PayPal is a real, live bank now. In Luxembourg, anyway. It's not currently allowed to be an American bank, partly because of the complexity of their arrangements with other financial institutions like GE and Mastercard. A funny thing has happened to that funny little payment service you use to buy junk on eBay; it's beginning to make the internet auction site that is its parent look like the little brother, at least least growth-wise.
PayPal has designs on the greater e-commerce market, which is expected to top $300 billion in the U.S. alone by 2010, up more than 50% from current levels. Last year, PayPal processed about 6% of all online payments worldwide. And in the first quarter, roughly 40% of the $11.36 billion in payments that PayPal processed originated on sites other than eBay's shopping properties. "The off-eBay business will, at some point, eclipse the on-eBay business," says Scott Thompson, PayPal's chief technology officer.
The strip mall bank with $4500 in rolled coins in the safe, two surly tellers, and the velvet ropes to keep you in line is doomed. Internet based payment services are the future. Good riddance.