Last year, both of these payment networks sealed a deal with PayPal, giving the company access to payments via Visa and Mastercard cards at the point of sale. This, supposedly, would reduce the competition between traditional payment networks and PayPal, since customers are no longer pushed to complete PayPal transactions via ACH (and outside of Visa/Mastercard networks).
This point, you may recall, was very important for Visa’s former CEO Charles Scharf.
The deal has been in effect for about six months now. Are the card networks satisfied with the results?
It’s unclear if more customers are shifting away from ACH as a result of the partnership, but that was not the point in the first place, Linda Kirkpatrick, EVP of merchants and acceptance at Mastercard, said during Barclays Emerging Payments forum yesterday:
From our perspective it was the right deal subscribe. I think also from our perspective it’s too soon to tell if those actions are having or yielding significant benefit for the network, but we feel that this is a value exchange that made sense given our respective places in ecosystem. Consumers don’t like ACH, they are reluctant to give a merchant their bank account numbers, so I think they appreciate when they can leverage again the safest and most secure way to pay and when they can be feel protected by zero liability.
Visa’s CFO Vasant Prabhu, shared a similar sentiment during the forum: the primary objective of the partnership was to secure frictionless experience for the beloved customer. Otherwise, there are no other clear benefits to share at the moment:
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We are very happy with how things are going with PayPal. They are doing what they promised they would do. We like the fact that the friction that a Visa cardholder had when they use PayPal is now gone. You are no longer discouraged to use Visa. The use-a-Visa now is as easy as using any other mode of payment on PayPal. How much volume at shift? We’ll have to wait and see. It’s too early to tell. We’ve certainly given PayPal some incentives from our own fees to make that happen.