Issues

The term "fintech" is often used to describe tech startups that are presumably going to upend traditional financial institutions (ie. Banks) through the use of new technology. Such a characterization, however, misses a large amount of what is truly transforming the financial services ecosystem. At PayPal, we believe that our nearly two decades of experience gives us a strong position to speak about what FinTech really is. This paper is our attempt to provide an insider’s perspective on the potential and the reality of fintech.

The remittances market is a valuable external source of funding for many families around the world. The traditional costs of securely and efficiently managing and moving money across borders have been relatively high. Advances in digital technology are enabling a significant reduction in remittances costs. This study looks at the digital remittance solutions developed by Xoom and PayPal.

Small and Medium-sized enterprises (SMEs) account for more than half of the world’s GDP and employ two-thirds of the global workforce. The number one barrier to growth faced by SMEs around the globe is access to financing. While lending to large firms has rebounded relatively quickly from the Great Recession, lending to small businesses is down approximately 20% over the same period. Online lending options like PayPal Working Capital, may be stepping in to fill this gap by resolving many of the barriers associated with traditional SME financing.

Charitable organizations pursue important causes and provide public services, with no intention of making a profit. Donors, be they individuals, groups, or companies, spend their hard-earned dollars to support these causes. Transferring funds from donors to charitable organizations, however, takes resources. The wide variety of payment methods available today – checks, credit cards, digital wallets, etc. – has democratized charitable giving by enabling people of any means to become donors. Each payment method though comes with its own unique set of costs and benefits.

Rapid Improvements in technology are enabling business models in the payments arena that were simply not possible 20 years ago. The innovations in industry, though, operate within a regulatory system that is struggling to keep pace. In this white paper, PayPal advocates the use of a new decision-making model in the United States—SMART Governance—to deliver the important goals of underlying payments regulation in a manner that benefits government, consumers and industry.

The overarching policy goals behind payments regulation remain relevant. However, rapid changes in consumer behavior, technology and merchant need are transforming the payments industry. Focused on the payments arena, this four-part document explains the transformation that is taking place in the industry, sets out why we think the approach to regulation in Europe can similarly innovate and transform, offers concrete ideas about how this could be done and ends with a case study and call to action.