September 8, 2016
On the heels of a similar agreement with Visa , PayPal announced on Tuesday a deal with Mastercard under which the network’s cards can be used in the PayPal wallet as a funding source to make payments. The online payments pioneer also will gain more presence at the POS, where PayPal users will be able to make contactless purchases at Masterpass-enabled terminals. They also will be able to make Mastercard the default payment method within the PayPal wallet. From a CNP perspective, the deal enables PayPal’s Braintree online processing unit to offer one-click payments through Masterpass and instant Venmo P2P transfers through MasterCard Send. According to PayPal CEO Dan Schulman, giving its users more choice drove PayPal to partner with MasterCard and Visa.
“Customer choice and partnership are fundamental principles for PayPal that guide how we operate as a company, giving our customers greater opportunities to more easily manage and move their money online, in app and in-store,” said Dan Schulman, president and CEO, PayPal. “With each partnership agreement that we sign, we further expand the ubiquity and value of the PayPal brand and improve our own economics.”
Terms of the agreement that affect PayPal’s economics include Mastercard waiving the fees it typically charges digital-wallet providers and giving PayPal a volume discount. In return, PayPal will provide increased visibility for Mastercard branding and will not solicit Mastercard cardholders using PayPal to link to a bank account instead of the credit card.