PayPal in Deal with MasterCard for Payments in Stores

PayPal Holdings Inc. and Mastercard Inc. on Tuesday announced a deal expanding PayPal’s presence as an in-store payment option.

The agreement marks a step further in the tug-of-war between card issuers and online payment companies as they grapple with consumers’ demands for instant forms of payment.

Additionally, PayPal will be provided certain financial volume incentives in the deal and will no longer pay a digital wallet operator fee.

Mastercard will be presented as a clear and equal payment option within the PayPal Wallet, making Mastercard and their issuers easily identifiable to the consumer when transacting.

PayPal’s pypl partnership with MasterCard ma follows a similar deal with Visa v in July as the company looks to expand its payments network.

The partnership with MasterCard was first reported by the Wall Street Journal.

“Our bread and butter is, we’re a checkout company”, said Jim Magats, PayPal’s head of global core payments, in an interview.

It hasn’t been a popular payment method for retail customers because PayPal started out as an online payments processor.

All three companies have something to win from this deal, with PayPal benefiting from presence at PoS systems, while Visa and MasterCard boosting their profits from an increased number of transactions originating from PayPal and Braintree. An aspect where PayPal will face a problem is that it will not promote MasterCard cardholders to tie their bank accounts through Automated Clearing House (ACH), used by PayPal, which provides customers with an alternative to credit cards.

The two companies have an existing partnership for co-branded consumer credit cards in the United States and Puerto Rico. Consumers with Mastercard accounts inside of PayPal wallets can now use them at the more than 5 million merchant locations equipped with NFC terminals. A few months ago, PayPal entered into an agreement with Visa to let customers link their online PayPal accounts to Visa cards, for which the latter will pay a fee to the former.

Several Canadian banks have gone on to develop their own finance and payments apps, allowing clients to make transactions using funds directly from their bank accounts.

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