PayPal and Mastercard Deepen mPayment Collaboration

PayPal and Mastercard are deepening their collaboration in the mobile payments market with a newly announced agreement.

The deal will see Mastercard presented as a clear payment option in PayPal’s mobile wallet and let users make it their default payment method. It will also let users withdraw funds from PayPal to their Mastercard debit cards. Furthermore, PayPal’s app won’t encourage Mastercard customers to link their bank accounts through the ACH network.

For PayPal, the deal will allow its app to take advantage of Mastercard’s tokenization services at points of sale, and PayPal will no longer have to pay Mastercard a digital wallet fee for card integration. PayPal is also going to “be provided certain financial volume incentives”, according to a post on the company’s website.

The agreement is very similar to one recently struck between PayPal and Visa, with the companies evidently seeing more value in cooperation than competition as more consumers embrace digital and mobile payments. But it is perhaps especially striking for one more major concession on PayPal’s part: The company will support Mastercard’s Masterpass on its Braintree merchant network. Masterpass is a digital payments platform designed to enable transactions both on the web and via mobile—an area in which PayPal has shown increasing interest—and as such would seem to be a pretty direct competitor against PayPal.

Nevertheless, both companies evidently see advantages in working together as digital payments continue their ascent.