Glenn’s reporting on the new banking licenses offered for the virtual world. Although there are obvious potential abuses, on balance I think these virtual world development are fantastic.
Back when I was running more website advertisements from Europe, Paypal was a godsend in terms of making it very easy to collect money from European partner. It was somewhat expensive – often running 5% or more in total fees, but well worth it in that I did not have to wait for checks in the mail and then wait for them to clear (international checks can take 10+ biz days to clear) .
I’m not clear on all the details but it looks to me like virtual banking is going to empower a LOT of places to compete with PayPal’s quality but expensive services, run their own interest rates, CDs, etc. Once a virtual bank establishes credibility it should be able to very cheaply and effectively offer better rates than conventional banks with their high costs. More risk? Probably some, but with greater risk comes greater reward so … you should sometimes choose to roll the dice on these things.