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PayPal's Mastercard deal brings its payments to more stores

It follows a pact with Visa from earlier in the year.
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Jaap Arriens/NurPhoto via Getty Images

PayPal wants to be your go-to payment option online and in stores, but it has a problem: banks and credit cards aren't a fan of its free bank transfers and other attempts to push online payment over the conventional variety. However, it's trying to make amends. In the wake of a Visa deal from July, PayPal has forged a partnership with Mastercard that gives the credit card firm higher prominence online in return for more of a retail footprint. PayPal will make Mastercard a "clear and equal" payment choice in its wallet (complete with an image of your card), let you set the card as a default payment method and will "not encourage" you to link a bank account if you're a Mastercard customer. In exchange, you can use a linked Mastercard in your PayPal wallet to make in-store purchases at contact-free terminals.

It's a gamble, to be sure: PayPal is hoping that you won't mind the in-your-face credit card promotion in return for greater shopping freedom. With that said, it might be necessary. PayPal is facing increasingly stiff competition in the internet payment world, including from heavyweights like Facebook. This helps PayPal reduce its dependence on that more vulnerable business and get the drop on rivals that haven't done a lot in retail.

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