PayPal Inc.'s latest addition to its mobile application, a remote deposit capture function, is leading some to view its behavior as more like a bank's.
"There are people and businesses in the U.S. still using an analog technology that's 400 years old — yes, I'm talking about checks," Laura Chambers, PayPal's senior director of mobile, wrote on its blog Wednesday, a day after the San Jose company added mobile remote deposit capture to its app for Apple Inc.'s iPhone. With the check capture feature, she wrote, "you can skip your next trip to the bank when you receive a check."
PayPal has strived to add functions to the app to improve its appeal. Earlier this year the eBay Inc. unit added a person-to-person funds transfer option that completes a transaction when PayPal app users bump their iPhones together.
The mobile remote deposit capture feature "is the continuation of [PayPal's] extension into bank-like payments services and shows their ability to disintermediate the banks in all types of payment avenues," said Andy Schmidt, a research director in TowerGroup's global payments service.
The technology, which enables customers to deposit checks into their accounts using images captured with cameras on their smartphones, is not unique to PayPal. USAA Federal Savings Bank in 2009 introduced Deposit@Mobile as part of its mobile banking application for the iPhone and Andriod-powered phones. The San Antonio company, which has a single branch, primarily serves individuals in the military and their families. JPMorgan Chase & Co. in July became the first major U.S. financial institution to offer mobile remote deposit capture.
How consumers use PayPal's version largely will depend on how often they interact with their accounts and the convenience factor, Schmidt said. Small businesses and consumers who receive small payments might find it easier to accept a PayPal mobile deposit instead of taking a check to a bank branch. "I think you'll see some surprising uptake within the PayPal community," Schmidt said.
Growing interest in mobile remote deposit capture technology has sparked a debate over whether it might help stall the rapid decline in check use. Schmidt said the technology moves the market in the wrong direction from electronic payments and still puts some emphasis on paper methods. One of the biggest challenges, however, has been for businesses and consumers to make and receive electronic payments.
Companies are using mobile remote deposit capture to make consumers more comfortable with mobile as a payment channel. "That can do a world of good of helping move the industry towards [more] electronic payments in general," Schmidt said.
