PURCHASE, N.Y.–PayPal Holdings has entered into a deal with MasterCard that will allow payments in stores.
According to The Wall Street Journal, PayPal will allow users to select a credit or debit card as the default payment method and share data on transactions made through MasterCard's tap-and-pay feature. PayPal reached a similar agreement with Visa in July to make it easier for its customers to use Visa credit and debit cards in stores.
“The two deals in quick succession are among the biggest moves so far in the online-payments pioneer’s post-independence strategy after splitting off from eBay Inc. last year,” according to the Journal. “The aim is to end bitter fights with the big card issuers and make PayPal a universally accepted method of payment. This would include in stores at the checkout counter, with MasterCard and Visa’s mobile-tap tools, the big new frontier for payments companies. But some analysts have argued that this comes at the expense of profitability in the short term. The moves shift PayPal away from promoting free bank transfers to fund customers’ transactions and toward the networks, which charge a fee.”
There is also fierce competition from tech firms such as Apple Inc., and young payments providers such as Stripe Inc., to win over merchants and consumers in big numbers in the mobile and one-click online payments realms.
Paypal said the network deals, which will see PayPal place debit and credit cards on par with other ways to pay, make PayPal a “ubiquitous” payment tool, The Wall Street Journal reported. The company added that volume growth would outpace declines in revenue per transaction, and that merchants would want to pay for PayPal because it works seamlessly for every customer.
As part of the agreement MasterCard will drop the digital wallet fee it charges PayPal. It will also give PayPal volume discounts, as Visa did.
MasterCard said it will further enable PayPal’s Braintree to offer Masterpass, a one-click online checkout tool, and enable Venmo users to make instant transfers via MasterCard Send, rather than waiting up to three days to get money into their bank accounts.