Thursday, May 15, 2008

How Paypal Transfers Funds to Philippine Bank Accounts via ACH

It seems that even months after Paypal opened the floodgates to withdraw Paypal funds in the Philippines, most Philippine banks are still clueless on what is Paypal and how to link their bank accounts to Paypal. Proof of this is when banks are called up by their customers for their bank codes but will deny any tie up with Paypal and instead will give their SWIFT code (which is not the same as their Philippine bank code)

I just received a call from someone at a bank inquiring if my company is involved or if I knew anything about Paypal.

I simply explained to him how Paypal works and how they do their fund transfers similar to an IBFT (inter-bank fund transfer) transaction but this time involving a foreign bank JP Morgan Chase who does the transfers via Automated Clearing House (ACH). It's a simple process where transferee accounts to to various banks are processed by JP Morgan through ACH.

I seems Paypal is a client of JP Morgan Chase's Global ACH service and Philippine banks don't know anything much about it since it's a seamless service.

Next thing I predict, is that banks will investigate this scheme if to see if it competes with their remittance business which is a highly lucrative business for them.

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