Data savvy financial institutions have been seeing payment transactions through card or ACH channels debiting their consumers’ accounts and crediting PayPal accounts, particularly for digital transactions. Many financial institutions prefer their customers use their own digital wallet options, but consumers have a preference for the PayPal service that they know. Rather than fighting the trend, Bank of America now has made it easier for customers to associate Bank of America card products with their PayPal account. In return, PayPal has been encouraging the inclusion of cards, not checking accounts in its service meaning the bank is at least receiving some revenue through the card networks for the load transaction plus they retain some connection with their customer:
Bank of America announced its customers can now seamlessly add multiple credit and debit cards to their PayPal account directly from the bank’s mobile banking app.
This new feature makes it even easier for Bank of America customers to shop how, where and when they choose.
Previously, PayPal was a direct competitor to banks and credit cards networks such as Visa and Mastercard. By working with financial institutions, PayPal can expand its network of safe and secure contactless payments at physical retail locations.
Part of the collaboration means that PayPal will discourage the use of ACH bank transfers to fund its digital wallet and instead promote credit and debit card funding. This benefits banks as they receive transaction fees from every debit and credit card transaction
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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