Rivals Visa and PayPal have shaken hands over a joint plan to issue debit cards in Europe. The truce stands to benefit merchants most of all, as it will expand their ability to use their PayPal funds to support business expenses and unlock new possibilities at the point of sale.
“Visa and PayPal have a shared goal of giving consumers a safe, convenient way to pay using their preferred device. Expanding our partnership into Europe provides greater consumer choice and benefits merchants,” said Bill Sheedy, CEO for the Europe region at Visa Inc. “By having the option to issue Visa accounts in Europe, PayPal will now have the ability to offer customers new and innovative ways to manage and move their money regardless of platform or device.”
PayPal enables users to leapfrog the card network and make payments directly from their bank account. Recently, however, it has been making inroads into more traditional retail banking territory. PayPal and Visa launched collaborations in the U.S. and Asia-Pacific last year, so U.S. customers already have access to PayPal debit cards. The Europe deal is an extension of those partnerships.
Jim Magats, head of payments, product and engineering at PayPal, said that several of PayPal’s merchant customers prefer to use the digital service for daily spending, and many are ready to extend that capability to card spending as well.
For PayPal customers, the partnership will open up a “Tap to Pay” option in retailers and shops across Europe. Visa has already built the contactless payments infrastructure. This gives PayPal its first “in” to brick-and-mortar retail transactions on the continent.
Meanwhile, Visa customers will find reduced friction in their PayPal experience, whether they are using their Visa card to pay online or in a mobile app.
Magats said that PayPal had historically made it difficult for customers to access their Visa card balance or bank account, but no more: Going forward, the company will be creating an “equal environment” for customers to get to their Visa account, thereby driving more Visa card transactions through PayPal.
In return, Visa will pay economic incentives, the Financial Times reported.
“PayPal is a really important piece of our broader strategy in enabling digital payments,” said Bill Gajda, head of innovation and strategic partnerships at Visa.
A press release by PayPal outlines the benefits: Increasing customer choice, creating the ability for PayPal customers to pay anywhere Visa is accepted worldwide, beefing up digital collaboration for greater payments security and providing faster, easier access to funds.
Although there is no immediate plan to release the debit cards to the public, a plan is in the works.
PayPal also offers prepaid cards in certain countries via a partnership with MasterCard. It’s fascinating to watch the hybridization process as virtual companies begin to move into the physical world. This announcement by Visa and PayPal comes close on the heels of Amazon’s launch of its New York brick-and-mortar bookstore.