PayPal overhauls US rates as payments rivalry heats up

PayPal Holdings Inc will lift merchant costs for its branded payment products while cutting those for behind-the-scenes processing of some Visa and Mastercard transactions, a bold move in an increasingly competitive digital payments sector.

The strategic shift reflects PayPal’s growing power in online transactions, which surged during the Covid-19 pandemic.

As consumers and businesses flocked to the company, a market leader, during lockdown, its active accounts mounted to 377 million, more than twice as many as in 2015.

The company said the move reflected the value of its proprietary services, with consumers nearly three times as likely to complete a purchase when PayPal products are available at checkout, while users of the new buy-now-pay-later option spend an average of 15% more.