A strategic initiative between PayPal Inc. and Mastercard, disclosed Sept. 6, 2016, builds on existing ties between the global payment brands. Targeting merchants, consumers and card issuers, the agreement introduces an expanded menu of cross-channel payment options designed to build brand value among millions of downstream cardholders, PayPal customers and participating financial institutions, the companies stated.
PayPal President and Chief Executive Officer Dan Shulman called Mastercard a trusted partner that has collaborated with PayPal in multiple partnership agreements over the years, which have made it easier for PayPal users to manage money online, in app and in-store. "With each partnership agreement that we sign, we further expand the ubiquity and value of the PayPal brand and improve our own economics," he said.
Mastercard President and CEO Ajay Banga added, "The expansion of the partnership with PayPal further reinforces our commitment to our billions of cardholders across the globe to provide them the choice to pay when, where and how they want while delivering the simple and secure payment experience they've come to expect from Mastercard."
The partners expressed confidence that the agreement is consistent with their shared vision of giving consumers greater choice and flexibility in managing their money. They also revealed that Mastercard will waive digital wallet operating fees if PayPal meets prescribed financial performance milestones.
The companies said the three-pronged agreement expands payment options to increase value for payments industry stakeholders across multiple channels in the following ways: Mastercard is a clear payment option within the PayPal Wallet, improving visibility for Mastercard-branded payment products and expanding consumer payment options; Braintree, a PayPal company, made Masterpass an additional payment option for its merchants, enabling them to integrate Masterpass into the checkout process; and PayPal will have increased visibility at the POS
The partners further noted that improved data quality and routing made possible through the arrangement will benefit financial institutions. PayPal and Mastercard plan to focus on enhancing data quality, improving transaction-level transparency and jointly working with payment card issuers to identify consumers who choose to migrate ACH payment flows to their Mastercard branded accounts. They also extended their PayPal Business Debit Mastercard program in the United States.
In addition to their climate of cooperation, PayPal and Mastercard emphasized their commitment to maintaining boundaries and honoring the spirit of their agreement. This includes equal representation of each other's companies and brands throughout all stages of transactions and payment flows. Consumers will continue to see the familiar Mastercard logos of their card issuing banks, "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," the partners stated.
Customers will also have the option of establishing Mastercard as a default payment method to facilitate a quick and easy checkout. PayPal agreed to respect Mastercard cardholders and not directly promote alternative automated clearing house payment methods that would route transactions away from Mastercard and its issuing banks. 
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