In a crowded market for online payments, PayPal Holdings Inc. PYPL, +1.94% thinks that giving sellers faster access to their funds will help the company’s offerings stand out.
The company on Tuesday announced Funds Now, a free program that will give sellers in good standing instant access to funds earned from their sales. More than a million sellers have already been given access to the feature for free, the company said.
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Usually, it can take days or weeks for sellers to access their funds, PayPal Chief Operating Officer Bill Ready told MarketWatch, mainly because of fraud concerns. PayPal’s confidence in its risk-detection tools now enables it to make funds immediately available to merchants.
“We think this is a meaningful differentiator of what we’re able to offer versus what others offer,” he said. Eventually, he expects Funds Now to “change expectations in the industry.”
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Merchants who use PayPal’s Funds Now option can immediately access the money from their sales within PayPal or spend it via a PayPal debit card. There is a separate process of transferring the funds to a bank account, which typically takes multiple days. Merchants can wait several days for the deposit to clear or use PayPal’s instant-deposit feature, which lets sellers transfer funds instantly for a fee.
Demand for the paid instant-transfer option has been “tremendous,” Ready said. The company is seeing “fantastic uptake across PayPal and Venmo.”
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Though the company’s latest move to enable instant-funds access deals with merchants, PayPal also offers an instant-transfer option for consumers who use Venmo to send money to friends. That’s one leg of the company’s plans to better monetize the popular money-transfer service and its loyal user base.
PayPal shares are up 1.2% in Tuesday’s session after an analyst hiked his price target on the stock, and they’re up 45% over the past 12 months. The S&P 500 SPX, +0.47% has gained 16% in that time.
