Chicago Fed: The growth of person-to-person electronic payments. "I offer three reasons why electronic payments have failed to capture the C2C market. First, technology limitations have hampered the adoption of electronic C2C payments. Second, most consumers find few problems with the use of cash and checks. Third, providers of electronic C2C payments face a large obstacle in implementing fees for these transactions." [Scott Loftesness] Very true. Third parties cannot provide the service for free (they have to pay their bills), and banks (who can provide the service for free) are hesitant to enter this market. There is probably one more reason, "chicken and egg problem". Checks are widespread, you can pay almost everywhere with checks. Any payment system implemented by third parties is limited in scope, so customers are reluctant to join. Case to the point. Why do we use so many checks? "We have identified several potential drivers of electronic payments, such as greater choice of payment instruments for consumers for different payment segments, greater non-face-to-face shopping opportunities, competition from non-bank payment providers, and a greater role by merchants to offer the low-cost payment alternatives. Anecdotal evidence suggests that U.S. consumers are slowly changing their payment habits, and we would expect this trend to continue."
CNET: Billpoint failure a lesson for eBay? "Analysts say Billpoint failed because of a poor business plan, aggressive competition from PayPal, and hostility from eBay sellers."
SFGate: EBay grabs PayPal $1.5 billion deal a marriage of local Web titans. "The marriage, rumored to be in the works for several months, brings together two of only a handful of profitable public Internet companies. But it also underscores EBay's failure with its own competing billing service, EBay Payments, formerly known as Billpoint, which will now be eliminated."
Bank Technology News: Straight-Through Processing (STP): In Pursuit of Greased Lightning. "The payoff is expected to be worth both the dollars and the headaches, as STP ultimately will lead to substantially lower operating costs and dramatic improvements on the risk-management side of the business, particularly where settlement risk is concerned."
Bank Systems & Technology: Electronic Payment Future Bright In North America. "... the shift to electronic payments won't necessarily result in lower expenses for North American banks. While industry spending on paper processing is projected to remain relatively flat over the next three years, spending on this electronic payments processing will hit $2.3 billion this year, and will grow 6 percent annually."
Banking online: STP & Payments: Loud buzz, low volume in the U.S. "... a lack of payment and accounting system integration and insufficient information are the two greatest barriers to electronic payments."
PayPal: Not What It Used to Be: "PayPal was started by some young partners, inexperienced with the realities of credit card processing and too arrogant to listen to their customers. First they thought they could get away with stating that charge backs would not be allowed. When that didn't work, they came up with a buyer/seller protection plan that set up some ground rules to prevent abuse. When that didn't work, they decided to just pretend that it did and hope that no one would notice."
Name Your Own Price on PayPal: "Armed with nothing more than a text editor and a Web browser, a crafty fraud artist can, for example, change prices of items at hundreds of e-shops that use PayPal."
USA Today: MasterCard to stop third-party transactions: "A new rule by MasterCard could crimp online commerce by stopping merchants from accepting credit card payments through third parties, such as the popular PayPal, USA TODAY has learned."
USA Today: PayPal works to keep MasterCard business: "Shares of online payment system PayPal fell 2% Friday on news that MasterCard would no longer work with third-party credit card payment systems." [Scott Loftesness]