This is a business PayPal is clearly happy to run at a loss. Why?

Why are they offering "no credit check?"

I don't buy this nonsense about displacing cash advance. I think they are looking for an "entry point" to get more merchants on their platform - thus generating more data (not to mention revenue). They'll monetize both.

Collecting merchant processing fees is the only possible way for PayPal to grow - right now, while it seeks to get in on this rush to aggregate ordinary transactional data... Or, big data.

It's a burgeoning business and this "head fake" may buy them a split second breathing room in this global multi trillion dollar processing fee competition.

Here's a scenario that immediately popped into my mind based on this article. Merchant applies for PayPal loan. PayPal says; "sorry not enough transaction history, but if you want a chance (to win) this dirt cheap and no credit check money - process with us and we will circle back soon."

They have just created a passive game mechanic. The merchant with poor credit no has a "shot" at a business loan. Only costs him time now... Cuz, "all PayPal needs to do is see my transactions for a while and I get a loan!" For the merchant who refuses MCA rates - but who has good credit, this is much the same.

PayPal had cast a wide funnel at the top, monetizes it, and as the funnel narrows -they lend money and will lose that.

No one has seen their funnel analyses before launching this - but Max Levchin is on that board so it makes me wonder.

There is something to be learned from the marketing of this product too. "Invites" "selected businesses..." If you email or call 100 businesses with exclusive invites to your "offer" - money, vs calling of emailing them "click here to apply now."

Which campaign will perform better?

If this industry is to be displaced - it won't because PayPal displaced it.

Maybe the gov, certainly not PayPal.