Is Visa Trying to Eat an Elephant in One Bite with PayPal?

Electronic Payments Breaking News

Electronic Payments Breaking News


PayPal has been quietly making all the right moves since its inception in 1998. First, as Confinity, “a company that developed security software for handheld devices.” Then, with a steady progression of fascinating but somewhat convoluted moves, PayPal evolved into the unique position it now holds in the payments industry.

A Little Bit of History…

PayPal enjoys the distinction of having trusted, name recognition, largely due to their affiliation with eBay.  Shortly after PayPal’s IPO, they were acquired by eBay and became their payment method source for most eBay users—which began PayPal’s rise to fame in the payments industry, giving them a solid reputation of online acceptance in the industry.

Almost two years ago, in September of 2014, the PayPal spin-off from eBay, which had everyone buzzing because it was said, at the time, that PayPal did not have the necessary legacy moving forward into the smartphone arena—which is the focal point of the payments industries futurity.

It was also said, at the time, that big players like Google and APPL would move in and take over PayPal’s existing domain.

PayPal purchased Xoom in March 2015, for an amount reported to be around, $1.09 billion, and the industry was watching… as PayPal was busy, strategically strengthening their competitive advantage.

Through the Paydiant division of PayPal, they are already powering merchant-run platforms. Therefore, Xoom, “a digital money transfer or remittance provider that allows consumers to send money, pay bills, and reload mobile phones from the United States to 52 countries,” was a brilliant, next move for PayPal.

Fighting to Win

Earlier this year, 2016, because PayPal has been the only, truly proficient, contestant for online payments, their position in the marketplace was secure enough (probably an oxymoron because secure is safe) that they got attention from Visa, who at first formed a “friendly” relationship with PayPal and later “as more alternatives emerged, including Visa’s own Visa Checkout service, the two started to develop a more competitive relationship.”

More recently, Visa and PayPal were like two mature, red deer stags going head to head over a prize. Nevertheless, they seem to have come to a mutually responsive, mutually supportive agreement, and the good news is that PayPal will be enabling account holders to use their Visa Cards in their PayPal account.

Electronic Payments Breaking News

Right now, at this juncture, it looks like these two may be in a strong position to reshape the whole way in which digital payments are envisaged, bringing significant revenue increases to them both, but not so fast…

Even though Visa and PayPal have negotiated a 12-month exclusive agreement, within one week, MasterCard was on the porch pursuing a similar deal with PayPal.

In their short, July 29, 2016, article, MasterCard PayPal chat about potential partnership, quoted from the Financial Times that MasterCard CEO, Ajaypal Singh Banga said during the company’s quarterly earnings call that the card network is holding “constructive dialogue” with PayPal.

Additionally, they quoted Banga as saying, “PayPal is actually working to resolve some of those concerns we all have,” he said. “This is actually a good thing for PayPal and for the industry because at the end of the day, providing consumers the ability of having seamless, simple ways of paying is good for all of us.”

With Lightning Speed

Further, due to the fintech revolution, everything is moving at what seems like lightning speed, encouraging would-be entrepreneurs to jump into the fray, whether they understand the payments industry or not.

The payments industry is difficult and complex to understand. A historical perspective of the chain of credit and debit processing, and the positions played by each, necessary entity, is vital for those just walking onto the stage of these enticing, enterprise opportunities.

As new apps and technologies emerge, sometimes creating technical glitches with often unsafe practices that threaten privacy and security for consumers and providers alike, industry growing pains require technical liniments and remedies in never-ending supply.

Not Much Time to Sleep

Meanwhile, research in payments shows uninterrupted mutating, and further—transmutating change throughout. It is a startling and immensely exciting time to be in the payments industry—especially from an MSP perspective.

For those on the front lines of this industry, providing payment services to merchants and others, IRIS CRM’s payment processing CRM services provides hosted, streamlined techniques in your business, leading to more sales and a lot less stress.  Give us a call…contact us if you’re interested. We’re here to partner with you for your success.

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