PayPal is the original and largest e-wallet service to date with over 179 million active users in 200+ geographical locations across the globe. PayPal experienced a short-lived partnership with the online gambling industry shortly after its launch in 1998, but returned as a provider to operators outside of the U.S. in 2005 and then a slow re-entry into the United States with a limited number of sportsbooks ten years later.
Most people are familiar with the name Elon Musk, an inventor and visionary, and notably the product architect of Tesla and Solar City.
Musk was also part of the founding team for PayPal and continues to be a part of the company to this day. Musk’s role involved a merger of his online banking company, X.com, with the founding team of Confinity.
Confinity was launched back in the day of Palm Pilots as a way to utilize them for encrypted payments and the two companies together produced an entirely new money service industry.
The result of these combined efforts is PayPal, and the company took off with flying colors between 2000 and 2002 earning an entry onto the NASDAQ.
Although PayPal has seen a consistent 3% increase in customers each quarter for the last two years, the actual number of transactions has actually been growing faster that its customer base. PayPal’s reach has also expanded with its Xoom branding that services 53 countries including 11 new areas just within this past year.
PayPal’s sales exceeded $10.8 billion in 2016 with an 14% increase in stock value and the company has further expanded its product offerings with the Venmo and Braintree brands both providing businesses with new PayPal payment systems. Furthermore, at the time of this writing, PayPal has just now ventured into expanded in-store payment options in the United States via Android phones through an agreement with Wells Fargo bank. Wells Fargo is allowing customers to use their debit or credit cards via PayPal for tap-and-pay transactions that should result in an even bigger customer base.
Getting back to PayPal and online sports betting, though. In 2003, Paypal merged with eBay and that signaled the end, albeit temporary end, to providing services in conjunction with online gambling.
PayPal had a bit of a rocky road in its history regarding transactions in conjunction with online betting. It first began processing them shortly after its launch in North America, but that was short-lived due to the legal complications in the industry as well as the potential financial risk that was envisioned and, eventually, came to light. PayPal was given fines equal to the amount they had profited over the two years of service they provided to the online gambling industry.
PayPal’s business structure does provide an ideal vehicle for online wagering, though, so it eventually returned to the global online betting marketplace in 2008 with some prominent United Kingdom based online bookmakers, such as Betfair and William Hill, and then slowly eased its way back in, acquiring new sportsbooks, racebooks, and casinos as payment partners. The United Kingdom has legalized gambling making it much less restrictive than some other locations such as the United States.
The return of its U.S. presence has, indeed, been a little bit trickier.
PayPal did quietly return to the U.S. sportsbook market in 2015 providing a new processing option for account funding with Caesars Interactive Entertainment, DerbyGames.com, and WSOP.com and continues to do so.
However, there is further stipulation attached to this set-up in that U.S. players in Delaware, New Jersey, and Nevada are the only ones who can currently participate in legalized gambling and, therefore, are the only ones who can utilize PayPal for online gaming transactions when and if it’s offered. Additionally, these players cannot use debit or credit cards for funding their PayPal account in conjunction with using the money they’ve earmarked for wagering, so it’s quite limiting for these U.S.-based bettors.
The main premise of PayPal is to provide a secure and private banking method easily funded by credit cards, debit cards, or bank accounts.
PayPal is not a bank, however, and is limited in its menu of offerings primarily focusing on a quick and easy process for sending and receiving money accompanied by buyer and seller protection.
As it is one of the present-day largest e-wallet services and one of the most reputable members of the e-commerce industry, PayPal has the discretion to implement stringent guidelines associated with acceptable merchants. When it comes to businesses that offer online wagering, these guidelines are clearly evident. PayPal strictly enforces online gambling rules and regulations in all of its locations. It had to pay the price in the early 2000s so the company is, rightfully, not willing to gamble with their profits again.
We mentioned that Betfair and William Hill have been presenting PayPal as a way to conduct quick and easy transactions since 2008 and have since been joined by others such as Bet365, PaddyPower, and SportingBet. Online casinos are also expanding their use of PayPal, offering it for both deposits and withdrawals, and encompassing the legal U.S. locations as well. A site like 888casino has PayPal as an option in all locations including their New Jersey-based website.
Take an internet bookmaker like Betway, though, and you’ll see that banking, including PayPal, is not entirely cut and dry. Betway utilizes PayPal for deposit and withdrawal transactions for its players from the United Kingdom and Germany, but only accepts PayPal deposits, and not withdrawals, in Austria. Additionally, it doesn’t even allow for PayPal use from its players in Brazil, Canada, Czech Republic, Finland, Netherland, Sweden, and Switzerland so just because a sportsbook has a PayPal designation, it may not be straight across the board.
When it is available for selection, PayPal is one of the favored methods of funding a betting account as it offers the big three:
The PayPal process itself is a nicely streamlined one. Customers register a PayPal account with a valid email address and funding option. Customers have the choice of using their traditional bank account, credit or debit card, or a combination. PayPal accounts can include several registered funding methods that are easily selected per transaction. They are not limited to always using a certain bank account or a particular credit card. They can also have multiple credit accounts or bank accounts verified within their one PayPal account.
Once the PayPal account is established, players can send to, and sometimes, receive money from their sportsbook account by simply selecting the option of their choice. Some sportsbooks and racebooks, like William Hill, are even providing a PayPal account sign-up link right in their own Cashier area to easily facilitate a new PayPal account and subsequent new funding method for the bettor.
PayPal as a “banking” method provides online bettors with:
As far as establishing a PayPal account, the ease and privacy factor lend itself to the popularity of this brand. PayPal members set up a user account with an email address and then either a bank, credit or debit card account, and they’re off and running. Accounts with new funding methods do require a certification process, but it’s as simple as allowing a small deposit (and subsequent withdrawal) from PayPal into the customer account and then verifying the amount of the deposit, ensuring that you are the owner and authorized to use the particular account. This process typically takes about 72 business hours to complete.
Online players also appreciate the higher limits of transaction amounts that PayPal allows for in regard to both withdrawals and deposits into a PayPal account and, subsequently, in and out of a player’s wagering account. As long as an account is verified there is virtually no limit to the total amount of daily transactions, but the per-transaction amount is typically capped at 10,000. There are slightly different verification procedures and limits imposed based upon the account holder’s geographical location, though, but PayPal definitely caters to the needs of the majority of online bettors.
In a survey of PayPal users in Europe, Russia, and the United States, 78% say they’ve recently used their PayPal account for online purchases as opposed to 48% using a credit card.
Despite PayPal’s popularity, Skrill is actually currently offered in more online sportsbooks, but both e-wallet solutions provide similar cost-effective, safe, and private ways to transfer money in and out of betting accounts.