A payment is made on a mobile device during a PayPal demonstration at Terra Gallery in San Francisco, California May 21, 2015.  REUTERS/Robert Galbrai

PayPal overhauls U.S. rates as payments rivalry heats up

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2021-06-20 03:00:03

A payment is made on a mobile device during a PayPal demonstration at Terra Gallery in San Francisco, California May 21, 2015. REUTERS/Robert Galbraith/File Photo

NEW YORK, June 18 (Reuters) - PayPal Holdings Inc (PYPL.O) will lift merchant costs for its branded payment products while cutting those for behind-the-scenes processing of some Visa and Mastercard transactions, a bold move in an increasingly competitive digital payments sector.

The strategic shift reflects PayPal's growing power in online transactions, which surged during the COVID-19 pandemic. As consumers and businesses flocked to the company, a market leader, during lockdown, its active accounts mounted to 377 million, more than twice as many as in 2015.

The company said the move reflected the value of its proprietary services, with consumers nearly three times as likely to complete a purchase when PayPal products are available at checkout, while users of the new buy-now-pay-later option spend an average of 15% more.

"We are changing prices to help our customers understand even more clearly where we provide value," Dan Leberman, PayPal's senior vice president for small and medium business and partners, said in an interview.

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