Most of you know my relationship with Paypal. They sent my wife away in tears on a recent Ebay transaction, and their customer service can be horrible at times (I’m now out $230 of my own money because of it, and because supposedly they can’t trust me). At the same time I’m on their Developer Council and I love ’em to death, because as a developer I feel I have a voice with them. Regardless, when compared to my bank, I see Paypal in an entirely different light than the situation with my wife. Without a doubt, Paypal is one of the most innovative banking solutions out there right now, and that’s hard to ignore. I wonder, could Paypal be a decent replacement to my business checking account at my bank? I’m starting to think it could very well be.

Innovation

Let’s start with their biggest strength. Paypal is by far one of the most innovative banking platforms on the planet right now. They are entirely set up to work virtually. They were one of the first to set up online money transfers. With just an email address I can send money to someone. I can set up, and take credit card transactions, entirely online. I can scan checks with my cell phone and they go into my Paypal account. They’re attached to Money Market funds that produce interest on my checking account. I was even able to order a debit card online, and now I can withdraw actual cash from my Paypal account.

Let’s add to all the additional payment services I can use and set up, all online. I can add, just by copying simple HTML, a payment widget to my website if I want to take payments. I can set up shopping carts with ease. I can integrate to payments, deposits, and more, all through a developer API. My banks can’t do that.

With my bank, especially my business account, my options are limited. I don’t yet have online check deposit capabilities on my business account.  I don’t have an API to access payments. Heck, for many business checking accounts you don’t even make interest on your accounts! Granted, my personal account situation is much better – I use USAA, whose services are second to none, but let’s stick to business for purposes of this post.

Customer Service

As I mentioned, Paypal customer support sent my wife away crying because we just happened to throw away our shipping receipt for an Ebay transaction that went bad 2 months after the fact. However, if I contrast that with my business banking account, that’s not so bad. With them there is no leverage – if you make a late payment, you get a fee, no leeway. I have to travel somewhere to get any sort of personal service, and calling them takes long waits on the phone. My bank is constantly trying to find new ways to charge me more money. At my bank I have very little protection if someone makes a fraudulent purchase from my bank account. I just don’t see that as much from Paypal. Compared to my business banking, Paypal looks pretty good!

Maybe my experience is different than yours. For my banking solution I have to have a multi-state banking solution that has offices in Delaware, considering my business is a Delaware LLC and my business is almost entirely virtual. So I guess my options are limited. However, Paypal is starting to seem like an awfully good solution to me right now to replace my business checking account. True, they’re not FDIC insured, but is the FDIC even viable any more? I’m starting to think my money may actually be better protected with a solution like Paypal, vs. the FDIC.

What do you think? Are there any better solutions for business banking out there? Should I consider moving my business accounting entirely to Paypal? I’m starting to think that may be a good option.