eBay Inc (EBAY) Might Be Planning Something Big: Capital One Financial Corp. (COF), Charles Schwab Corp (SCHW)

Why Would PayPal Be Different?
PayPal would hold several advantages over most traditional banks. First, PayPal is already moving into physical stores accepting this form of payment. A PayPal bank would have the opportunity to offer both the PayPal form of payment to a retailer, and could potentially cut a deal on this service if the retailer brought their banking business to PayPal.

Second, if PayPal allowed this Coinstar partnership to become a full ATM-like functionality, the company would immediately have one of the largest ATM networks in the country. Bank of America has about 16,000 ATMs, but there are over 20,000 Coinstar machines. In addition, these Coinstar machines are located mainly in grocery stores, convenience stores, and other places customers are already shopping.

Third, PayPal already is in the money transfer business. The company saw a 24% increase in payment volume in the current quarter. There is no more a popular way to pay and get paid online. The company’s deep understanding of online transactions would be unmatched by any bank trying to talk to other businesses. PayPal’s additional value as a bank would be the ability to offer a solution to individuals and businesses where they can use over 20,000 locations to access their account. They could also deposit electronically through check images, and direct deposit would take care of the rest.

The bottom line is, PayPal has an opportunity that many people might not think about. While investors are wondering what’s next for their bank in light of the challenges of the last few years, PayPal could swoop in and steal market share. Charles Schwab Corp (NYSE:SCHW) is pushing hard to gain deposit dollars, and Capital One Financial Corp. (NYSE:COF) is embracing online savers like never before. Traditional banks are trying to steal business from each other, but PayPal could be the threat that none of them see coming.

The article This Company Might Be Planning Something Big originally appeared on Fool.com and is written by Chad Henage.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.