As the mobile payment/digital wallet game ramps up, the announcement of Discover’s partnership with PayPal is definitely a big sign of things to come from two of the biggest names in the financial sector. Last Wednesday Discover and PayPal officially announced their new partnership and, it seems, consumers couldn’t be happier.
This new partnership will improve PayPal’s retail reach as Discover’s 7 million merchants will now be able to accept PayPal as a form of payment. It will take some time to fully implement the program but starting in 2013 every retailer across the United States who already accepts Discover Card will also allow PayPal account holders to complete their transactions simply by using their cell phone number and a PIN (like you would with the PayPal mobile app). Simultaneously, PayPal account holders will receive a new card that is linked to their PayPal account that will also track loyalty points, rewards, and other services through Discover.
PayPal currently has 113 million active online customers around the world. 50 million of these are in the United States, and these numbers are only going to grow once this new partnership hits full swing. In fact, PayPal expects significant growth once users are able to pay in-person at a physical store instead of being limited to the online interface.
PayPals’ vice president of retail, Don Kingsborough affirmed
We couldn’t be more thrilled to work with Discover. This relationship quickly extends PayPal’s reach to millions of merchant locations nationwide and is a milestone moment for us that will create new benefits for Discover merchants without requiring new hardware or software. This relationship will deliver a truly seamless digital wallet.
The “digital wallet” term is a hot button right now, but it’s still not the end-all to the deal. For instance, there is no talk yet of how Discover’s famous cash back rewards will be involved with this partnership. That is to say, if they will be included at all. Of course, it is yet to be known whether customers with both a Discover Card and a PayPal account will be able to share benefits between the two or if extra incentives will be available to combined accounts. As you might imagine, these are provisions that will very likely be smoothed out over the course of the next year, leading up to the launch of the program.
Indeed, this is the most intricate aspect of the partnership. Discover has already established a well-celebrated history of offering generous and creative rewards with real value to their customers. As a matter of fact, they have led the industry in loyalty rewards since their inception in 1985. Discover was the first to offer a generous 5 percent rebate on rotating categories, which is something common to many cards these days.
The other half of this, then, is working out whether or not PayPal is going to develop any sort of loyalty program for their retail division. They already have a PayPal Extras MasterCard, but that is a card linked to a PayPal account, which is a little different than the new Discover program.
While it should be quite obvious to present PayPal and Discover Card holders how this partnership can benefit them, those who are skeptical need only look as far as Wall Street for affirmation. According to TIME Business, the reactions on Wall Street have been positive. Colin Sebastian, an equity research analyst told Reuters that this partnership only further cements PayPal as a leader in the digital wallet industry as they continue to take very deliberate steps towards reaching out to every customer they can possibly placate.
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