Since the dawn of modern financial institutions, people have been forced to open accounts with them to benefit from services like automatic bill paying, debit cards, online banking, and overdraft protection. Only in the past decade – give or take – have companies that are not financial institutions started to provide average consumers with such financial services.
Let’s look at PayPal, for example. Founded as Confinity, the company initially developed software to help protect companies from fraud and identity theft in the process of accepting payments. A few years after the business was founded, it was purchased by eBay. Initially, PayPal was used as a means of securing payments from customers and immediately delivering them to vendors on the site.
Currently, PayPal acts similarly to a financial institution. Unlike traditional banks, individuals can accept payments through credit and debit cards – as well as PayPal balances – which simply can’t happen through financial institutions with the exception of funds transfers between accounts. PayPal is far quicker than checking accounts for accepting payments.
Further, PayPal provides consumers with services like its PayPal Prepaid Debit Card. Unlike checking accounts, this prepaid debit card cannot be overdrawn, thereby saving consumers money by not capitalizing on their mistakes. PayPal simply takes $4.95 each month from consumers’ accounts to use debit cards anywhere that debit cards issued by traditional financial institutions can be used.
— PSI-Pay (@PSIPayLtd) August 10, 2015
The company uses electronic money – better known as e-money – to conduct the entirety of its transactions. Companies like PSI Pay and Western Union use electronic money to conduct their operations, as well.
Speaking of Western Union and PSI Pay…
PSI-Pay is a company that was founded in 2007. It was founded with the goal of providing financial services to consumers around the United Kingdom independent of financial institutions. Recently, PSI Pay’s proprietary online ecoPayz wallet network integrated with that of Western Union.
Now, people in the United Kingdom can send money around the globe using ecoPayz.
The partnership between Western Union and PSI Pay is becoming increasingly popular around the world. For example, roughly 30 percent of all banking customers around the globe use financial products and services from companies that are not considered to be traditional financial institutions. This effectively results in consumers having more freedom than they otherwise would with the option of only using financial institutions’ services.