PayPal Taps Citigroup For New Mobile Push--Update
December 15 2016 - 12:52PM
Dow Jones News
By Telis Demos
PayPal Holdings Inc. has struck a new partnership with Citigroup
Inc. to make it easier for customers to use mobile phones to pay at
the checkout register.
The pact between the New York bank and the San Jose, Calif.,
payments company won't directly affect PayPal's main business of
facilitating online commerce and peer-to-peer payments. But it
could pave the way for the company to pursue what many believe will
be a bigger opportunity in payments over smartphones and other
mobile devices.
PayPal's move Thursday follows a decision earlier this year to
stop fighting Visa Inc. and MasterCard Inc. As part of that
agreement, PayPal agreed to stop steering its users away from debit
and credit cards, and in return got access to the two card
networks' store terminals where consumers can tap a phone to pay
with a card.
PayPal's strategy raised questions about whether the online
payments giant could grow usage enough to overcome the lost
fees.
But the company, led by CEO Daniel Schulman, promised it would
deliver deals with card issuers to encourage the use of in-store
payments.
"We talked about giving customers flexibility to pay how they
want, and now we are rolling out new experiences," said Jim Magats,
PayPal's head of global core payments, in an interview.
Citigroup, a major card issuer with 143 million customer
accounts, and Fidelity National Information Services Inc., known as
FIS, a bank-technology provider that connects to some 6,000 banks
in the U.S., will in 2017 start letting customers who load their
cards into their PayPal accounts pay at the point-of-sale with a
mobile swipe, according to the companies.
In a statement, Citigroup card executive Ralph Andretta said
that the goal of the PayPal agreement was to continue a push to
"enable banking in the palm of our customers' hands."
As part of the deal with FIS, PayPal is also working with two
smaller banks, Avidia Bank and Wintrust Financial Corp.
The announcement, expected Thursday, is the latest in an
escalating race between banks like J.P. Morgan Chase & Co., and
technology players such as Apple Inc. to make it easier for
consumers to use their mobile phones to pay for everyday goods and
services.
Some argue that the range of choices are confusing customers and
slowing adoption. Only 16% of U.S. consumers have used a mobile
wallet to pay, according to a new survey by Fiserv Inc.
To encourage usage, PayPal and the banks also plan to explore a
way to enable people to pay via PayPal's app and payment buttons
with any money they might have with the banks, including their
checking accounts, credit lines, and even rewards points.
That could also pave the way for other financial management and
spending tools, PayPal said. Already PayPal's app offers the
ability to order at some restaurants, similar to a feature J.P.
Morgan this month announced for its Chase Pay app.
Doug Brown, general manager of FIS Mobile, said that while FIS's
banks enable customers to pay digitally with a variety of apps,
including Apple Pay, PayPal will be a major partner. The typical
FIS bank with $1 billion in customer assets has customers who make
roughly $50 million to $100 million worth of PayPal payments, he
said.
It isn't yet clear exactly how PayPal's mobile wallet will work.
The company hasn't yet announced any deals, for example, with Apple
or Samsung Electronics Co. to let its app work with the near-field
communication hardware in the phone to swipe at terminals. PayPal
says it is working on further tech partnerships.
"It's in our strategy to be as ubiquitous as possible," said Mr.
Magats.
Write to Telis Demos at telis.demos@wsj.com
(END) Dow Jones Newswires
December 15, 2016 12:37 ET (17:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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