Rumors are swirling that Visa (NYSE:V) is seriously considering taking a run at PayPal (NASDAQ:PYPL).
There are plenty of reasons why a marriage between the world’s largest credit card issuer and one of the world’s largest processors of credit card transactions makes sense. The combined company could afford to undercut competitors, further increasing its market share.
A partnership between the two companies would create a huge financial services company, which could give big retailers the ability to have one company process their offline and online credit card transactions. That clout, plus the scale to cut prices to both online and offline merchants, would give a combined Visa/PayPal a huge leg up on competitors.
It would also give Visa the ability to launch PayPal-branded credit cards, giving cardholders rewards that could be easily added to their PayPal accounts. Such a card would be nearly as attractive as a cash back card and would further boost PayPal’s exposure to non-tech folks.
Visa’s CEO spoke about PayPal a few months ago at a tech conference, telling reporters the company would ideally like to partner with the payment processor. But if such a deal couldn’t be worked out, Charlie Scharf indicated his company wouldn’t hesitate to compete aggressively with the digital company.
Rather than competing, why not just buy them out?
Additionally, PayPal moved its earnings call to July 21, which happens to be the same date Visa is holding its earnings call.
PayPal shares are down slightly in mid-day trading on Monday, falling 0.29% to $38.97 U.S. per share. Shares are close to 52-week highs of $42.55 U.S.
