How Far Could PayPal Go in Virtual Payments?

You might draw a couple of conclusions from PayPal's heightened profile in the retail payments space. You might argue that PayPal, of all the present major contenders, is the only company that has a reasonable chance of disintermediating the Visa and MasterCard payment information networks and brands.


You might also conclude that the walls between e-commerce and "commerce" are starting to blur. In the future, the difference between an "online" and a brick and mortar shopping experience might be less clear.


You might further conclude that the "currency tendered" in a transaction increasingly could take on new forms. Today, no matter what form the transaction takes, the payment is in, in the U.S. market, U.S. currency. In the future, other forms of value might be exchanged.


There are lots of legal and regulatory issues to be settled, to be sure. But some transactions might occur in equivalent virtual stores of value such as points, credits, tokens and other forms of stored value. Not that it will happen soon, or at all, but someday the currencies could extend far beyond "U.S. dollars and cents."


In one sense, that is a linear extrapolation from what PayPal now is doing. Rather than tell consumers which payment method is best for them, PayPal is working to accept all types of payments: plastic card, NFC, the new “empty hands” mode or barcode scanning.


Right now, PayPal is simply trying to let consumers decide how to pay, so long as PayPal is part of the transaction clearing, and so long as the currency, no matter what physical "channel," is U.S. currency. In principle, though, markets could develop that allow other virtual currencies to be used, as well.