Are MasterCard and PayPal about to enter into a strategic alliance?

Mastercard shop

The card network giant is reportedly having a “constructive dialogue” with PayPal about forming a potential strategic alliance, according to the Financial Times.

Most people may find the news unsurprising, given that MasterCard’s biggest rival, Visa, inked its own special partnership with PayPal only a week ago.

The news of a potential MasterCard/PayPal partnership came during Thursday’s quarterly results update, when Ajaypal Singh Banga, MasterCard chief executive, said the company was engaged in a “constructive dialogue” with PayPal.

“PayPal is actually working to resolve some of those concerns we all have. This is actually a good thing for PayPal and for the industry because at the end of the day, providing consumers the ability of having seamless, simple ways of paying is good for all of us,” he said.

Visa’s deal will see the firms working closer when it comes to how consumers use PayPal and Venmo mobile wallets to make payments. Also, any shops that have Visa contactless checkouts will now accept PayPal wallets, helping boost the footprint of PayPal’s mobile point of sale reach.

In return, PayPal will stop encouraging its users to connect their accounts directly to bank accounts.

However, Visa’s consumer-base is greater than that of Mastercard’s, leading to analysts to suggest that MasterCard would have to offer more than Visa did as it may not have as much to offer to PayPal automatically.

Martina Hund-Mejean, MasterCard chief financial officer said: “Everybody needs to remember that we were the first network, actually, to tell them … that the way that they’re doing the PayPal wallet is not good for the ecosystem.”

“Both parties have to be happy and we’ll announce when we can announce,” he added.

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