PayPal's Plug-in Provides Payment Parity

We received an email recently from PayPal inviting us to download their new plug-in, which streamlines the payment process at websites. However, this is not simply an auto-fill tool for forms like RoboForm. In fact, it allows you to use your PayPal account for purchases at any site that accepts MasterCard - even if the site you are purchasing from does not accept PayPal. This new Secure Card feature allows users to generate one-time MasterCard numbers for use in purchasing a product once, or a multiple-use number for repeat purchases at the same vendor.

Secure cards themselves are not necessarily new. BofA offers one (it was part of MBNA), as do Citibank and Discover. These features allow clients to use their cards online without exposing their actual card numbers to the vendors. However, what is different with the PayPal secure card is that now a buyer can use a secure card almost anywhere online without having an actual credit card (if they link the payment to their bank account). Or, they can use any card of their choosing as a secure card for purchases mitigating the need to rely on BofA, Citi, or Discover's secure payment tools.

Although PayPal's market share of payments is still small - a BusinessWeek article from last June said they had 6% of all online payments worldwide - they are widely used among eBay's clients. As those users see the benefit of this new tool, they may be willing to adopt it on non-eBay sites. Indeed, the same BusinessWeek article reported that 40% of the payments processed by PayPal originated on sites other than eBay's shopping properties. What PayPal has done is given consumers flexibility and choice - and that should give established banks and card companies pause.PayPal's new payment plug-in gives consumers flexibility and choice - and that should give established banks and card companies pause.