PayPal and Visa jointly announced a deal last week giving PayPal access to Visa payment rails at the point of sale, and giving Visa cards preferential treatment within the PayPal environment. The deal is exclusive for 12 months, Visa CEO Charlie Scharf noted.
I can tell you that I’m not clear that I understand enough about what exclusivity Visa signed with PayPal, because we’re not encountering any difficulty while talking to PayPal in that space. So I don’t know exactly what the nature of that exclusivity is. You got to ask PayPal or Visa, because I’m pretty clear that we’ve got enough good conversations going on, not just now but for a little while.
Banga said conversations with PayPal haven’t changed, and those conversations seem similar to the ones Visa was having. Banga characterized the exchange in this way:
It’s been sometimes good, sometimes stressful, but constructive. And my view always has been that if PayPal wants to, or anybody else like that — a digital wallet operator — wants to use to our rails of credit and debit to be able to build their own model, then they can’t just use our rails when it suits them, and use another rail to go around us and the banks when it suits them. There’s got to be a more constructive partnership.
Banga praised the work of PayPal CEO Dan Schulman and said that overall he had a “generally positive” view of how the digital payments space was shaking out.
Thad Peterson, senior analyst for payments with Aite Group, shed a little light on what the Visa-PayPal deal may actually mean. “It’s exclusive in the way that the Visa product will be presented in the PayPal wallet, and also in the level of data that will appear on the customer’s statement for a Visa PayPal transaction,” he told Bank Innovation. “And my guess is that the deal that they got on interchange is pretty special too.”
MasterCard struck its own deal last week, acquiring the U.K.-based payments platform VocaLink. Curiously, this move puts MasterCard closer to the world of ACH payments — a world that infuriates Visa’s Charlie Scharf.
Wall Street is not viewing the Visa move as a particularly positive one for PayPal — its stock is down 7% and investors on balance seem to think Visa got the better end of the bargain.4 - Readers Like This Post