MasterCard and PayPal have engaged in a "constructive dialogue" about a possible strategic alliance, according to a report in the Financial Times.
MasterCard's chief executive Ajaypal Singh Banga was presenting the company's Q2 results and told Wall Street analysts that the two respective giants of the offline and online payments markets were exploring a possible link-up that would ease some of the competitive tension that has built up between the two as PayPal continues to build its market share.
“PayPal is actually working to resolve some of those concerns we all have,” he said. “This is actually a good thing for PayPal and for the industry because at the end of the day, providing consumers the ability of having seamless, simple ways of paying is good for all of us.”
Talk of an alliance follows the recent reciprocal deal struck between PayPal and Visa, the largest card operator in the world. Under the terms of the agreement, consumers will be able to use Visa cards for PayPal payments and also use PayPal for transactions at bricks and mortar retail outlets.
Singh Banga said “it will be important for MasterCard to provide something in addition to what Visa’s offered” as MasterCard “doesn’t have as much to offer PayPal” as Visa did because it has fewer consumers.
Martina Hund-Mejean, MasterCard chief financial officer, added: “Everybody needs to remember that we were the first network, actually, to tell them … that the way that they’re doing the PayPal wallet is not good for the ecosystem.
But she was more coy about when a possible partnership may be officialy publicised. “Both parties have to be happy and we’ll announce when we can announce.”