December 13, 2012
PayPal Inc. on Thursday took a step closer to providing bank-like account access with its introduction of a branded prepaid card that can be used to fund PayPal accounts. The PayPal My Cash Card, which is the first PayPal-branded prepaid card in the 14-year-old company’s history, allows consumers who lack bank-issued payment cards or who don’t want to use such cards to load their accounts with cash.
Atlanta-based prepaid card program manager InComm has opened its merchant network to the new card. Some 30,000 locations are now set to sell the card, a number expected to double next year. Participating merchants include CVS, Dollar General, Family Dollar, and Rite Aid.
PayPal refuses to say how many cards have been sold so far or how much it expects the program to generate in incremental spending on its network. But the link the card creates between cash and the digital PayPal wallet makes the San Jose, Calif.-based eBay Inc. unit a “stronger competitor to banks,” says Ben Jackson, an analyst who follows prepaid cards for Mercator Advisory Group, Maynard, Mass. “Now users do not need a traditional financial institution to fund their accounts,” he says in an e-mail message to Digital Transactions News. “Now, anyone can get a PayPal account and have access to a large number of online stores without needing a credit or debit card to shop.”
Consumers can buy the My Cash Card in denominations between $20 and $500. They can then load the value of the card into their PayPal account online, using a PIN printed on the back of the card. Those without an account will be presented with the option to create one. Once the account is funded, users can make purchases at any online or physical merchant that accepts PayPal. Unusual among prepaid products, the new card carries no load or inactivity fees. Its sole charge is a $3.95 activation fee.
“We’re delighted to give our consumers more control of their money with the option to load money into their PayPal accounts, unlocking the potential to shop and pay at millions of merchant locations,” said PayPal vice president of retail services Don Kingsborough, in a statement. “Consumers tell us that they…are looking for additional options to keep [their accounts] funded--this is a great solution for many of our customers who prefer to work with cash.” Before coming to PayPal last year, Kingsborough was co-founder and executive chairman of Blackhawk Network, a prepaid card processor and unit of Safeway Inc., the supermarket giant.
While My Cash Card is the first such product to be exclusively branded by PayPal, the company has had a similar relationship since 2009 with Green Dot Inc. on a cobranded MoneyPak product. With the cash option from Green Dot, a customer buys a MoneyPak at a store by handing over the cash amount he wants to load into his PayPal account. When he logs into his account, he indicates Green Dot as his funding source and enters a number from the MoneyPak card, and can start spending the cash online.
Despite the similarity in the products, Mercator’s Jackson points out that the MoneyPak product can be used to fund a variety of cards, whereas the funds from My Cash Card will go exclusively to PayPal.
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