PayPal announced a new alliance with MoneyGram this week which PaymentsJournal thinks solves two problems for the company:
- It reduces the speed to spend friction of relying on the ACH system to transfer funds.
- It increases the reach of the product into existing MoneyGram users across the globe.
With so many money transfer entrants coming into the market and as traditional financial institutions move into this segment of the market, PayPal is under some pressure to improve its processes and align them more closely with the real-time capabilities of card and EFT networks in order to be more competitive.
The pilot run, which a PayPal blog post says will launch in early 2013, helps the payments giant pare down the number of steps it takes for a customer to go from “cash to commerce,” which should ultimately translate into more purchases, whether online or offline.
Another potential benefit to the company is the opportunity for the company to incentivize consumers to keep more money in their PayPal account which may be more attractive to an underserved market.
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