We’ve all been there – a tenner borrowed here, a fiver owed there. It can be hard to keep track when you owe it – and mortifying to have to ask for it back when you don’t.
Digital payments giant PayPal thinks it has the answer. It is throwing down the gauntlet by scrapping fees for euro transfers in Ireland.
With more than one million active accounts here, the money-transfer firm previously charged a fee of 3.4pc plus 35c on euro transfers.
PayPal is probably the best known for its use in online purchases, originally linked to eBay. A 2015 split from eBay helps explain the new peer-to-peer shift, and a focus on in-store payments thanks to its acquisition of iZettle.
Its cut in fees is targeted at inter-personal payments.
Research by PayPal found Irish adults are owed on average €152 through loans to family and friends.
According to the survey, this adds up to a hefty €575m owed to Irish consumers in small, often unpaid debts.
Paypal says it can counter costly and inefficient methods of payment that, it maintains, are causing animosity between the debtor and borrower.
Turning away from cash and moving towards faster mobile payments is the first step, according to PayPal’s vice-president of global operations EMEA Louise Phelan.
“Cash is still king in many people’s eyes, but it doesn’t deserve our loyalty. Cash comes with hidden costs and frustrations, both financial and personal,” she said.
“There seems to be an Irish taboo around asking to be paid back by friends and family. Almost a third of us prefer to do nothing and not ask to be paid back, leaving many people out of pocket.”
It’s a tough space though. Irish payments start-up Plynk was specifically targeted at the family and friends payments segment and, despite initial enthusiasm, this month took the decision to seek a liquidator.
And the battle for mobile payments may never be fully won, because lots of people remain very attached to cash, for a variety of reasons – even technical ones as the recent Visa outage that left people unable to make card payments showed.
“We believe cash will play a reduced role in the future of money, but it will not become obsolete. Ultimately, we think it is about choice. Consumers should be able to decide how they want to pay,” says Phelan.
“We have to show Irish consumers that there are better alternatives to cash.”
In the nationwide PayPal survey, over two-thirds of respondents (67pc) said they would use cash to repay a personal debt; with Irish consumers actually carrying more cash on them now (€57 on average) than they did two years ago (€39 average).
But while many consumers are not be able to let go of the notes and coins in their wallet, the drawbacks may not be apparent.
A third of survey participants paid fees for withdrawing money at an ATM, or for using telephone and online banking services, in order to facilitate the repayment of these small debts.
Depending on their bank, customers can be charged a standard flat fee of around 35c for ATM withdrawals using a debit card – or up to 1.5pc if they use a credit card.
Just under one-fifth of those who owe small amounts to family and friends say a lack of ready cash is the reason they don’t pay it back.
These outstanding debts between loved ones are having an impact on relationships, according to the survey, as a quarter of respondents state they will never lend money to that person again and 8pc admit to a falling out with the borrower.
Phelan said the PayPal app is efficient in terms of time and ease-of-use, and it can help save consumers money when they’re looking to repay a debt.
“In this day and age, we should expect more from our financial services. We have these incredibly powerful computers in our pockets, which should make life easier,” she said.
But will other financial institutions in the State follow suit?
“Our research shows that cash is still king in Ireland, and so far there haven’t been any contenders for its crown.
“I believe PayPal is best placed to take the fight to cash.”
Phelan leads PayPal’s global operation team in Dublin, Dundalk and Berlin.
When asked if any up-and-coming Irish fintechs had caught her eye, Phelan said she wouldn’t speculate on targets but PayPal is intent on leveraging its position “as the global leader in digital payments to make investments around the world in like-minded companies”.
And any such development would only strengthen PayPal’s business in Ireland, she said.
“These deals are about growth and expansion, not about cost cutting.
“They will not affect our commitment to Ireland, which remains an important strategic hub for our business,” she added.
PayPal recently acquired an “appealing partner” in small business commerce platform iZettle, which has a presence in Europe and Latin America.
“Small businesses are the bedrock of our business, and they increasingly want a one-stop solution that can help them compete online and offline,” she says.
“The acquisition of iZettle will significantly expand our in-store presence, and strengthen our platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment.”
eBay’s decision to drop PayPal following the separation, worked in her firm’s favour, she said.
“Under the terms of the operating agreement with eBay, we were not able to pursue some of their marketplace competitors. Now we will have the ability to pursue after July 2020,” she says.
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