PayPal becomes a real bank, starting July 2007.
When I logged in today at PayPal (Europe), I saw a message that they established a new company in Luxembourg, but that nothing will change.
Today, they announced it has been granted a banking license for the European Union by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg, effective July 2, 2007.
Under this new charter, PayPal will be able to continue its European expansion by offering its services to more online merchants across Europe. In addition, PayPal will be moving its European headquarters to Luxembourg.
PayPal Obtains Bank Charter for European Union
PayPal building the foundations for European growth
Neil Sharing thinks, UK customers may worry about regulations and authority.
PayPal plays with the big boys
PayPal says it’s making this move for commercial reasons, not legal ones, as the changes would allow the company to increase the number of online retailers offering the service. That makes sense to me, since Europeans are very suspicious towards ‘non banking’ payment processors.
Also, in my opinion, this move makes PayPals position towards Google stronger. I wonder how long they will take to do exactly the same in other continents.
Personally I think this may be good news, IF PayPal has to follow banking rules from then on. I don’t think they will be allowed to freeze accounts at will, as they do now.
On the other hand, PayPal says it will only continue its online activities for now, so no banking, although that may very well be possible in future.
Also, Luxembourg is a great place for a bank, because this small country thrives on banking and their bank secrecy is among the best in the world. It may arouse some suspicion from tax departments in other countries though.
Well, if that happens, I’ll move to Luxembourg. Very low tax rates!
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