• Mon. Jan 30th, 2023



PayPal is extending access to fast payments with Visa

  • PayPal is expanding its fast payment capabilities in an effort to enable more of its PayPal, Venmo, and Xoom users to quickly move their funds to bank accounts.
  •  And this move should be particularly appealing to consumers during the pandemic.
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PayPal is expanding its Instant Transfer feature globally in an effort to enable more of its PayPal, Venmo, and Xoom users to quickly move their funds to bank accounts. 

How often US main street SMBs experienced cash flow shortages during the pandemic

PayPal and Visa expand fast payment partnership.

Business Insider Intelligence

The service was already available in North America and some markets in Asia Pacific and Europe, but PayPal has deepened its partnership with Visa and its Visa Direct fast payments network to bring it to more locations. The expanded partnership will also allow PayPal to deploy Visa Direct’s payment services for its Braintree, Hyperwallet, and iZettle products, positioning PayPal to offer faster payments throughout its ecosystem.

Expanding this partnership should benefit PayPal since the coronavirus pandemic has boosted the need for fast access to funds and helped PayPal rapidly grow its user base.

  • Both merchants and consumers need faster access to their funds due to the pandemic, and PayPal’s collaboration with Visa should help give them the control they want. Seventy-six percent of US Main Street SMBs—defined as firms making less than $10 million in annual revenue that have a brick-and-mortar presence in commercial areas—suffered cash flow shortages at least occasionally in the four months leading up to June 18, per a study from PYMNTS and Visa. And many consumers need fast access to whatever funds they have to maximize their financial flexibility while they face unemployment and drops in income. PayPal’s collaboration with Visa Direct should help both businesses and consumers quickly access their funds to handle any cash crunches they face, potentially bringing more users to PayPal.
  • PayPal is quickly accumulating accounts during the pandemic, and adding attractive features could help it boost loyalty. The company added 21.3 million net new active accounts (NNAs) in Q2 2020, up 137% year-over-year (YoY): 1.7 million merchants signed up for PayPal, Venmo added enough accounts to surpass 60 million users, and Xoom attracted 600% more NNAs than it did in Q1 2020. Consumers and businesses are flocking to PayPal to access its digital payment capabilities, and by expanding its partnership with Visa and Visa Direct it can offer them additional valuable features that may lead many of its new users to keep using PayPal’s services regularly. 

And for Visa, this partnership with PayPal should help it avoid disintermediation and better compete in the fast payment space. Visa and other card networks risk being cut out of the payment process when consumers and businesses turn to digital payment services like PayPal. But through this partnership, Visa can ensure it captures some of PayPal’s volume.

And working with a high-profile partner like PayPal may help Visa Direct attract more partners, helping it battle Mastercard Send—the card network’s own push payment platform—and real-time payment networks like the one operated by The Clearing House.

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