Amid an unfathomable scale of competition from online payment processing giants likes of Visa and Mastercard, PayPal Holdings Inc had issued a statement on Friday saying that it would raise merchant costs for its branded products’ payments and would slash a slice of 'behind-the-screen' processing fees on debit and credit card transactions, pointing towards an audacious move in a highly clogged digital payment industry.
In point of fact, the San Jose, California-based online payment processing giant’s latest leg of strategic shift, which came forth as a palpable sign of PayPal Holding Inc.’s market dominance that soared exponentially during the pandemic-led restrictions, comes over the heels of a meteoric rise in online transactions over recent years as merchants and buyers had reportedly swamped the payment processor during the pandemic, mounting the numbers of its active accounts to 377 million, more than two-fold of what it had back in the 2015s.
PayPal to overhaul rates in the US
In tandem, according to PayPal Holding Inc.’s statement released late in the day, the San Jose-based payment processing megalith would charge the sellers a 3.49 per cent of transacted amount plus 49 cents for each transaction which would take place via its proprietary products such as merchant websites alongside its digital wallets, while the rate hike would be applied to the products likes of PayPal Checkout, Pay with Venmo alongside PayPal Credit among others.
Nonetheless, PayPal would decline the costs of transactions made through Visa and Mastercard credit and debit cards to 2.59 per cent plus 49 cents for each transaction. Previously, PayPal used to charge most sellers 2.9 per cent plus 30 cents to process online payments.
Meanwhile, adding that a decline in basic transaction costs would help the payment processing giant better compete with smaller rivals likes of Stripe alongside Authorize.net, PayPal’s senior Vice President for small and medium business and partners, Dan Laberman said in an interview following the announcement, “We are changing prices to help our customers understand even more clearly where we provide value.
The wallet is of tremendous value; the card processing is commoditized. We think it's a bold price to come out with. ”