Visa and PayPal: Potentially A Big Deal

July 21, 2017         By: Steven Anderson

The mobile payments market in general is a competitive place, as many subsections of business commonly are. Seeing companies work together, therefore, is something of an anomaly, something that’s really only done if both sides of the operation can see a clear advantage. Recent plans for PayPal and Visa to get together, meanwhile, have had some wondering if there’s a clear benefit to this move.

The immediate answer is likely yes. While the two are different companies, they’ve actually been seen working together in the past. After all, setting up a PayPal account generally requires some kind of credit or debit card, whether to fund the PayPal account or to offload the excess funding that’s in there, assuming that’s how one gets paid for goods or services.

So when PayPal and Visa got together to release a line of debit cards in Europe, and PayPal essentially took a step forward into physical retail banking, some got to wondering just what the deal was with all this. As it turns out, such a move would provide benefit for both sides.

With PayPal and Visa working together, PayPal users would get access to the “tap to pay” infrastructure currently in place throughout large portions of Europe. That’s welcome, especially for those who shop in European brick-and-mortar operations. Visa users, meanwhile, get more and simplified access to PayPal’s operations.

This last is noteworthy; PayPal has been very careful about letting in outsiders. While most anyone could sign up and link their Visa card, PayPal’s overall ecosystem has been comparatively closed. PayPal often made sure it was easier to pay with a PayPal balance than with the card or bank account to which the PayPal balance was tethered.

Now, that’s not so, and users can make the choice much more readily. That’s a move that will benefit PayPal thanks to some new financial incentives from Visa, so it’s clear there’s benefit on both sides.

PayPal can take its new revenue stream and use it to develop future capability, while Visa gets access to an easy-to-use operation that’s already trusted in a surprising number of places, especially online. Since reports put both companies’ stock prices as on the rise since this concept emerged, it’s safe to say the investors see value here too.