Please note the title (vs Should Prosper Pay Interest). One of my most viewed articles at RateLadder is Prosper.com Lenders Unite: Where is our Interest?…
I was reading a online Fortune article (What PayPal does with your money), which brought up the age old (in Prosper terms anyway) question… Will prosper pay interest? When asked at Prosper Days during the town hall John Witchel responded “…maybe.”
So this article from Fortune seemed timely… here is the line that explains how paypal pays interest.
Indeed, Paypal’s user agreement - which all accountholders must read and accept - states: “Paypal may combine your funds with the funds of other Users and place those Pooled Accounts in one or more bank accounts in PayPal’s name.”
…
PayPal’s Pires said accountholders should be aware that they have the power to collect interest for their own use on delayed funds. It’s as simple as enrolling in the company’s PayPal Money Market Fund, Pires said.
For enrolled accountholders, any funds earmarked for a hold are diverted into the Money Market Fund rather than PayPal’s corporate bank account, Pires said. The dividends earned are credited to user accounts on a monthly basis.
So my read on this is Prosper could do something similar… And if Prosper asked me to opt into an interest bearing money market pool I would agree to do just that.
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6 comments ↓
Come on you wouldn’t be interested in making more money. I say we just ignore the whole interest thing ;-).
I’m just waiting to see who is going to be first - Lending Club or Prosper.
I agree. I’ve got my money in the PayPal MMA, even though I know the funds aren’t guaranteed. I never keep too much money in there anyway. But I do want it earning money for me if possible. The same thing for my Prosper and LC accounts.
Let’s go on strike.
In a past post somewhere, John Witchel said, lenders cash was kept in separate accounts, known as FBO accounts, as this was safer,that if Prosper folded, the money could easily easily returned to us this way and that Fed Regs prevented paying interest on this type of account. Now at Prosper Days, he says “Maybe”, So I guess there’s trade offs. They are working on some type of workaround.
I don’t care so much since I only have a small amount of cash, I can see people who have a lot of cash, wanting it,but as John also pointed out,
we have instant transfers on over $500 now. So you can keep your money in an outside interest bearing account and transfer it over when you want it.
I suspect JW’s earlier analogy - in his now-deleted blog - of complaining about an absence of sofas in a bus station might be a better reflection of his feeling toward interest-paying accounts than “Maybe…”.
I agree. Just reporting on what he said in the townhall…
The problem as I see it is one of perception not in actual return… Let’s say Lending Club offers to pay interest tomorrow. I would suspect that Ledning Club would see a surge in deposits. It is not limited to Lending Club… Prosper would see the same surge if they started to pay interest.
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