Not so long ago, people were intensely wary of making any online transaction. The internet was not a safe place, and it was easy for scammers and fraudsters to intercept payments between buyers and sellers. It did not help that there were hardly any secure sites for people to use.
In the early 2000s, if you wanted to make a payment over the internet, the most common way to do this was to text or email your credit card details to the vendor. These would then be manually punched into the credit card machine, and a paper receipt posted back with the goods.
The advice was to send your card number, expiry date, and three-digit security codes in different texts or emails. Well, at least it allowed people to buy things remotely and meant that a physical signature was no longer required. The alternative was to send a check or cash through the post.
Looking back, it seems incredible that anyone bought anything online, but the idea of eCommerce was gripping the world, even if the technology had not caught up with the idea.
The Original; PayPal
One of the earliest companies to get to grips with the opportunity was PayPal. The platform was initially set up to provide a secure payment gateway for the newly created online car boot style site eBay.
It allowed peer-to-peer transactions without the vendor giving out their bank account details or the purchaser sending their details over an unsecured internet connection. It also had and continues to have a considerable advantage for the vendor.
They could take online transactions without having to apply to their bank for merchant services which would allow them to accept debit or credit cards. All anyone needed was a PayPal account and an email address.
PayPal has come a long way from its earliest incarnation but, essentially, offers the same service. Secure transactions between buyer and seller. However, it has become even more successful.
People expect to be able to have the option at checkout when they are shopping online, and increasingly it is available for in-person purchases as well. Most major online retail stores take PayPal, as do movie theatre chains.
It is hard to find a sector that does not accept PayPal. It is often the preferred payment method for gamblers playing at the best PayPal casinos because they offer easy deposits and fast withdrawals without fees.
While it is the original online payment platform, PayPal now faces stiff competition from rivals like Apple Pay, Google Pay, and Klarna. As a result, it has had to diversify the services it offers its customers to stay relevant.
New services include PayPal credit and Pay in Three. They also introduced an app for people on the go and, in 2019, introduced PayPal Cash; a debit card that sits in your e-wallet.
Apple Pay and Google Pay
PayPal is no longer the only name in the game. Apple offers Apple Pay, a system for sending and accepting payments backed up by Apple. It is integrated into the iPhone operating system.
It allows the user to make contactless, secure payments at any outlet that accepts Apple Pay. Depending on how the user has set the app up, the purchase can be charged to a bank account, debit, or credit card.
Google Pay works in much the same as Apple Pay, with credit and debit card information stored digitally inside the user’s Google Wallet.
The latest contenders; Skrill and Dwolla
Skrill is similar to PayPal, allowing users to store payment information and use it to pay other people. Dwolla is designed for small and medium businesses to pay out to customers, vendors, and other businesses.
Dwolla is only available in the United States at the time of writing.
The Bottom Line
PayPal got there first and is hard to beat. In 2012 they acquired Venmo, which allows friends to split bills and create money pools. As a result, PayPal is one of the world’s largest processors of peer-to-peer payments.