PayPal Debuts a Credit Card That Offers 2% Cash Back (bloomberg.com)

PayPal is turning to its old nemesis, plastic, to help it expand beyond the digital realm. From a report: The online payments venture is introducing a credit card that offers customers 2 percent cash back on purchases -- one of the industry's highest rebate rates -- with no annual fee. The rewards will appear in users' online wallets and can be spent immediately on additional PayPal purchases or transferred to a bank. The move is part of Chief Executive Officer Dan Schulman's effort to transform PayPal from a payments button on websites into a versatile financial tool for everyday use, even in brick-and-mortar stores. He's forged 24 deals over the past 18 months with technology and financial companies including Apple, Visa and JPMorgan Chase, looking to make PayPal ubiquitous in the lives of its 210 million customers. The company already tested the card with some of them.

Comments

PayPal Seizes Financial Assets

[thechemic]

With they way they unnecessarily seize the monetary assets of 100s of thousands of their customers, you're going to need the 2% cash back in order to justify your relationship with them.

Re:PayPal Seizes Financial Assets

[Mitreya]

And they are still not a bank from any regulatory perspective (in US).

Re:PayPal Seizes Financial Assets

[edtice1559]

Although this deserves the +5 (maybe Funny instead of Insightful), the vast majority of people who *pay* with Paypal have a great experience. It's the merchants who choose to accept Paypal that tend to have awful stories of not getting paid. I suspect that part of the reason, though, is that Paypal will accept merchants that Visa/MC would never take on as customers. Although Square seems to have managed to go after a similar market with a much better reputation.

Re:PayPal Seizes Financial Assets

[Chas]

Exactly.

Fuck PayPal. Them and the horse they rode in on.

Re:PayPal Seizes Financial Assets

[thechemic]

No. I don't mean recoup fraud. Start an eBay business and get it making more than about $4000/month. You'll find very quickly that PayPal will literally seize about 75% of your money and place it in "Reserve" status. You won't have any access to it for 180 days. In addition, they'll continue to freeze a certain percentage of all your income as your company grows. Need your money back to go on vacation: denied. Buying a house: denied. Think you can get your money back by closing your PayPal account: denied, for 180 days.

PayPal has all the power of a bank without being burdened by any of the regulations as a bank. They act as their own judge, jury, and litigators. They can and will seize your money at will, and their's nothing you can do about it. I know because they're holding $14,000 of mine.

Re:PayPal Seizes Financial Assets

[david_thornley]

There's reasons why I don't often use Paypal to receive money and never leave money in my account. It would probably be easier to use it more and leave some there, just as it would probably be easier to give Paypal my banking information, but I don't trust them.

Do they still randomly confiscate your accounts?

[sinij]

Do they still randomly confiscate contents of your accounts? I guess since this is a credit card product, now they will also have an ability to max the credit card for you.

Re:PayPal issues Credit Cards

[fred6666]

from what I understand JP Morgan / Visa issue the card. Paypal just puts its name on it.

US news only

[courteaudotbiz]

Too bad this news is US only. I have a Canadian PayPal account and the page to sign up is not accessible.

Re:US news only

[green1]

Honestly in Canada you have a lot of other options for cash-back credit cards already, and none of them require getting paypal involved.

Re:US news only

[green1]

1. Do you want to go direct and pay less.
2. Do you want to go through a middle man and pay for it in fees.

Except that number one isn't even an option anywhere. There isn't a single shop that exists in my city that will give me any form of discount for using cash or other low-cost payment methods. As a result I would be a positive idiot not to take advantage of the credit card and at least get the cash back. Yes I agree that they are driving up the prices of everything but as long as the price is the same regardless of which payment method I use I shoyld at least get the benefit from it.

Re:US news only

[hord]

Credit card companies provide convenience. I never have to worry about having the right amount of cash or dealing with change or stupid cashiers. Not to mention they scale to the internet and other transaction scenarios where cash is inconvenient or impossible. That's worth it to me. I think you'd also be surprised at a retailer's attitude in having a stable, audit-able, and secure transaction platform that doesn't require hiring security forces.

Merchants also provide convenience. I mean you could just pick your items up on a dock for cheaper. Are you happy paying that middle man? What about the middle man that shipped the goods? Do you buy direct from the manufacturer? Why aren't you harvesting it yourself?

Re:US news only

[Cederic]

But the charge for accepting Mastercard is set by Mastercard, not by the card issuer. So the cost to the merchant for accepting the paypal card or another mastercard card.

So no price rises as a result of this specific card..

Re:US news only

[green1]

What hassle? the credit card is exactly the same as debit for ease of use, and significantly more convenient than cash, but the credit card both gives you rewards, and defers your payment by about a month (so you can earn interest on the money in the mean time). There are literally no downsides and only upsides.

If you use debit instead of credit you're passing up on easy money.

If stores ever start giving a discount for using a different payment method, I'll re-evaluate what the best payment method is, but until then you'd be a fool not to use a credit card for every single transaction every single time.

Do the phishers also get 2% back?

[enjar]

Now in addition to needing to reset my PayPal passwords at paypalscam.serv3486.co, I've got emails that tell me to log into paypal.scamhaus.ru so my credit card won't stop working. What's next, PayPal mortgages so I can have my down payment routed to ppmortgageredirectmoneyscam.biz?

Re:Do the phishers also get 2% back?

