It all started as a rumour on Twitter back in February. A post was made stating that First National Bank was in talks with PayPal to bring the service to SA. The news spread like wildfire among SA's digirati - to such an extent that FNB was forced to make a rushed and rather uninformative statment on the matter.

Last month the rumours were confirmed. FNB’s exclusive Top Up and Withdraw service with PayPal allows FNB customers to top up and withdraw funds from a PayPal account via a qualifying FNB account.

The problem with PayPal

Why is this significant? Well let’s first look at what PayPal is. As one of the biggest players in the online payment market, with 81 million active accounts, PayPal carries a lot of clout. Instead of having to enter your credit card details for every transaction you make on the net, you simply open an account with PayPal. This account can then be securely linked to your credit card, and you can use PayPal for your purchases. Thanks to a number of security features people also feel at ease paying money into a PayPal account.

Although South Africans could easily open a PayPal account, the problem was that the Reserve Bank didn’t allow for those payments to be transferred back into a SA bank account. So if you had an online shop selling vuvuzelas, money transferred to your PayPal account had to stay there. Until FNB’s deal with PayPal, that is.

Payment now transferable

FNB customers can open a PayPal account and link it to a qualified FNB account to receive PayPal payments in 21 different currencies. FNB will then convert the currency to South African Rands when the money is transferred into their account, with a transaction commission of 1.5% per transaction. All this approved by the Exchange Control Department of the South African Reserve Bank.

Some problems

But the service isn’t hitch free. Receiving payments in any of 21 currencies is fantastic, but the fact that none of those currencies is the Rand is rather odd. So, selling goods via PayPal to fellow countrymen requires that you deal in foreign currency. The other issue is the fact that you are tied to FNB if you want to receive payments via PayPal.

Despite this, the FNB-PayPal agreement is yet another necessary step for SA to become more connected in a globalised world. It just makes us wish that we actually had something to sell online.

The South African PayPal site is up and running on https://www.paypal.com/za. Visit www.fnb.co.za for more info.

Techsmart April 2010 www.techsmart.co.za