Visa Inc. V and PayPal Holdings, Inc. PYPL have expanded their partnership, which in turn, extends the latter’s Instant Transfer services to the global markets, thus enabling fast domestic and cross-border digital payments.
PayPal’s instant transfer services leverage Visa Direct’s real-time payment capabilities. The deal extension comes at a time when real-time money transfer and payment settlement became the need of the hour. This requirement came up in the wake of COVID-19 breakout, which left consumers as well as small businesses cash starved. In such circumstances, instant access to funds, which can restore financial flexibility to those in need, is of utmost significance.
Visa and PayPal’s deal will allow family members residing in two different countries to transfer funds instantly. Also, small businesses can pay and receive payments on a real-time basis.
The magnitude of the requirement of real-time payment capability can be gauged from the fact that 76% of U.S. SMBs reported struggling with cash flow shortages in the last few months. 91% of SMBs expressed interest in real-time settlement capabilities.
Also, Visa Direct experienced an almost 80% increase in transactions in the Person-to-person (P2P) payment category in the United States during third-quarter 2020, which reflects the popularity of real-time payments solution.
Via this deal extension, PayPal will be able to widen the global white label Visa Direct payout services through PayPal and its Braintree, Hyperwallet and iZettle product solutions. Moreover, eligible PayPal customers can pay and get paid by friends, family and businesses, and move money quickly from their PayPal, Xoom and Venmo accounts through Visa Direct to their eligible Visa cards.
The partnership between Visa and PayPal dates back to 2016 when both came together to provide an improved and a more seamless payment experience for Visa cardholders and offered greater choice to consumers to pay with the PayPal and Venmo wallets.
A couple of years later, in 2018, Visa and PayPal stretched their alliance to accelerate the adoption of digital and mobile payments in Canada.
The strengthened collaboration with PayPal underscores Visa’s efforts to tap a meatier market share of the payments space, which is undergoing digital transition. The global pandemic accelerated led to this change and the trend is expected to surge even after the health emergency dies down.
Last year, another company in the same space, Mastercard Incorporated MA, extended its pact with PayPal Holdings, which allowed the former to provide its Instant Money Transfer service in Singapore and across multiple markets in Europe.
Visa currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 7.3% compared with the industry’s growth of 2.7%
A better-ranked stock in the same space is Envestnet Inc. ENV, sporting a Zacks Rank #1 (Strong Buy) at present. Earnings of the stock surpassed estimates in each of the trailing four quarters, the average being 14.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Mastercard Incorporated (MA) : Free Stock Analysis Report
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