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The important thing for Americans to understand is that Paypal is not a bank. You can have an "account" and hold money in it and it may function similar to one
by walrus01 4y ago
The important thing for Americans to understand is that Paypal is not a bank.
You can have an "account" and hold money in it and it may function similar to one, but it has none of the federally mandated legal protections of being a bank.
Some much more recent Fintech startups such as Chime are legally underpinned by something that is an FDIC regulated bank.
- creeble 4y agoIndeed, it’s the magic that made PayPal what it is today. Back when it was x.com, they were trying to figure out how to avoid being a bank, and they did it with something that violated credit card merchant agreements: by crediting accounts without correlated purchases (you can still do this today, depending on your card processor I think). That got noticed, so they just started holding the money instead. I never figured out how a company that holds your cash with exclusive rights to do anything they want with it has avoided banking regulation.