Just days after announcing a similar deal with Visa, PayPal has now announced it has come to an agreement with MasterCard, as well. This will allow customers to use PayPal to pay in stores, it was said, through the use of smartphones and contactless payment cards. According to multiple media reports, this deal actually means losses for PayPal in the short term.
Wall Street Journal reported that PayPal is 'shifting away from promoting free bank transfers to fund customers’ transactions and toward the networks, which charge a fee'. But with strong competition coming from the likes of Apple or Stripe, PayPal wants to become a 'ubiquitous' payment tool, as soon as possible.
“Customer choice and partnership are fundamental principles for PayPal,” the company's Chief Executive Dan Schulman said. “With each partnership agreement that we sign, we further expand the ubiquity and value of the PayPal brand and improve our own economics.”
Under the agreement, PayPal will be sharing its data with MasterCard. Also, users will be able to choose PayPal as their default payment method, it was said.
“Whether paying in the physical or digital world, consumers want to see the familiar MasterCard brand,” said MasterCard CEO Ajay Banga. PayPal, on the other hand, will no longer have to pay the digital wallet fee, and will get volume discounts.
“Our bread and butter is, we’re a checkout company,” said Jim Magats, PayPal’s head of global core payments, in an interview. “What merchants want is conversion, and they’re willing to pay for removing any friction in checking out.”
Image Credit: Lava / Flickr