up to $1,000 by bringing 100 new users into the system ($10 each). To qualify for the $10 you must beam a penny or more and the recipient must register with Confinity, confirm their credit card number by email and confirm their street address sent by snail mail. The recipient also gets $10 and can earn additional referral bonuses in the same manner.

The company plans to offer the service on a co-branded basis through partners such as banks and portals. No word on partners at this early stage.


We strongly encourage you to set up an account at PayPal to see how it works. You can register, poke around, and beam yourself a test transaction, in less than 15 minutes, and you only have to give up one credit card number. Here’s why it’s so good:

  •  Instant gratification: Within six minutes of first learning about PayPal, you can be beaming money across the Net.
  •  Easy to use: You can send money to anyone simply by knowing their email addresses (you don’t even need to know their name!).
  •  Simple and intuitive user interface: Once registered, it takes only 30 seconds to send money, faster even than scribbling out a
    paper check.
  •  Instantaneous posting of transactions.
  •  Two-step user authentication: Snail mail confirmation is required for full access, but a
    simple email authentication gets users started.
  •  Fast Web site.
  •  Free (except lost float).


It’s not perfect, the weaknesses:

  •  Lost float: In its current business model, Confinity holds the money. Consumers won’t like that. But we think most will understand the trade-off: lost float for free transfers.
  •  Fraud concerns: The current email address and password scheme is not rigorous enough for financial transactions. Additional password protection should be placed in front of transfer functions, at least for high-dollar transactions. Email notifications to senders would also be a welcome security addition.
  •  3600 tracking: Users need a way to track whether the funds transfer was received. The company says it will add that feature soon. They recently added referral tracking.
  •  Credibility: We don’t think the company does enough to assure users that the system is secure and fail-safe. It does an adequate job explaining itself, but they could use more detail and especially more assurances from independent third parties (only investors Nokia and Deutsche Bank are listed as endorsements)
  •  Learning curve: This is the $64 million dollar question for Confinity. Will people go through the hassle of signing up and learning the system
    to get the $25 you owe them for mom’s flowers? We think many will, if the other issues, especially credibility, are addressed (see below).

Summary: For a system 10 days out of beta, PayPal is spectacular. The company’s ability to plug holes and refine its business in Internet time bodes well for the future. We have been using the system for about three weeks and have already witnessed dozens of enhancements to the user interface and Web site.

Trust is the biggest obstacle to adoption. Will users turn over their bank account numbers to a new, unregulated, unlicensed company with “” in its name? We think for most consumers the answer is “no.” The company must partner with major financial services companies (e.g. a top-10 bank or card issuer; or Visa, MasterCard, or American Express) to gain significant adoption. The company should have little trouble finding big name backers. Chase’s $15 million profit in VerticalOne (OBR 9/99) should mollify any critics in the boardroom.


Matt Bogumill, Business Development

165 University Avenue

Palo Alto, California 94301

Phone: (650) 566-3645; Fax: (650) 566-3646

The Confinity Team

Peter Thiel CEO Background in law and finance; headed Thiel Capital Management, LLC, an investment fund with a focus on high-tech startups; also worked as an options trader for Credit Suisse and securities lawyer for Sullivan & Cromwell; BA and JD from Stanford.
Max Levchin CTO Background in cryptography and handheld programming; previously founded NetMeridian Software, where he developed some early palm-top security applications and SponsorNet, an early Web-based advertising service; BS University of Illinois.
David Jaques CFO Background in finance and banking; previously Treasurer of Silicon Valley Bank; also worked for Barclays Bank PLC in New York and London in currency and interest rate risk advisory services; graduate of South-West London College.
Luke Nosek, VP Mktg. Background in technology and business; co-founded SponsorNet with Levchin; BS University of Illinois.
David Sachs, VP Strategy Worked on the start-up as a consultant at McKinsey, jumped to the client in early November.
John Malloy Partner at Nokia Ventures, LP., previously VP of Business Development for Nokia Americas, a founder of GO Communications, a PCS startup, and Marketing Director at MCI.
Peter Buhl Partner at Nokia Ventures, LP, previously CFO of Ipsilon Networks and CFO of Software Alliance Corporation.
Reid Hoffman Founder of SocialNet, an internet community service, previously Director of Product Management and Development for Fujitsu and User Experience Architect at Apple Computer.
Technology Advisors
Martin Hellman Electrical engineering professor at Stanford and renowned cryptographer with a leading role in the development of public-key cryptography.
Dan Boneh Computer science professor at Stanford with expertise in hand-held encryption.
Media Strategy Advisor
Peter Robinson A research fellow at the Hoover Institution at Stanford University, hosts the PBS program Uncommon Knowledge.
Industry Advisors
Scott Banister VP of Ideas for idealab!
Scott Loftesness Former CEO of Digicash and Visa exec; currently an entrepreneur-in-residence at US Venture Partners.
Glenn Osaka Former Hewlett-Packard VP; oversaw the integration of VeriFone into HP.

