There's a reason PayPal now represents a potentially significant threat to Visa and MasterCard in the transaction clearing business. For starters, PayPal is the only big name contestant that, at least for the moment, has a business model that challenges firms such as Visa and MasterCard.Whatever else Google, Isis (AT&T, Verizon Wireless, T-Mobile USA), Apple and Amazon might wish to do, for the moment they are focusing on parts of the mobile commerce ecosystem that actually are complementary to the clearing networks.
But PayPal, in principle, can displace the clearing networks. PayPal almost certainly can operate at lower cost than Visa and MasterCard, and in a competitive business, the low-cost provider tends to win, long term.
Also, recent surveys suggest there is a level of trust in the PayPal brand, in terms of end user trust, that concedes nothing to Visa, American Express or MasterCard.
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