VISA And PayPal Negotiate A Truce To Extend Payment Choices For Consumers
By Christine Kern, contributing writer
The partnership is designed to accelerate the adoption of digital payments.
A new partnership between VISA Inc. and PayPal places the two entities on a new path towards the acceleration of the adoption of digital payments that are safe, secure, and convenient for both consumers and merchants, according to a press release. The collaboration is designed to provide “an improved and more seamless payment experience for Visa cardholders” and will offer more flexibility in payment options for consumers using PayPal and Venmo wallets.
The announcement comes as PayPal released its latest earnings figures, demonstrating its financial strength in Q2 2016. PayPal reported revenue growth of 15 percent, with 188 million active customer accounts and 1.4 billion transactions processed.
"We have a clear mission at PayPal. We want to democratize financial services and become an everyday, essential service for underserved consumers," said Dan Schulman, President and CEO of PayPal. "We want to use our platform and services to enable merchants to fully capitalize on the move to mobile and digital commerce. Our strong financial performance is one sign of the tangible and consistent progress we've made towards achieving these goals. Our agreement with Visa enhances our capabilities, offers the potential to establish new contexts for our consumers and merchants, and lays the foundation for additional partnerships."
Among the benefits of the new collaboration are better customer experience, more spending volume on credit and debit cards, lower operational costs, and improved security. All of these benefits should help drive increased sales.
“Giving consumers choice in how and where they pay is essential to our goal of being a customer champion and we welcome the opportunity to work with more partners like Visa who share our vision,” said Dan Schulman, president and chief executive officer, PayPal. “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.”
According to the terms of the agreement, Visa Cardholders will gain enhanced consumer choice and improved experience, making it easier for customers to pay with Visa cards on PayPal. PayPal will also join the Visa Digital Enablement Program (VDEP) to expand point of sale acceptance and enhance transaction security. Consumers will be able to instantly withdraw and move money from their PayPal and Venmo accounts to their bank accounts via their Visa debits cards using Visa Direct. The agreement also provides certain economic incentives for PayPal, including Visa incentives for increased volume and greater long-term Visa fee certainty.
“We are excited to begin a new chapter with PayPal. Our agreement provides a framework for our companies to work together collaboratively,” said Charlie Scharf, chief executive officer, Visa. “PayPal has built industry leading capabilities which complement those of Visa and our clients, and working together, we will be able to deliver better solutions for consumers and merchants. At Visa, we are focused on growth by providing our issuer and acquirer clients – and their clients, merchants and consumers – with the best way to pay and be paid everywhere and this agreement supports this approach.”