Presumably, I can't call the bank and tell them to transfer from someone's account using their phone/email address.
Do you have a problem giving your Paypal address out? I don't: I give mine out and people can use it to transfer money in. How is this any different at all?
Anything that makes it easier, faster, or more convenient to transfer money is going to increase fraud. This is not hyperbole, it's simply a matter of degree.
The credit card networks make up for this by charging a sizeable fee on every transaction and passing the cost of reported fraudulent transactions back to the merchants, who presumably feel the convenience is worth the cost.
In this scheme though it's not clear who is going to bear the cost. Paypal had Ebay to basically force people to use it for their transactions.
Who is going to pay the fraud costs in these transactions? Do federal laws that limit liability for other card network transactions apply to email payments by bank? Are personal and business accounts treated the same way?
Do you have a problem giving your Paypal address out?
Yes I don't use PayPal, although its as much because I have heard of so many people not actually getting paid the money they were sent.
But this isn't really about you and me, we know how email and phishing scams work so we are not the biggest ones at risk.
How is this any different at all?
For one thing, Paypal currently does face huge costs due to fraud, so even if it's the same, it represents more of it.
There is now (and there almost always has been) so much fraud in banking it's treated as an expected statistical loss. Something like 0.5% of transactions is one statistic I've heard. Banking has been pushed online, and currently the highest-risk website transaction of all is setting up a new biller, address, account number, etc. in the online bill-pay. There's malware that will script this process for you.
So now the transaction destination is just an email address... hmm, what could possibly go wrong? :-)
