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Itaú-PayPal's e-commerce tie-up a credit positive, Moody's says

Itaú Unibanco Holding SA's e-commerce partnership with PayPal Holdings Inc.'s Brazilian subsidiary is credit positive for the bank, Moody's said Aug. 31.

Through the partnership, Itaú will offer digital wallet services to its clients and raise the number of electronic retail customers accepting PayPal as a means of payment through subsidiary Redecard SA.

The agreement will increase payment volumes generated by Itaú in e-commerce transactions, a fast-growing segment in Brazil, Moody's said. In particular, the deal will target the heightened competition among traditional credit card acquirers in the country amid the rise of financial technology companies.

The deal will also introduce Itaú into the online credit card payment segment, which accounts for 20% of total credit card payments despite almost doubling since 2016, the rating agency noted.

Itaú's tie-up with PayPal is among the measures the bank has taken to leverage its digital platform, Moody's said. The bank received regulatory approval for a stake purchase in XP Investimentos SA, Brazil's largest online investment firm. It is also considering offering digital-only accounts in Argentina to try to accelerate growth and expand its market share in the country without incurring hefty expenses.