Dive Brief:

• PayPal has announced the PayPal Cashback Mastercard, a new cash-back credit card exclusively for PayPal account holders that offers 2% cash back on online and in-store purchases where Mastercard is accepted, a PayPal press release stated.

• The card, issued by Synchrony Bank, has no annual fee, and also no annual cash back limit, no minimum redemption amount, no restrictions on how to spend cash rewards, no fraud liability and no expiration. Cash-back rewards are redeemed directly to a card holder’s PayPal balance.

• The new card balance is automatically added to the PayPal wallet upon approval, meaning that in most cases, PayPal members can start using the card even before the physical card itself arrives in the mail.

Dive Insight:

This announcement comes after a recode report in June that suggested PayPal subsidiary Venmo was testing a physical debit card that could be made available to its members. We haven’t heard much about that debit card since, but it’s possible that PayPal is looking at a company-wide strategy to expand the presence of its payment capabilities at in-store point-of-sale.

That’s probably a good idea, as Apple Pay and other mobile payment offerings continue to grow. In an increasingly crowded market, any company in the payments sector needs to make sure it has every type of transaction and point of transaction — whether in-store, online or mobile — covered. For PayPal, that means upping its game at brick-and-mortar checkout lines.

It should be noted that PayPal already does offer at least one physical credit card with Mastercard — the PayPal Extras MasterCard — according to TechCrunch, which also noted that PayPal users who have PayPal credit cards spend about 35% more via PayPal than those who don't. Both cards latch on to popular features, with the Extras card using a reward points system, and this latest card acknowledging the growing popularity of cash-back cards.

This popularity has prompted several companies to innovate on the cash-back model, offering higher percentages of cash back, as well as new models and new methods of redemption. Earlier this summer, for example, Amazon began offering 2% cash back on purchases made by Prime members using Amazon balance funds on a debit card, with the option of receiving the cash-back bonus on a gift card or as a direct deposit. As PayPal enters the cash-back card segment, we are sure to see more variations on the model.