PayPal is rolling out a feature that allows users to transfer money instantly to their banks accounts. For now the feature is limited to users who have supported Visa and Mastercard debit cards linked to their PayPal accounts.
The feature is aimed at eliminating a point of friction that PayPal needs to address as rivals encroach on the turf that PayPal claimed leadership of when it bought P2P payments pioneer Venmo back in 2013. PayPal also faces a formidable competitor in Apple Pay, now that P2P payments will become a part of iOS 11.
“We expect that funds will typically be available in your bank account in a matter of minutes, although some banks may take up to 30 minutes,” PayPal chief operating officer Bill Ready said in a blog post. “Our beta of this is now available to select PayPal users and will be made available to all U.S. PayPal users with eligible Visa or Mastercard debit cards over the coming weeks and months.”
PayPal’s move is a necessary one to maintain its edge in a competitive market. A consortium of U.S. banks is close to launching Zelle, a service offering instant transfers among customers of its member banks. Square Cash has offered instant payments for some time for a fee equal to 1 percent of the transaction, or for free if users wait a business day. PayPal’s instant transfers will charge a flat fee of 25 cents.
Ready’s post noted that PayPal has been offering P2P payments since 1998, when owners of Palm Pilots could beam money to each other. The technology remained a secondary feature until Venmo caught on, but the market is still in its early stages of development and a clear leader has not yet emerged in the market of mainstream consumer finance.
Apple, which has partnerships with Visa and Mastercard, could sideline other users depending on how well its Apple Pay P2P offering is received. Apple’s iTunes store gives Pay access to 375 million users, although only about 12 million of them are using the payment app each month.
PayPal’s stock was down 0.62 percent in Tuesday trading to $52.60.