PhotoPayPal and MasterCard have worked out a deal that they say will benefit consumers, merchants and, of course, themselves. It will make MasterCard a clear payment option within PayPal, increase PayPal's point-of-sale presence, and make Masterpass a payment option for PayPal Braintree merchants.

That might all sound a little confusing, but basically it's intended to make PayPal more competitive with Apple Pay and other tap-and-pay options like Android Pay and Samsung Pay.

PayPal says it will increase its presence at stores by allowing customers to use their "tokenized" MasterCard in their PayPal Wallet to make in-store purchases at more than 5 million merchants around the world where contactless payments are supported.
 
Under the expanded partnership, consumers and small businesses will be able to instantly cash out funds held in their PayPal accounts to a Mastercard debit card. PayPal will also be provided certain financial volume incentives and, as a result of the commitments made under this agreement, will no longer be subject to the digital wallet operator fee.

Familiar brand

“Whether paying in the physical or digital world, consumers want to see the familiar Mastercard brand from their chosen issuer,” said Ajay Banga, president and CEO, Mastercard. 

Breaking down the details a bit further, a MasterCard press release said:

  • Mastercard will be presented as a clear and equal payment option within the PayPal Wallet, making Mastercard and their issuers easily identifiable to the consumer when transacting.
  • Customers will see a familiar digital representation of their Mastercard from their chosen issuer, ensuring them that all payments made through PayPal are protected with the same safety and security measures that they have come to expect when using a Mastercard.
  • Customers will be able to select Mastercard as their default payment method to allow for quick and easy check-out.
  • PayPal will not encourage Mastercard cardholders to link to a bank account via ACH.
  • PayPal will expand its presence at the point of sale by utilizing tokenization services from Mastercard. This will allow consumers to use their tokenized Mastercard in their PayPal Wallet to make in-store purchases at the more than 5 million contactless-enabled merchant locations across the globe.

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