In the world of finance, companies tend to work against each other rather than together. But that’s exactly what rivals PayPal and Visa are doing. Given that the two companies have such different models, does it really make sense to start merging practices and creating more competition? What can traders expect from this deal? Is Visa getting the short end of the stick?
What Benefits will PayPal and Visa Get From this Deal?
While they might be very different companies, PayPal and Visa have a lot of common ground. Both companies are in the customer payment space. But where PayPal has always been a digital payment solution for businesses and consumers alike, Visa has always been a physical, card in hand, retail banking solution. Now the two companies are working together to offer PayPal debit cards through Visa in Europe. While it’s clearly a good idea for PayPal, what’s Visa’s plan here?
PayPal users will be able to “Tap to Pay” in brick and mortar shops throughout Europe through Visa’s contactless payments infrastructure. And in return, Visa customers get more, easier access to PayPal’s system.
And that’s a big thing. Until now, PayPal has been extremely protective of its ecosystem, particularly in regards to competition. PayPal has always made it easier to pay with a PayPal balance than to access a Visa card or bank account balance. Now, that won’t be an issue. And PayPal can even suggest Visa as a first option on invoices sent through its system. For granting that access to Visa, PayPal will some some financial incentives from Visa, which means more revenue and profits.
According to PayPal’s press release, its users can now pay with their PayPal balance anywhere Visa is accepted — worldwide. Other benefits include beefing up digital collaboration for greater payments security and providing faster, easier access to funds, as well as increasing customer choice.
Currently, there are no plans to release physical debit cards, but a plan is being developed.
PayPal also currently partners with MasterCard in other countries. PayPal also currently owns BrainTree, which owns social payment network Venmo. Throw in the new partnership with Visa, and these are all positive signs for a company that’s come under fire for being stagnant regarding innovation.
What is PayPal? Watch this video from PayPal to know more:
Both Visa, Inc. (V), and PayPal Holdings, Inc. (PYPL) are both UP on the news, and should continue to rise.
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