PayPal announced today that it is teaming up with Visa in a move designed to open up its payment processing service and Venmo offering to more people. This strategic partnership is geared towards helping financial institutions, sellers, merchants, and buyers not only do more business, but also accept the changing landscape that technology has made in the world of commerce.
Coinciding with PayPal’s Q2 2016 earnings results, the announcement touts that PayPal will now enable its users to pay for goods and services using their Visa cards and have that experience become easier. In doing so, the credit card’s digital image will be incorporated into PayPal’s payment flows, but won’t necessarily be linked to a bank account through ACH. Additionally, PayPal said it’ll support the needs of issuers to identify people who are choosing to migrating existing ACH payment flows to their Visa cards.
PayPal is also joining Visa’s digital enablement program (VDEP), which will provide transaction security and expand acceptance of PayPal’s digital wallet in all physical retail locations where Visa’s own contactless transactions are supported. Customers can also easily withdraw money from their PayPal and Venmo accounts using their Visa debit cards.
Interestingly, this move comes a couple of months after Visa’s chief executive Charlie Scharf said at the JP Morgan Chase technology conference that he wants PayPal to stop urging its users to fund their digital wallets through bank accounts, which is what ACH does. According to Recode, Scharf said that one model that his company was looking at involved going head-to-head against PayPal in ways “people have never seen before.”
It seems that there has been peace made in the financial space, as this strategic partnership doesn’t emphasize use of ACH. In fact, Scharf is quoted in a release as saying, “We are excited to begin a new chapter with PayPal. Our agreement provides a framework for our companies to work together collaboratively. PayPal has built industry leading capabilities which complement those of Visa and our clients, and working together, we will be able to deliver better solutions for consumers and merchants.”
If you’re curious, in Q2 2016, PayPal generated $2.65 billion in revenue, up 15 percent from last year with an earnings per share of $0.36. Wall Street analysts had expected revenue of $2.6 billion and an EPS of $0.36.