Source: Confinity, 11/99




Nokia Ventures

$100 million venture capital fund formed in 1998

Deutsche Bank Tech Ventures

Largest bank in Europe

Bill Melton

CEO and founder of CyberCash and the founder of VeriFone with 30 years experience in the banking and telecommunications

Martin Hellman

Electrical engineering professor at Stanford University

Sources: Confinity, 11/99


The Buzz


Date Published



Nov. 17 Financial Times Web Privacy
Nov. 16 ZDNet Credit Cards Accepted Here
Nov. 15 PC World Beam Me Up Some Money, Scotty
Nov. 15 Wall Street Journal PayPal Electronic Plan May Be On the Money in Years to Come
Sept. 8 CNBC Beam Me up Some Cash
Sept. 2 Wall Street Journal Bartering for Equity Can Offer Sweet Rewards in Silicon Valley
Aug. 23 San Francisco Chronicle Sometimes Opportunity Does Knock
Aug. 2 allNetDevices The REAL Net Device Killer Apps
July 29 International Herald Tribune Money Beamer
July 27 Wired News PayPal Puts Dough in Your Palm
July 26 ZDNet A Palm In The Hand Is Like Money In The Bank
July 23 Red Herring Investors beam funding to Confinity
July 23 UPSIDE Today Executive Briefing
July 23 Nokia Invests In Net Device Payment Technology
July 22 Wall Street Journal Beam it up, Scotty
July 21 San Jose Mercury News Please, just beam $3 million to hand-held – it’s for start-up

Source: Confinity, Dow Jones, 11/99

Categories: Best of the Web, PayPal

Remote Payments And The Auction Opportunity

By Jim Bruene on November 4, 1999 12:35 PM | Comments

It’s surprising that no system has emerged to handle the immense volume of person-to-person payments generated by online auctions. In August, Prudential estimated that 66% of eBay auctions were converted into sales (the remaining 34% had no winning bidder). If that percentage held through the entire third quarter, eBay sellers delivered about 24 million “bills” to winning bidders, or eight million per month.

Yet, less than 7% of sellers allow payment by anything other than snail-mailed paper (see table below). eBay purchased BillPoint in May in order to offer an electronic (via credit card) payment solution. The company says it will be available by year-end. In the meantime, has begun to emerge as a payments alternative on eBay. It’s not as well known as BidPay, which mails Western Union money orders for a minimum of $5 per item. But as soon as participants discover it is free and real-time, it should catch on quickly.

eBay Sellers Accepting Remote Payments1






Visa credit card


6.6% escrow


0.3% money order by mail


0.1% escrow


0.0% money order by mail


0.0% electronic (ACH)


0.0% escrow




Source: OBR search on, 11/29/99

(1) number of eBay auction listings mentioning the company as a payment alternative; 3.4 million total listings 11/29/99

(2) Transactions are eventually charged to credit cards for all types

(3) Up from 3 on 11/22/99

Person-to-Person Payment Providers

Person-to-person payments are on the verge of gaining even more momentum with the entry of at least three providers in the next four to six months, including Checkfree (see table below):

Person-to-Person Payment Entrants


Transaction Drivers

Business Model

Palm Pilot users, digital cell phone users; viral marketing float and abandoned funds (maybe)
DotBank banking, auctions, gifts, classifieds, viral marketing unknown
Checkfree MoneyWeb* small businesses wanting to accelerate accounts receivables float, transactions fees from recipients of funds (businesses)

*working name, not actual product name

This is merely the tip of the iceberg. We estimate there are several hundred companies working on various payment and stored value schemes, from eWallets, to universal gift certificates, to new global currencies. A partial list is provided on the next page. In addition, financial institutions are expected to jump into the market leveraging their existing IT systems, risk management, and customer service organization.


