PayPal and Visa announced a new US
strategic partnership on 21 July. The
deal puts an end to their feud relating
to processing fees and will now offer
greater choice to customers over
digital payments.
As per the agreement, details of which
were listed in a Visa press release ,
PayPal would now make it easier for
both new and existing customers to
choose Visa cards, while paying
online. PayPal will present Visa cards
as a clear and equal payment and also
allow consumers to make these cards
their preferred method of payment.
PayPal will also put an end to its
earlier strategy of encouraging Visa
cardholders to link their digital wallets
directly to a bank account via the
Automated Clearing House (ACH).
PayPal used to do the same as cutting
Visa out of the transaction was helping
it to lower its processing costs.
The new deal will now allow for
funnelling more transactions through
Visa’s network. This in turn benefits
Visa as it would translate to more
revenues for the American credit cards
and payment systems company.
In exchange, PayPal will gain access to
the Visa Digital Enablement Program
(VDEP). This will help in the expansion
of PayPal’s digital presence to all
physical retail locations in the US,
where Visa has already enabled its
contactless transactions system. Also,
joining VDEP, will help PayPal access
Visa’s token services and other digital
capabilities in the US.
Most importantly, the new agreement
will provide PayPal with long-term
Visa fee certainty, a factor that was the
prime cause for their long dispute,
according to a news report. The deal
will also make PayPal eligible for other
economic incentives from Visa such as
those it offers for increased volume.
Apart from benefits for both the
companies, the new agreement is also
said to be in favour of customers.
According to Visa, they will now be
able to instantly withdraw and move
money from their PayPal accounts to
their bank account. The new deal is
also expected to provide customers
with a better user experience, a proper
application of rewards along with
reducing confusion and costly and
time-consuming disputes.
Dan Schulman, CEO at PayPal, said,
“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.”