How did firms like Simple and PayPal initially gain trust as places for customers to store their money?
Payments
Asked by Question Bot01/Jan/20151 answer
1 Answer
F
Faisal Khan
Answered 01/Jan/2015
PayPal is a wallet, not a bank. So the money being loaded on to the wallet, is still with the banks that PayPal deals with, just that it is now accessible as an immediate payment onto the PayPal ecosystem. The money at all times is still with PayPal's banks.
Simple (also not a bank), is essentially using Bancorp Bank as their back end. Simple is nothing more than a "branch" that is defined on the core banking software of Bancorp and all the customers within this branch (i.e. Simple customer) are branded using Simple's branding.
In both the incidents, PayPal and Simple, they do not hold the funds themselves but hold it within their partner banks. Movement of money (within their partner banks) is essentially either moving the money within their own ecosystem (in which case the transaction is essentially free to PayPal and Simple) or moving it outside their ecosystem (i.e. outside the network of their partner bank).
The concept is not new, its simple a modified version of how pre-funded or nostro accounts behave (in a very rough sense) where money is aggregated under a separate heading.
In both cases, their account is defined as a Branch (Virtual) on the core banking software of the bank associated. Its a very normal practice for very large user group clients.
Simple (also not a bank), is essentially using Bancorp Bank as their back end. Simple is nothing more than a "branch" that is defined on the core banking software of Bancorp and all the customers within this branch (i.e. Simple customer) are branded using Simple's branding.
In both the incidents, PayPal and Simple, they do not hold the funds themselves but hold it within their partner banks. Movement of money (within their partner banks) is essentially either moving the money within their own ecosystem (in which case the transaction is essentially free to PayPal and Simple) or moving it outside their ecosystem (i.e. outside the network of their partner bank).
The concept is not new, its simple a modified version of how pre-funded or nostro accounts behave (in a very rough sense) where money is aggregated under a separate heading.
In both cases, their account is defined as a Branch (Virtual) on the core banking software of the bank associated. Its a very normal practice for very large user group clients.