Other Online Payment Entrants



Shopping eWallets/Micropayments (see OBR 6/99) 1-click pay is being extended beyond its own Web site with zBubbles
American Express Blue chip card; software/hardware solution
Cha! debuted at PC Forum
Brodia used by MBNA
Cybercash InstaBuy has been available for 3 years
Cybersource working with Visa on fraud deterrent
eCash Technologies purchased the assets of Digicash in Aug.
entrypoint/eWallet idealab! company; used by NextCard
GlobeID @pay Wallet
iPin billing to ISP/utility accounts
Microsoft is one of the most visited Web sites online (OBR 8/99)
QPass deals with NY Times, WSJ, Forbes, etc.
Trintech ezCard
UTM Systems card reading device that fits into the floppy disk drive
Fledging Online Currencies 175,000 users; aggressive U.S. off-line marketing campaign
e-gold launched in 1996, from Gold & Silver Resources, Inc.; backed by real metals claims to be “first gift currency;” merchants pay 15-20% of sales; 80,000 users
Oakington UK company planning global online currency called eBits
Prepaid Accounts (many aimed at children)
DoughNet partnering with  
Prepaid Gift Certificates
800GiftCertificate 85 participating retailers prepaid VisaCash cards with online transaction inquiry; full-page ad in Inc. extensive off-line print marketing 45 merchants
Rewards Programs
ClickRewards used by Citibank, NextCard, and more
MyPoints multi-million $ print campaign in process
Official Payments tax, tickets, court payment specialist

Sources: Online Banking Report, 11/99; The Industry Standard, 11/15/99; Release 1.0, 10/18/99


With the exception of Checkfree, whose CTO, Ravi Ganesan briefed us extensively on his company’s plans (Nov. 18), the P2P payment providers aren’t talking much. Confinity’s VP of Strategy, David Sacks, wouldn’t even tell us how many employees they had (Red Herring reported 14 in July). In our five years of covering Net banking, we’ve never run into this level of secrecy. Even though it makes our job more difficult, we can’t blame them. With $100s of millions, if not billions, at stake, it pays to be cautious about what you tell outsiders.

Categories: Ebay, PayPal, Virtual Bank

The Emergence of Person-to-Person Internet Payments

By Jim Bruene on November 3, 1999 12:33 PM | Comments
Truly Virtual Banking Products

As you can see from the chart below, many of the most interesting Internet banking products can easily be offered by non-banks. During the past five years in OBR, we’ve looked at all of them, but it was mostly theoretical. No matter how good they looked on paper, without being able to point to real-life examples, making a business case was difficult (see OBR 7/99 and 7/98).

All that is changing very fast. Fueled by an unprecedented pool of venture capital, innovative startups are swarming to the relatively untapped financial services and payments space. In second quarter, we witnessed the launch of three scan-and-pay bill management companies, CyberBills, and PayTrust. In third quarter, we saw the launch of three financial statement aggregators, VerticalOne, Yodlee, and PayTrust. And now in fourth quarter, we are watching at least one person-to-person payment company go live, PayPal.



Person-to-person (P2P) payments are not new. In fact, the paper payments business (personal checks, money orders, cashiers checks) continues to grow. According to The Green Sheet 68.8 billion paper checks will be processed in 1999 (U.S.), up 2.2% from 1998’s total of 67.4 billion; and an increase of 30% from 1989 (52.9 billion).

What is missing is a Web version of these products. The Web has spawned a whole new marketplace of sales between parties that have never met and never will. eBay has popularized the phenomena with its P2P auctions. In third quarter, eBay 36.2 million auctions, nearly four times the number in third quarter 1998 (9.2 million). In fact, eBay’s registered user base of 7.7 million is approximately equal to the entire online banking user base across all U.S. financial institutions.

Truly Virtual* Retail Banking Products


First on Web

Who Else Has It


financial statement aggregation Aug. 99 by VerticalOne PayTrust


8/99 9/99
balance alerts
Aug. 96 by Britton & Koontz; Feb. 97 by Signet Bank Cascade Bank and an estimated 50 to 100 banks, primarily Q-UP & Edify clients 3/99

Payments/Funds Transfer
pay-anyone bill payment SFNB in Oct. 95 several hundred banks and credit unions along with Checkfree, Yahoo, and many discount brokers 3/99 2/99 1/99 12/97 11/97
scan and pay bill payment PayTrust began testing in early 99; CyberBills launched in Mar. 99; Intuit announced a partnership with CyberBills to bring it to and AOL in 2000 6/99 3/99
person to person payments Confinity began offering a beta version Sept. 99; product launch Nov. 99 coming Q1 2000; Checkfree coming Q2 2000 11/99
Web-based interbank transfers Schwab’s had since 1997; CompuBank was first bank in Oct. 98 USAccessBank and an estimated 10 to 15 other U.S. banks and CUs (estimated) 6/98
credit card balance transfers NextCard in Feb. 98 estimated 5 to 10 card issuers 5/98
Other Services
eSafeDeposit Net.B@nk announced May 99   5/99

Source: Online Banking Report, 11/99

*companies don’t have to be a bank to offer these “banking” services


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