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Mastercard, PayPal get cozier with more payment options

Mastercard and PayPal are expanding their long-standing partnership to highlight the former’s payment options more clearly within PayPal’s platform and offer Masterpass acceptance to Braintree merchants, foreshadowing the potency that financial services’ cross-partnerships can yield.

PayPal will procure an expanded presence at point-of-sale locations, making it a more visible and viable choice for shoppers paying with their mobile devices. Mastercard – which recently underwent a revamping – will also tap into PayPal and its Braintree subsidiary’s audiences, a move that will help the brand take competitors such as Visa head-on in the battle for valuable real estate on consumers’ smartphones.

“We see PayPal as an important, strategic partner and today’s announcement ensures prominence for Mastercard in the PayPal user experience,” said a spokeswoman for Mastercard. “It also advances our digital agenda through Masterpass and emerging digital merchants.

“We took the time to build a partnership that benefits all key constituents,” she said. “Consumers have greater choice and flexibility in how they manage and move their money.

“Issuers will have improved data quality and routing. Merchants will have more choice, as Masterpass will be added as a payment option for merchants that process payments via Braintree, a PayPal company.”

Banking on cross-benefits
The two financial services’ expanded partnership aims to enhance the customer experience by increasing PayPal’s presence at point-of-sale locations, highlighting Masterpass as a digital payment option for merchants using PayPal’s Braintree and making Mastercard a more visible option within PayPal’s platform.

Small businesses and consumers will be able to instantly cash out funds accumulated in their PayPal accounts to a Mastercard debit card. Additionally, PayPal will earn financial volume incentives, enabling it to no longer incur a digital wallet operator fee.

Mastercard’s mobile payment options will be highlighted more pervasively within the PayPal Wallet, meaning that users could become more likely to transact via Mastercard in lieu of another competing platform. Consumers will also be able to choose Mastercard as their default payment method, resulting in faster and easier checkout processes in the future.

Meanwhile, PayPal will not encourage Mastercard customers to link to bank accounts through ACH. The peer-to-peer payment service will also leverage Mastercard’s tokenization services to expand its presence at the point of sale.

This action will let individuals use their tokenized Mastercard saved within their PayPal Wallet to complete in-store purchases at more than five million NFC-enabled merchant locations worldwide.

“Our thoughtful approach to the partnership with PayPal will help propel the Mastercard digital agenda, as well as that of our partners, by expanding our digital acceptance footprint in both browser and mobile with top digital merchants,” Mastercard’s spokeswoman said. “The partnership will also help issuers drive and maintain top of wallet positioning with this important ecommerce leader.”

More for merchants
The partnership also boasts the inclusion of Masterpass as a payment option for merchants using Braintree. Therefore, those merchants will also be able to provide their customers the ability to pay via Masterpass.

Braintree operates payments for companies such as Uber, Pinterest and Airbnb.

The companies claim they will work in tandem to enhance data quality, offer more transparency for transactions via tokenization at the point of sale and continue collaborating with issuers to catch customers who are transferring existing ACH payment flows to their Mastercard cards.

Mastercard has been feverishly working to expand its slate of financial partnerships, suggesting it wants to sidle up to more merchants and capture greater usage among consumers.

The company recently acquired British payment-technology provider VocaLink, following a string of innovations for its Masterpass mobile payment service, in a bid to even out adoption of the technology in all markets and become a top contender in the crowded space (see story).

Meanwhile, PayPal continues to climb the ranks in the digital payment sector by taking on a growing number of partnerships with competing platforms.

Earlier this summer, Visa and PayPal threw a twist into the race for mobile payments domination by entering into a strategic partnership that will broaden consumers’ ability to pay via PayPal and Venmo and improve security, indicating the importance of collaborations in this competitive space (see story).

Yesterday, PayPal also announced that Visa Checkout will be available for Braintree merchants in early 2017, showcasing its dedication to keeping payment options plentiful for its customers.

Thanks to its slew of fruitful collaborations and increased payment options for both merchants and customers, PayPal will likely garner higher transaction rates.

‘We anticipate this agreement will drive increased transactions for PayPal and Mastercard, and greater customer engagement, given customers will be able to identify their preferred funding source more easily and default it for future use,” said Chris Morse, director of communications at PayPal. “We have been experimenting with customer choice for some time now.

“What we have seen is a much better experience for consumers, more engagement, higher conversions, and many more incremental net adds.”