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Visa partnership strengthens Paypal’s O2O position

In an online to offline (O2O) play, the online-payment provider strikes a deal with Visa that gives consumers the option to use Paypal digital wallet payments at physical retail locations that facilitate contactless payment transactions.

Thursday’s partnership emphasized greater collaboration between the two and tries to resolve Visa’s complaints that PayPal steered its users to tap their bank accounts rather than their credit cards as a way to avoid paying Visa’s credit card fees. The partnership comes a day after PayPal celebrated its one-year anniversary as a standalone public company after its eBay.

What it means
With PayPal no longer directing its users to link their bank accounts instead of their credit cards, PayPal can now capitalize on "certain economic incentives," including Visa incentives for increased volume, and greater long-term Visa fee certainty. The partnership also enables Visa debit customers to move money instantly on Paypal and Venmo accounts via their Visa debit cards leveraging Visa Direct.

"This agreement opens new avenues for PayPal to collaborate with Visa, financial institutions, and others in the payments ecosystem to deliver greater value, more choice, and new experiences for our joint customers wherever they transact — online, in-app or in-store," PayPal CEO Dan Schulman said in a statement.

The deal also calls for Paypal to start sharing data about Visa-funded transactions with the credit card company, which the company says will be similar to the data collected when a Visa card is swiped at a store or used online.

PayPal will join the Visa Digital Enablement Program (VDEP) to expand point-of-sale acceptance.

Source: WSJ

Tags: News, payments

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