After hearing Scott Thompson, President of PayPal, speak at Mesh10, I'm wondering if PayPal is positioned to become the new international bank.
After answering the obvious questions about what PayPal is doing to resolve its well documented issues around customer service (one part of the solution is a soon to be opened 2000 seat customer service call centre) Thompson discussed how PayPal enables merchants to open an account in minutes and is working to bring down the costs for buyers and sellers to move money around.
Scott agreed that PayPal is in the fraud business as much as the payment business. He spoke about the $169(US) million purchase of Israeli software maker Fraud Sciences. In a meeting with 
the company before the purchase Thompson recalled the “aha” moment was when one of the founders summed up the key aspect of the software as ‘footprint finding’, ”Good people on the internet leave footprints. Bad people cover these footprints up”. By searching for people’s ‘footprints’ and reviewing other data they have access to (i.e. eBay and Skype accounts) PayPal is able to determine very quickly if you are who you say you are with a reasonable amount of certainty.
Fraud by merchants is actually a greater risk than fraud by consumers because sellers can rack-up huge sales and disappear before fulfilling the orders. By decreasing the risk of fraud and actual fraudulent acts, PayPal will be able to decrease the fees for merchants using their services.
When asked if PayPal will go into Banking Thompson simply answered, “Yes, in certain markets where it makes sense”. PayPal has also expanded into off-line payments on its own and in cooperation with MasterCard. Using the PayPal debit card you can access your PayPal money anywhere in the world via an ATM that accepts MasterCard. MasterCard currently issues PayPal credit cards but I wonder if that will change with the announcement earlier this week that MasterCard has its own API for developers. Currently both of these cards are only available in the US but if the MasterCard API release kills the partnership, PayPal may move quickly to complete a deal with someone like Visa and release their cards internationally.
Currently in over 190 markets around the world, with over 153 million accounts, a deal with Facebook to be its payment method of choice and, backed by the deep pockets of eBay, is PayPal positioned to become an International Banking force?
If PayPal gave you a competitive rate would you switch to using PayPal as your bank of choice?