Dive Brief:

• The agreement last month between PayPal and Visa is disappointing many of PayPal’s investors, the Wall Street Journal reports. 

• Many investors say that the move is a sign that the e-commerce payments company, which spun off from eBay last year, is becoming more of a traditional finance company instead of a tech disrupter, according to the Journal. 

• PayPal shares have fallen 7% since the July 21 announcement, and the consensus analyst forecast for 2017 earnings has fallen to a new low.  

Dive Insight:

The PayPal-Visa agreement announced last month could go far in introducing PayPal into more stores, faster. While PayPal dominates in online payments, it’s lagging behind mobile wallets Apple Pay and Android Pay (and, of course, physical credit cards) in brick-and-mortar point of sale transactions.

The new deal "seems to pave the road for PayPal to get more in-store payments,” Scott Fitzgerald, SVP of marketing at global commerce services and payments company BlueSnap, told Retail Dive. “That’s the big one.”

However, PayPal will likely be handing over more in fees because they will be higher than the bank account withdrawals that currently dominate PayPal’s system. PayPal has been making more money on the transactions it enables because the fees associated with ACH payments (where a user accesses a bank account rather than a credit card) are lower and flatter compared to the higher, percentage-based fees of credit-card transactions. As purchases grow, the differences widen, considering that those credit-card percentages can get hefty.

In addition to those higher fees from PayPal, investors are apparently wary of the move because it may temper the company’s disruptive (and therefore, presumably, innovative) bent, which is often the source of heightened investment returns.

“When it first started, I saw PayPal as a disruptor, but now [it’s] more a part of the traditional ecosystem,” Ned Elton, chief growth officer of business payments startup PEX, told the Journal. “Visa is ubiquitous, and it’s tough to overcome that.”

But PayPal global head of product and engineering William Ready told the Journal that the company's goal is to reduce friction in the payments space, critical to easing the adoption of mobile payments, which are still growing but have failed to really take off.

That has some investors happy with the arrangement, despite the added fees PayPal will encounter.

“They are trying to be something different than they were historically,” Elliot Turner of RGA Investment Advisors, who didn’t sell PayPal shares after the announcement, told the Journal.

“The level of [customer] engagement will be far more deterministic to the company’s future worth” than transaction costs, he said.