HUNTINGTON BEACH, Calif. -- Acquirers stared into the face of the “enemy” here last week, and he didn’t really seem that scary.

It happened when a representative of PayPal Inc., one of the so-called outsiders supposedly roiling the payments industry, addressed a session at the Western States Acquirers Association 2012 Conference.

Matt Watts, PayPal senior manager, strategic alliances, brought a message of cooperation, not conflict, to the gathering.

Instead of admitting that PayPal wants to steal bread from the mouths of acquirers’ children by pushing companies out of the acquiring industry, Watts told attendees that “hundreds” of ISOs already work with PayPal and that the San Jose, Calif.-based company wants to work with many more.

“We would not be where we are today without ISOs, and we cannot get to where we want to go without them,” he said.

Watts shared the dais with Donna Embry, senior vice president of Louisville, Ky.-based Payment Alliance International and incoming president of the Midwest Acquirers Association. Embry said big companies nentering or expanding their activities in the payments industry need ISOs to reach small merchants.

ISOs have built relationships with small merchants over the years, and no one else has an effective way of contacting those retailers, she maintained.

Meanwhile, ISOs should work with the industry’s new players, some of whom will bring profound technical change to payments, Embry said.

“We’ve got to break down these barriers … and understand what they’re doing,” Embry said of the relationship between acquirers and new players. “A lot of these ‘enemies’ aren’t really enemies.”

PayPal began as means of making and accepting payments online, Watts said. It continued in that vein when it became a unit of eBay Inc. in 2002.

The company began working with ISOs when it acquired VeriSign Payment Services in 2005. It moved offline when the Home Depot began accepting its cards this summer. Now a dozen or so big retailers are preparing to accept it, he noted.

A recent deal with Discover Financial Services now means that PayPal’s card will be accepted anywhere that accepts Discover, Watts said. That move is designed to yield profits to ISOs that promote PayPal’s card to merchants, he said.

ISOs also can sell the services of PayPal’s payment gateway at a profit, Watts noted.

Acquisitions have provided PayPal with value-added services that could make its offline option more attractive to merchants and more profitable for ISOs. The former Bill Me Later offering, for example, raises consumer spending by affording more time to pay the tab, he said.

However, those value-added products may not become available offline immediately, Watts said.

At any rate, PayPal appears ready to join forces with ISOs that can promote products to merchants, Watts told attendees. ¡


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