Acceptance: Partnership between PayPal and Discover

• PayPal and Discover have partnered enabling the online-born facilitator to access over seven million locations across the US. These stores will be ready to accept PayPal payments as soon as 2013. The equipment process will not imply any estate renewal or upgrade. In fact, the issued PayPal cards will only display PayPal’s logo but their PANs will be part of Discover’s lists.

• This partnership implies interactions between an established card network and a facilitator to give rise to a new alternative multi-channel payment option. PayPal’s virtual wallet will in fact be compatible with most POS systems thanks to the cards.

• For merchants, this agreement should allow for sales and customer reward improvements based on PayPal’s over 50 million active users in the US.

• PayPal also plans to set up marketing campaigns to be rolled out starting April 2013 to improve users’ awareness of these new features. Coupons and

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• Discover is accepted by roughly 95% of the points of sales where Visa and MasterCard are present; unlike its rivals, it disposes of direct links with its merchants and even acts as an acquirer for about 1,500 of them. This partnership could allow them to propose additional services to these business customers (targeted offers, etc.).

• For PayPal, partnering a major card scheme will significantly expand its physical reach, while, until now, PayPal InStore’s trials were only limited (partnerships with retailers such as Home Depot, Office Depot or Toys "R" Us; see January 2012 Insight).

• According to PayPal, the card will more likely resemble a multi-channel "token", acting as a link between virtual and physical networks.

• We should also remind that in France, about thirty McDonald's locations are currently piloting PayPal online payment solution.