Visa, Mastercard, Amex, and Discover Plan Combo Checkout Button to Compete With PayPal

Visa, Mastercard, American Express, and Discover are planning to combine their online payment options into "a single button," hoping to make customers' shopping easier and reduce friction in the checkout process. The button will be a major competitor to PayPal, and combat what's called "the Nascar effect," where multiple payment logos and options dot the purchasing interface on online marketplaces "like the side of a race car" (via Bloomberg).

The new project is being headed by Visa and Mastercard, which announced during an industry conference that they will integrate the Visa Checkout and Masterpass payment options into the button. Afterwards, spokespeople for American Express and Discover announced they are joining the project as well. With all of these platforms located behind one button, users who already have payment options saved in each will be able to checkout "with a few clicks."


Still, the project is in early stages, with a name and the visual design of the button still undecided. Visa and Mastercard hope to start moving customers enrolled in Visa Checkout and Masterpass to the new program by the end of this year, and expanded checkout support is expected in 2019.

With all of the major credit and debit card companies joining forces, the new button is believed to be a direct competitor to PayPal, which amalgamates a customer's credit cards, debit cards, and bank accounts into one place for easier checkouts.
The aim, according to the card networks, is to make online shopping simple, letting people finish with a few clicks -- an experience pioneered by PayPal Holdings Inc. Yet some analysts say the coordinated effort may ratchet up competition between cards and PayPal, something long seen as a potential risk to that company’s meteoric growth.

“This is always kind of a looming threat to PayPal,” said Thomas McCrohan, an analyst at Mizuho Americas after the first announcements this week.
In a recent survey, 58 percent of merchants said they accepted PayPal in 2017, followed by Apple Pay at 48 percent, Visa Checkout at 26 percent, Masterpass at 16 percent, and AmEx Express Checkout at 9 percent. By providing a less splintered landscape for online shopping, the credit card companies hope to increase visibility among the "one-button concept" marketplace, where people currently "think of PayPal and Amazon Pay," analyst Raymond Pucci said. "People don't really say, 'Oh yeah, Visa and Mastercard.'"

PayPal has been facing increased pressure from rival payments processors recently, with eBay in February detailing plans to phase out its 15-year-long partnership with PayPal to integrate Adyen as its primary payments platform.

PayPal and eBay have an operating agreement to stay partners through mid-2020, so the Adyen alliance will begin slowly by educating buyers and sellers about the new processor in late 2018 and throughout 2019. By 2021, eBay wants to have "transitioned a majority" of its marketplace customers to Adyen, at which time PayPal will be relegated to a secondary checkout option.

Mastercard, Discover, American Express, and Visa also plan to make checkouts simpler in physical stores, this month eliminating the signature requirement for purchases.


Discuss this article in our forums

Mastercard’s Plans to Fully Eliminate Signature Requirement Next Year Will Speed Up Apple Pay

Mastercard today announced that cardholders will no longer have to provide a signature for any purchases in the United States and Canada after April 2018. The change will apply to both debit and credit cards.


Mastercard said removing the need to sign for card-present transactions will not have any impact on customer security due to modern safeguards.

"Our secure network and state-of-the art systems combined with new digital payment methods that include chip, tokenization, biometrics, and specialized digital platforms use newer and more secure methods to prove identity," said Linda Kirkpatrick, an Executive Vice President at Mastercard.

Mastercard's consumer research unsurprisingly found that a majority of people believe it would be easier to pay, and that checkout lines would move faster, if they didn't need to sign the receipt when making a purchase.

Already, more than 80 percent of in-store Mastercard transactions in North America today do not require a cardholder signature at checkout. Mastercard said both customers and merchants support the change.

The long-existing "signature required" clause is intended to verify that customers own the debit or credit card they are attempting to use. The process is supposed to involve the cashier verifying the signature on the receipt matches the one on the back of the card, but in reality, this process is often skipped.

The change should make Apple Pay transactions even quicker for Mastercard cardholders. Currently, even when using Apple Pay, sometimes a signature can be required for purchases over $50 in the United States.

The signature requirement is already very uncommon in Canada, where chip-and-PIN cards are the norm. At most merchants in Canada, customers insert a card into the payment terminal, enter a PIN, and the purchase is completed.

Mastercard removing the signature requirement won't speed up Apple Pay in Canada, however, as contactless payments aren't generally permitted for purchases above $100. Above this limit, customers must use chip-and-PIN.

Mastercard currently doesn't require a signature for purchases totaling $50 or less. Visa's no-signature limit is $25, but the amount is upped to $50 for purchases made at grocery stores and discount stores like Walmart.

Related Roundup: Apple Pay

Discuss this article in our forums