Visa And PayPal Partner To Accelerate Digital Payments

Visa and PayPal today (July 21) announced a strategic partnership that will combine the power of the largest payments network in the world with the largest digital payments network in the world to give consumers more choice about how they pay when using their PayPal accounts.

According to a release that was issued by PayPal announcing the deal, “the partnership puts PayPal and Visa on a new path with the companies working more collaboratively to accelerate the adoption of safe, reliable and convenient digital payments for consumers and merchants.”

Although there are five major points to this partnership, three immediately emerge as significant:

First, Visa cardholders will not be encouraged to provision their PayPal accounts with an ACH option and PayPal will work with issuers so that consumers are presented with an easy option to move their ACH account options to Visa-branded cards. Although PayPal CEO Dan Schulman has been openly vocal about PayPal’s tender-agnostic mission, ACH payments have been part of PayPal’s value proposition since it launched. The collaboration with Visa ensures that Visa cardholders and issuers are given equal weighting when establishing payments credentials inside of their PayPal accounts.

PayPal will also have access to the Visa Direct network which means consumers can move money to and from Visa debit products to and from their PayPal and Venmo accounts instantly.

Second, PayPal will become part of Visa’s Digital Enablement Program (VDEP). This means that PayPal, working through issuing banks, will now become a digital credential that can be used to transact at a physical point of sale, where Visa contactless transactions are accepted. Merchants will then have access to the tens of millions of PayPal-enabled consumers who will be ready and now able to transact via their mobile phones in their stores.

“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,” PayPal President and CEO Dan Schulman was quoted in the press relase announcing the partnership.

Third, this new relationship comes with new economics which provide greater “fee certainty” for PayPal, but, in time, could also form the foundation for new business models for PayPal and its merchants.

“We’re excited to begin a new chapter with PayPal,” Charlie Scharf, CEO of Visa, said in a press release. “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.”