MasterCard Worldwide’s recent collaboration with a Belgium-based payment company to improve cross-border online shopping may be a way for the card company to compete with PayPal Inc., one expert contends.

The card company announced the agreement with Borderlinx Europe SA on Aug. 30. The collaboration enables international cardholders to use MasterCard-branded cards to shop at retail websites based in the United States and the United Kingdom that do not typically ship products to other countries (see story). 

The system, which is free for merchants, creates a U.S. or UK address for international shoppers and integrates with shipping-service companies to deliver an order to a foreign address. To promote the system, Borderlinx most likely will advertise on issuing banks’ and merchants’ websites, Geoff Iddison, MasterCard group executive in charge of e-commerce and mobile, tells PaymentsSource.

Borderlinx also provides a concierge service to consumers, Iddison says. If a U.S. merchant does not accept cards issued in the UK or another country, the consumer pays Borderlinx, and Borderlinx settles with the merchant, Iddison notes.

 “E-commerce is highly strategic for card companies because of the pressure from other companies like PayPal,” Gwenn Bézard, research director with Boston-based Aite Group LLC, tells PaymentsSource.

MasterCard’s purchase of DataCash Group PLC also suggests the company is looking to establish a greater e-commerce presence, Bézard adds. MasterCard agreed to buy the London-based payments-technology developer on Aug. 19 for $520 million (see story). 

To entice consumers to sign up for Borderlinx, MasterCard is offering its cardholders free registration, which usually costs between $20 and $30, depending on the market, Iddison says.

The company also is offering its cardholders free 30-day storage, which can benefit consumers ordering items from multiple merchants at one time, Iddison says. By storing the items, consumers may receive them all in one shipment, he adds.

“What MasterCard is doing is making the brand more useful for its consumers,” Bézard notes. And while the system may be a bit “clunky” because of the steps it includes, “it is a good service that provides a purpose and good value for consumers and merchants,” he says.

Visa Inc. also appears interested in increasing its e-commerce footprint. The company recently purchased CyberSource Corp., Bézard notes.

Visa in April purchased the online payment-services and fraud-management provider for $2 billion (see story). 

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