[enjar]

When the son of the deposed king of Nigeria emails you directly, asking for help, you help! His father ran the freaking country! As for the girlfriend, she has been running into one immigration hassle after another, so things keep getting delayed. She's also had to deal with her sick parents and a number of other personal issues. But the money I send is worth a lot more over there, so it goes a lot farther and we should have it all sorted out in a few months when we can get together. It seems crazy that this has been going on for a year already, but we are making do with photos, email, texts and Skype for now. But with all that money I'm making off the Nigerians, it's no big deal to cover these minimal expenses for the woman who is my soul mate, I'm sure!

Re:PayPal issues Credit Cards

[xxxJonBoyxxx]

Not quite. From TFA:

>> PayPal is working with Mastercard Inc. and lender Synchrony Financial, the largest issuer of private-label credit cards, on its offer.

Must really be a slow news day...

[__aaclcg7560]

In other news, my credit union offered an "eclipse astounding" debt consolidation loan at 8% APR. The 2% back credit card that I have is 24% APR. If I pay the same monthly amount that I paid on the credit card for the debt consolidation loan, I'll be out of debt in three years. Seems like a no brainer.

Re:I don't know

[stinerman]

Should I also not give people second chances or just businesses?

I'm almost interested

[Presence Eternal]

If you use a 2% card in the long haul, that's likely going to pay for an entire year of your life, just by selecting said form of payment.

Yes, you can argue about how it gets passed on the stores and thus the consumers till you're blue in the face, but none of the places I shop at offer cash discounts, even though they're allowed to, so it's strictly a disadvantage to not do this.

Thing is, I'm really unsure about this offering. If it excludes paypal purchases from the 2% back, then it'd seem to make little sense, since you can otherwise just use an existing 2% back card with paypal.

Re:I'm almost interested

[david_thornley]

That would require physically going into the building and waiting in line and talking to a real human - sometimes twice, as there are places that have had too many drive-offs and require payment in advance, then if you don't use all the money you need change. For what a gas discount would be on gas, I don't consider it worth it.

Re:PayPal issues Credit Cards

[green1]

So in other words, Synchrony Financial issues the card. Paypal just puts its name on it.
So paypal has no need to be a bank for this, many non-bank companies have cards with their name on it without being banks. They're just not the ones who are actually issuing it.

Re:I don't know

[Anonymous Coward]

According to the Citizens United decission, your statement is redundant.

another

[buddyglass]

CitiBank has one of these as well. You get 1% at the time of purchase and 1% when you pay down your balance:

https://www.citi.com/credit-cards/credit-card-details/citi.action?ID=citi-double-cash-credit-card

Re: Do they still randomly confiscate your account

[nehumanuscrede]

Those of us that have first hand experience with PayPal's bullshit practices don't need to " get a grip ", we KNOW what PayPal does.

Which is why we refuse to use it.

One day you'll wake up to an email claiming your accounts have been frozen for ' security reasons ' and you'll begin the game of how to regain access to them.

Assuming you can. I gave up after two years and just wrote the account off as a loss.

Absolutely will not give them another dime by any means.

Utilize their unregulated services at your own peril, but never claim you weren't warned.

Re: This is fantastic!

[Anonymous Coward]

Bigger players can't do this.

Large merchants pay under 2% plus a couple of cents per transaction. Much of that goes to the merchant's bank / underwriter / payment processor, not the card issuer. The issuer makes their money on interest and annual fees.

PayPal can do this because they deposit 2% into a PayPal account and gouge 3% from the PayPal merchant when you use it.

For normal cards to do this, the card issuing bank would need to get at least 3%, which means the merchant would need to pay 5%, which would end up coming out of the customer's pocket.

So this would be awful if it caught on with other issuers.

Push other Cards to 2%

[crow]

With any luck, this will get enough attention to push other cards to 2% on all purchases. Many will do up to 5% on purchases of selected types (typically gas and restaurants), but are 1% in general. Perhaps this will push them to 2%? I sure hope so!

Remember, credit cards used to give you nothing. Then there were air miles cards and Discover offered cash, which eventually led to other cards also giving cash. So despite all of them essentially using the same back end (Visa/MasterCard), there's a lot of competition between card issuers, so I'm optimistic.

Re:Cashback - deceptive language.

[Ash-Fox]

This socalled cashback is nothing more than a discount on purchases when you buy stuff, and 2% is $2 in every $100 - when has that ever mattered to a real person?

Matters to a lot of consultants and contractors that travel. But in my experience, you're better off having a point card for something like Hilton Honors because you can get more options out of the points earned rather than cash back.

And actually, why would anybody use a credit card in an age where debit cards are available

Each transaction is insured. Debit card transactions aren't, if transactions can't be reversed, you're out of luck, it's gone. If you book certain things like holiday packages and something goes wrong during it, you get a full refund on the holiday, paid by the card issuer, who may choose to dispute the package later with the provider.

Additionally, the exchange rates on Mastercard and Visa are preferential to what your bank would normally choose as an exchange rate for a debit card (even if you have visa debit card or mastercard debit card - these rates are no longer available).

Quite often banks like to tack some nasty exchange rate fees for non-local currencies when you use a debit card. Mastercard and Visa also prefer to use the lower exchange rates because they want to generate more transactions and this is one of the ways they do so.

Through the use of credit cards and paying them off on a regular basis, you can build up your credit rating which in turn allows you to get larger mortgages. If all you do is end up paying the minimum payments per month, your credit rating does not lower from this.

I would have to pay an annual or monthly fee for having a credit card at all

That sounds like a charge card, not a credit card. Charge cards work differently.

Credit cards are simply an expensive way of getting into debt.

My credit cards cost me nothing on top (unless I choose not to pay them off in full, but I live within my means) and I end up with more rewards and protections using them using others. I don't pay more for using a credit card either in transactions.