PayPal Inc. is acting more like a bank these days and the addition of a mobile remote-deposit capture feature to its Apple Inc. iPhone application is helping solidify that view, according to one industry observer.

Last week, PayPal’s Laura Chambers said the company soon would add mobile remote-deposit capture. As of Oct. 5, an updated iPhone app was still not available.

San Jose, Calif.-based PayPal did not return a request for comment.

PayPal has strived to add functionalities to its iPhone app. Earlier this year the eBay Inc. subsidiary added a person-to-person funds-transfer option that completes a transaction when PayPal app users bump their iPhones together.

The mobile remote-deposit capture feature “is the continuation of [PayPal’s] extension into bank-like payments services and shows their ability to disintermediate the banks in all typed of payment avenues,” says Andy Schmidt, a research director in TowerGroup’s global payments service.

The technology, which enables customers to deposit checks into their accounts using images captured with cameras on their smartphones, is not new.

USAA Federal Savings Bank in 2009 introduced Deposit@Mobile as part of its mobile-banking application for the iPhone and Andriod-powered phones (see story). 

The San Antonio-based financial-services company, which has a single branch, primarily serves individuals in the military and their families.

JPMorgan Chase & Co. in July became the first of the major U.S. financial institutions to offer mobile remote-deposit capture.

How consumers use PayPal’s version largely will depend on how often they interact with their accounts and the convenience factor, Schmidt says. Small businesses and consumers who receive small payments might find it easier to accept a PayPal mobile deposit instead of visiting a bank branch.

“I think you’ll see some surprising uptake within the PayPal community,” Schmidt says.

Growing interest in mobile remote-deposit capture technology has sparked a debate over whether it might help stall the rapid decline in check use.

Schmidt believes the technology moves the market in the wrong direction from electronic payments and still puts some emphasis on paper methods. One of the biggest challenges, however, has been the ability of businesses and consumers to make and receive electronic payments.

Companies are using mobile remote-deposit capture to make consumers more comfortable with mobile as a payment channel. “That can do a world of good of helping move the industry towards [more] electronic payments in general,” Schmidt says.

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