PayPal Extends Partnership With Visa Into Asia-Pacific Region

(Bloomberg) -- PayPal Holdings Inc. and Visa Inc. said they are extending into the Asia-Pacific region a partnership that currently covers only the U.S., in a move aimed at boosting transactions via digital payments for both companies.

Similar to the U.S. deal announced in July last year, the collaboration will allow users of PayPal and Visa cards to choose either mode of payment, the companies said Wednesday. Previously, PayPal had sparred for years with credit-card firms for control over online and in-store transactions.

While saying it's too early to quantify a boost from the U.S. deal on transactions, PayPal is “encouraged” by the increasing usage frequency and reduction of complaints from customers, Jim Magats, head of payments, product and engineering, said by phone from PayPal's headquarters in San Jose, California.

The two companies said in a statement that the partnership makes it easier for Visa-issuing banks in the Asia-Pacific region to offer cardholders the ability to make payments anywhere PayPal is accepted online, and it also expands the use of PayPal to retailers that accept Visa in physical locations.

Strategy Shift

The payment firm last year shifted its strategy to become a global digital platform that works with banks, card issuers and e-Commerce companies including Alibaba Group Holding Ltd. Such deals are aimed at building loyalty among its about 200 million users and adding to that base in Asia, which Magats describes as a “card-oriented market."

“We hypothesize that a lot of customers leave us, they churn from us because of dissatisfaction around consumer choice," said Magats. “So we expect that over time, our consumers will be sticky to us.”

PayPal expects to roll out the deal with Visa in other parts of the world, but hasn't decided where after Asia, Magats said. The company's agreement with MasterCard Inc. in the U.S., may also be extended into other parts of the world, he said.

PayPal is also looking to increase usage of digital payments in developing Asian markets such as India and Indonesia, where most of the population does not have access to banking services but are active cell-phone users, Magats said. About a third of PayPal transactions are from mobiles, he said.

The company does not provide a regional breakdown, but says international revenue accounts for 54 percent of its annual income.

To contact the reporter on this story: Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net.

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Andy Sharp