What does Apple Pay mean for PayPal and others

Screenshot 2014-09-18 20.04.28

Whilst Apple’s recent announcement, Apple Pay, a signal that it was entering the merchant payment space had not been a complete surprise, most pundits would admit the were caught a little off-guard. Quite a lucrative market, Apple’s initiative puts it head-on with the existing heavy-weights, such as PayPal and Amazon, which is in itself quite a risky adventure.

Apple’s payment gateway, of course piggy-backs on the hardware refresh of it’s mobile (and also wearable Apple Watch) devices, which will now include NFC-chips, to allow it to interact with participating merchants contactless.

One touch to pay with Touch ID. Now paying in stores happens in one natural motion — there’s no need to open an app or even wake your display thanks to the innovative Near Field Communication antenna in iPhone 6. To pay, just hold your iPhone near the contactless reader with your finger on Touch ID. You don’t even have to look at the screen to know your payment information was successfully sent. A subtle vibration and beep lets you know. (source: Apple)

The reach of Apple’s first fouray into the merchant ecosystem, allows users to scan/photo their credit cards, to allowing them to consolidate a list of cards that they can choose to purchase with, at stores. Apps will also have the ability through APIs, to allow users to purchase using Apple’s secure gateway. Uber and Target are already signed-up participants.

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Screenshot 2014-09-18 20.04.30

Of course, Apple Pay will only open up more as each year progresses, and Apple saw a problem with mobile wallets that they needed to address, using the clout that only Apple can provide. But this poses one fundamental question, what does this mean for the other merchant providers like Paypal?

My opinion is, they should be very worried. Whilst they have been established for quite a few years, none of them have been able to assert a foothold in the mainstream payment markets. Apple on the other hand, already have the large user-base of mobile phone users, a hardware division to allow for physical interaction with merchants (as opposed to software-only), and promise that their solution is more trustworthy than Amazon, Google Wallet or PayPal.

Apple doesn’t save your transaction information. With Apple Pay, your payments are private. Apple doesn’t store the details of your transactions so they can’t be tied back to you. Your most recent purchases are kept in Passbook for your convenience, but that’s as far as it goes.

Keep your cards in your wallet. Since you don’t have to show your credit or debit card, you never reveal your name, card number or security code to the cashier when you pay in store. This additional layer of privacy helps ensure that your information stays where it belongs. With you.

Privacy is a major concern, and whereas Amazon and Google (and probably PayPal) cannot offer that guarrantee, Apple have provided an extra layer between your credit card and merchants, meaning they (or Apple) don’t see what you are buying, and where you are buying, which then means, your credit card providers won’t either.


PayPal have gone on the offensive, hitting at Apple’s security lapses, and whilst iCloud and Apple Pay are not exactly the same product, it does signal that PayPal are starting to feel nervous.

What are your thoughts?

Doron KatzApple, Apple Pay, Blog, iOS