PayPal and Visa come to terms with a new agreement on payments. Instead of payments being routed through an ACH transaction via PayPal the money will come directly out of your debit card. This is a lot more efficient as is, but the impact on PayPal’s margins weren’t viewed favorably by the Street today. In other words, the feud between the two companies may have ended, but the impact for the alternative payment provider translates into lower gross margins on total payment volume for PayPal. On the other hand, it makes the mobile app much more accessible, as a payment alternative from Apple Pay or Google Pay for that matter.Here’s what the analysts at Morgan Stanley had to say:A mix shift in funding from ACH to debit would not appear to have meaningful impact (our Scenario 1) as we estimate a relatively small difference in total costs related to ACH vs. debit funding once associated transaction losses are taken into account (our analysis assumes only a 12bp difference). It would imply that ~25-60% of addressable volume make the switch from ACH to card transactions within a year (this assumes the "addressable volume" is perhaps 60% of ACH volume, which is transacted by consumers that have a Visa credit card).That being the case, the impact on margins could prove somewhat substantial in a worst case scenario assuming total addressable volume makes the transition to card based transaction rather than PYPL’s payment network based transactions. I find the likelihood of this to be relatively low, and while PYPL is no longer the fairly valued growth stock it once was, the recent over reaction by investors can be used as an opportunity to buy the online payment provider.