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PayPal, MasterCard strike mobile wallet deal

September 6, 2016

PayPal and MasterCard have expanded their partnership on three fronts: by making MasterCard a clear payment option within PayPal; by enabling Masterpass as a payment option for Braintree merchants; and by expanding PayPal's presence at the point of sale.

As a result of the agreement, PayPal will receive financial volume incentives from MasterCard and will no longer be subject to the digital wallet operator fee.

"With each partnership agreement that we sign, we further expand the ubiquity and value of the PayPal brand and improve our own economics," PayPal President and CEO Dan Schulman said in the release. "MasterCard has been a trusted partner for many years. By collaborating and innovating together we will continue to help move digital payments forward and improve payment experiences for our mutual customers."

Under the expanded agreement:

• MasterCard will be presented as a clear and equal payment option within the PayPal Wallet;
• customers will see a digital representation of the MasterCard provided by their issuer;
• customers will be able to select MasterCard as their default payment method;
• PayPal will not encourage MasterCard cardholders to link to a bank account via ACH; and
• consumers will be able to use the tokenized MasterCard in their PayPal Wallet to make in-store purchases at more than 5 million contactless-enabled merchant locations worldwide.

PayPal and MasterCard will jointly focus on:

• enhancing data quality to deliver consistent transaction-level data for MasterCard issuers;
• providing greater transparency for transactions at the point of sale through tokenization; and
• working with issuers to identify consumers who choose to migrate existing ACH payment flows to their MasterCard cards.

Additionally, Masterpass will be added as a payment option for merchants who process payments via Braintree, a PayPal company and the companies will extend their PayPal Business Debit MasterCard program in the United States.