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PayPal is rolling out Instant Transfer, a feature that allows US consumers to instantly transfer funds from their PayPal account to their bank account.
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The firm plans to roll out the feature to US businesses in the coming weeks, with international expansion expected in the “near future.” Instant Funds is powered through a partnership with JPMorgan Chase, which gives PayPal access to the Real Time Payments network from The Clearing House to enable the Instant Transfer to a bank account.
Instant Transfer can cement PayPal’s leading position against firms like Square and Stripe, which are gaining more traction as they incorporate value-added services into their ecosystems.
- P2P payments are key in driving volume for PayPal, and an instant transfer option can help propel engagement even further. In 2017, PayPal began pilotinginstant cashout for its peer-to-peer (P2P) payment offerings that required a debit card, which not all users have or want to receive funds to. Therefore, this feature could be more appealing and attract new users. PayPal’s user base ticked up 17% year-over-year (YoY) throughout 2018: The firm added 38.7 million customers last year, 13.8 million of whom joined in Q4 2018 alone, to reach 267 million customers. And P2P payments are a key driver for PayPal, representing 24% of PayPal’s total payment volume (TPV) in Q4 2018. So, giving users the ability to instantly transfer funds to their bank accounts can increase engagement among PayPal customers, who make an average of 36.9 transactions annually, up 9% YoY, reaching 2.9 billion total payment transactions in Q4 2018.
- The service can help address a pain point small businesses experience with electronic payments. Last year, PayPal debuted Funds Now, a service that allows merchants to access their completed sales in real time so they can spend, access, or use them immediately. The service has been extended to more than 3.5 million businesses across the US, the UK, Australia, Canada, Germany, France, Italy, and Spain. But that feature was aimed primarily at sellers on PayPal’s platform, so Instant Transfer can expand real-time funds to more businesses. Further, instant access to funds can help alleviate a major hurdle small businesses experience once they do begin accepting electronic payments: PayPal found that firms often wait seven to 21 days to receive completed sales.
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