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ALKESH SHARMA / Emirates Business
The recent pact between online
payments network giant ‘PayPal Holdings Inc.’ and leading global financial service provider ‘Visa Inc.’ is likely to reap rich benefits for both multinationals in the UAE.
The agreement, which is expected to end the history of animosity between the digital payments company and Visa Inc., was announced this week. While PayPal will gain an enhanced access in the UAE’s physical retail stores and shopping malls through this pact, Visa would be able to avail vast database of future potential clients, say industry pundits.
“This is a win-win situation for both companies as now there would be no clash of business interests in the UAE. I am a daily user of PayPal for my business deals and I have seen that many times its executives are advising customers to not to link their bank accounts with Visa. Moreover, as a customer, I am happy because now I can expect more consolidated services from them,†Tarig Hussaine, a UAE-based hotelier, told Emirates Business.
Notably, both PayPal and Visa enjoy a strong clientele in the Emirates, which is home to tens of hundreds of businesses and sees daily transactions worth millions of dirhams through online as well as electronic mediums.
“While using PayPal, we have our bank accounts linked with digital wallets. Doing payment through this mode is easier as well as economical than using a plastic card for electronic payment. But there is one handicap; PayPal has a limited access to retail locations,†Akshay Makhani, a technology researcher with a Dubai-based consultancy firm, told Emirates Business.
“However, this agreement with Visa will help PayPal users to make payments by just tapping their smart devices at all the places where Visa is supporting contactless payments. That means now PayPal has an immediate access to hundreds of retail stores in the region,†pointed out Makhani.
However, there is one flip side of this much talked about deal. US-based newswire Bloomberg has reported that the PayPal Holdings Inc. shares dropped the most in four months on concern about the cost implications of a new agreement with Visa Inc. It said that the PayPal shares dropped as much as 9.2 percent to $36.43 earlier on Friday. The stock was down 6.9 percent at $37.35 in afternoon trading in New York. That is the biggest intra-day decline since March 24.
At the same time, financial analysts maintained that this agreement could prove a costlier affair to PayPal. As making payments through Visa could be a dearer mode to process rather than connecting customers’ digital wallets to bank accounts for PayPal.