PayPal recently made some changes to their fees, something I never thought we would ever see happen.

We’re removing the variable rate pricing for sending money to friends and family members who have PayPal accounts in a country other than the United States when you send money using PayPal balance or your bank account and introducing a new flat fee of $2.99 or $4.99 per transaction depending on the recipient’s country. However, when you send money using your credit card, debit card, or PayPal credit you will be charged the new flat fee per transaction depending on the recipient’s country + 2.9% of the transaction amount + a fixed fee based on the currency.

PayPal has decided to remove the variable rate pricing for sending money, moving to a fixed rate fee depending on the recipients country. The fees for sending money using a card or PayPal balance still have more fees associated with them, including a 2.9% fee of the transaction amount.

If you think this sounds insane, it is. PayPal has effectively just raised the prices for its service, it's a pretty confounding move to make in an industry currently seeing innovation thanks in part to blockchain technology and cryptocurrencies.

Understandably PayPal needs to make money, it's a business and it costs them money to provide a service, but these fees in some instances are going to be excessively high. Imagine sending someone $5 for something and paying a $5 fee? The only way in which the new fees make sense is when you're dealing in large amounts where the variable rate might have cost a lot more.

If you're Australian the flat fee is $5.99 AUD, that only kicks in once you send an amount equal to or higher than $5.99 AUD. Any amount lower than $5 will not incur a fee, anything between $5 and $5.98 will incur a fee equal to what you are sending. Which is insane when you think sending $5.50 is actually going to cost you $11 in total.

This is an interesting move most likely spurred by eBay announcing they're ending their 15 year deal with PayPal and using Adyen. I guess PayPal realise they need to plug the money hole elsewhere when eBay moves away from treating PayPal as a first-class citizen.

Cryptocurrencies focused on P2P payments and transfers have a real shot at unseating PayPal after this move. The real issue that cryptocurrencies have is that it can be hard to obtain as the KYC/AML verification steps are complicated and time-consuming, and buying cryptocurrency is daunting for first-time buyers.

To answer the question of whether or not Cryptocurrency will kill PayPal? It looks like PayPal is killing PayPal by pulling such an anti-consumer move that will surely backfire and result in PayPal revising its fees somewhere down the line as they begin to wilt and die like a forgotten flower.

The future of money is not PayPal. Just like we saw Uber come along and decimate the taxi industry, we saw Airbnb come along and seriously hurt the accommodation industry and numerous online platforms change the travel game, so too, will cryptocurrency.

RIP PayPal 1998-2018.

Image sourced from Pixabay.