PayPal and Visa have announced an unprecedented U.S. strategic partnership that intended to result in an improved and easier payment experience for Visa cardholders and will offer greater choice in how consumers pay with the PayPal and Venmo wallets, according to a joint press release from the companies.

The companies said that the partnership puts them on a new path to collaboratively work to accelerate the adoption of safe, reliable and convenient digital payments for consumers and merchants.

Further, the arrangement is designed to carry significant benefits for issuing financial institutions, acquirers and merchants. For issuing institutions, these include a better customer experience, more spending volume on their credit and debit cards, lower operational costs, and improved security. Merchants will also benefit from the improved customer experience, efficiency and security, which together will help drive increased sales, according to the announcement.

"Giving consumers choice in how and where they pay is essential to our goal of being a customer champion and we welcome the opportunity to work with more partners like Visa who share our vision," said Dan Schulman, president and CEO of PayPal. "This agreement opens new avenues for PayPal to collaborate with Visa, financial institutions, and others in the payments ecosystem to deliver greater value, more choice, and new experiences for our joint customers wherever they transact — online, in-app or in-store."

Details of this agreement include:

• Enhanced consumer choice and improved experience for Visa cardholders: PayPal will make it easier for new and existing customers to choose to pay with their Visa cards and ensure an easier experience. Visa cards will be presented as a clear and equal payment option during enrollment and subsequent payments, with an easy ability for consumers to set as their preferred payment method. Visa digital card images will be incorporated into payment flows. PayPal will not encourage Visa cardholders to link to a bank account via ACH. PayPal will also support and work with issuers to identify consumers who choose to migrate existing ACH payment flows to their Visa cards
• PayPal will join the Visa Digital Enablement Program to expand point-of-sale acceptance: PayPal will join VDEP, a commercial framework for Visa partners to access Visa's token services and other digital capabilities in the United States. This will enhance transaction security and expand acceptance for PayPal’s digital wallet to all physical retail locations where Visa contactless transactions are enabled. Consistent with VDEP, issuers will be able to choose whether to participate and retailers can expect to pay fees that are consistent with other contactless transactions they accept today.
• Instant withdrawal of money: Consumers will be able to instantly withdraw and move money from their PayPal and Venmo accounts to their bank account via their Visa debit cards leveraging Visa Direct — providing an experience that offers speed, security and convenience.
• Enhanced data quality: PayPal will ensure that data provided to issuers and their cardholders for Visa-funded transactions will be consistent with the information that is received with traditional Visa card transactions. This will ensure a better consumer experience, reduce cardholder confusion, ensure proper application of rewards, and reduce costly and time-consuming disputes.
• Economic incentives: The agreement affords PayPal certain economic incentives, including Visa incentives for increased volume, and greater long-term Visa fee certainty.

"We are excited to begin a new chapter with PayPal. Our agreement provides a framework for our companies to work together collaboratively," said Charlie Scharf, CEO of Visa. "PayPal has built industry leading capabilities which complement those of Visa and our clients, and working together, we will be able to deliver better solutions for consumers and merchants. At Visa, we are focused on growth by providing our issuer and acquirer clients — and their clients, merchants and consumers — with the best way to pay and be paid everywhere and this agreement supports this approach."