October 19, 2009, 12:00 AM

First Data partners with PayPal to link debit cards to PayPal accounts

Payment processor First Data is partnering with PayPal to allow debit cardholders in First Data’s Star Network to link their debit cards to PayPal accounts online through their financial institutions’ web sites.

Payment processor First Data is partnering with PayPal to allow debit cardholders in First Data’s Star Network to link their debit cards to PayPal accounts online through their financial institutions’ web sites.

As the first payments network to offer such a service to financial institutions, First Data aims to help its bank clients earn revenue from their customers’ online shopping. “Financial institutions’ customers have already voted and a good percentage of them already have PayPal accounts,” says Julie Saville, Star Network vice president. “This gets the financial institutions into the mix.”

Most PayPal users fund their accounts by direct debits from their bank accounts, which generates no revenue for the banks. Some consumers load value to PayPal through their credit cards, which may be issued by the same bank where they have a checking or savings account or a different financial institution. When consumers fund their accounts using their debit cards, the financial institution receives interchange revenue with each transfer, just as if the consumer were paying with a debit card at bricks-and-mortar store or e-commerce site. First Data declined to disclose the interchange rate.

Once a financial institution launches the program, customers will be able to enroll through their financial institution’s Internet banking site. After registering, customers can immediately fund their PayPal accounts using their debit cards without having to enter debit card account information or expose their debit card numbers to merchants for each purchase. The financial institutions, which will have their logo or insignia appear every time a customer uses his PayPal account to make a purchase, will also provide cardholders’ authentication adding an extra layer of security to the account.

No financial institution is yet live with the program, which is optional for Star banks. However, First Data, which processes transactions initiated with 160 million credit and debit cards on behalf of card issuers, hopes to have the program running with a financial institution in several months.

Saville hopes the program, which First Data originally began discussing two years ago, allays customer concerns about using their debit cards to make online purchases.

comments powered by Disqus

Advertisement

Advertisement

Advertisement

From IR Blogs

FPO

Kevon Hills / E-Commerce

Back To School offers a testing ground for the holidays

Shoppers heading back to school aren't so unlike shoppers that will be looking for gifts ...

FPO

Jock Purtle / E-Commerce

What is your e-commerce business worth?

The founder of a merger and acquisitions consulting firm examines how e-retailers can know the ...

Advertisement