PayPal, an online payment service, late last month launched a co-branded debit card in conjunction with MasterCard International.
The card, labeled PayPal MasterCard debit card, is linked to users' PayPal online accounts, which are used to store funds from online transactions between consumers and businesses. The PayPal online payment service enables people to send and receive money from anyone who has an e-mail address.
The debit card is primarily targeted to small businesses that conduct transactions online and individuals who receive money through online auctions on a consistent basis.
“An individual that just sold items on an eBay auction might want access to cash instantly,” said Luke Nosek, vice president of strategy at PayPal, Palo Alto, CA. “The debit card provides its users with the money as soon as payment is received, as opposed to having to wait for a bank to process the transfer.”
Funds on the debit card can be accessed at any automated teller machine, and the card can be used at any online or offline retail location where MasterCard is accepted, Nosek said. Cardholders can also transfer funds to their personal bank accounts, he said. Officials at MasterCard did not return calls by press time.
PayPal launched a pilot program of the card late last month targeting roughly 2,000 of the company's select customers that receive money on their PayPal account on a regular basis.
“A lot of Internet companies go for broke with marketing plans, and now they are broke,” Nosek said. “We will find out how well this select group responds and then roll it out to the next set of customers.”
The company plans to roll out the card gradually over the course of 2001 to all of its 5 million customers, Nosek said, adding that it is too early to provide a breakdown of rollouts.
“We already have a huge customer base that would be most interested in the product,” he said.
PayPal sent out an e-mail promotion in early October to the first set of customers with details about the upcoming offer to “whet their appetites” for the card, Nosek said. On an unspecified date in the first quarter of 2001, the company will send an undisclosed number of e-mails to the second set of customers, which will detail the card and provide customers with a link to its Web site, at www.paypal.com, to register.
Selected PayPal users who visit the site independently will be presented with register forms to sign up for the card.
To access their PayPal accounts online, customers must enter their card number and personally identifiable information. Nosek said this information is encrypted into the PayPal database to deter online identity theft. The maximum transaction allowed via the PayPal system is $10,000, Nosek said, adding that PayPal has moved about $1 billion in transactions since its October 1999 inception.
The debit card is offered for free to consumers, and businesses are charged 2 percent of each transaction performed on the card. Consumers who perform more than $500 in transactions over six months are upgraded to a business account and charged the 2 percent fee.
Peter Thiel, former founder of Thiel Capital Management, and Max Levchin, former founder of NetMeridian Software, a wireless device security applications developer, founded PayPal.