PayPal famously split from eBay Inc. last year leaving many to wonder what their next move would be. Over the years the online-payments pioneer had picked a few unwise fights with heavyweights such as Visa and MasterCard. But there finally seems to be a change of strategy.
PayPal Joins the Fold
PayPal sealed deals with Visa and MasterCard that will soon allow customers to select their credit or debit cards as default payment methods rather than just their bank account or PayPal balance.
By calling a truce on their battles with the major card issuers in the industry, it seems the initiative is to promote PayPal as a universally accepted method of payment both online and offline.
It's refreshing to see banks, credit card companies, and PayPal putting their differences to one side.
Traditional banking had made no secret about being resentful of PayPal's free bank transfers and heavily promoting its online payment system over conventional banking.
The recent deals seem to satisfy all parties as they realize they are all stronger together than apart.
Ultimately, PayPal will enjoy lower fees and obtain a visibility in physical stores for quick and easy payments. MasterCard and Visa will get their hands on customer data they were previously locked out of. But more importantly, they should see a massive increase in online and mobile payments.
The strategic decision by PayPal enhances their reputation as a universally accepted payment method while card issuers receive much-needed help with their mobile payments initiatives.
Payment Practices Upheaved
PayPal is encouraging its customers to pay using their service as a mobile wallet. The blurry line between online checkouts and those we find in physical shopping malls is close to being torn down. In many ways, 2016 is proving to be a watershed moment regarding payments as users begin to embrace smartphone and contactless payment cards.
Numerous reports suggest the recent deals could subject PayPal to losses in the short term. But it's clear the online payments giant is playing the long game here. With 157 million active account holders worldwide and widely known as one most common online payment methods, getting Visa and MasterCard on board to pursue the high street is a very shrewd move.
Cultural Change Vis-à-vis Digital Technology
All consumers are essentially carrying around a super computer in their pockets. The ability to book a restaurant table, cab or accommodation on the other side of the world with a few taps of a smartphone screen has changed everything.
The bottom line is that all consumers now have a simple set of 21st-century demands. The choice to pay when, where and how we want in a seamless, simple and secure method. The easier companies make exchanges, the faster they will happen.
The biggest obstacle to widespread mobile payments is industry fragmentation. Platforms such as Apple Pay, Android Pay, and Samsung Pay are all heavily reliant on devices and software. This is not the way it should be. If you replace your smartphone, it should not affect how you pay for items online or offline.
Bluntly put, people want a universal platform that will make it easy to share and spend money. Maybe other businesses will begin to follow the positive example set by Visa, MasterCard, and PayPal.
Digital Transformation Shows No Signs of Abating
The simplification and personalization of everything shouldn’t be labeled disruptive. Technology is being interwoven seamlessly and invisibly into our daily lives. If anything, it’s the opposite of disruption. It’s imperceptible.
Businesses that team up in this way and merge their forces have a better chance of underpinning consumer’s lives from the ground up. This unity is a point in case.
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