Apple’s new Apple Pay, an NFC-based payment app on the iPhone 6 is expected to give a tough competition to Ebay’s PayPal with its strong consumer coverage and inclusion of debit card data.
The company’s new payment system is expected to be popular among consumers due to its mobile in-app and offline features. Shares of PayPal, owned by Ebay declined by 3 percent on Wednesday after Apple unveiled its Apple Pay service on Tuesday. PayPal is the main revenue generator for the shopping site and accounted more than 40 percent in sales in the recent quarter.
“There is the potential for Apple to disrupt PayPal’s competitive position. These are legitimate concerns, for mobile in particular,” said Victor Anthony, an analyst at Victor Capital Markets.
Ebay’s stock market value is likely to fall as there will be reduction in online payments. However, Apple Pay will be used only by Apple users mainly for offline payments in several market categories. Apple also chose not to partner with PayPal for its new service which is likely to give tough competition.
Apple Pay will be launched in more than 220,000 merchant locations in the US and will be available only on the iPhone 6. The service will allow users to make payment using the Touch ID and services like Uber, Groupon, Target can be paid using the feature. However, many analysts predict that there is still hope for PayPal as Apple Pay is launched in the US currently. R.J Hottovy, an analyst with Morningstar predicts that PayPal could eventually get integrated into Apple Pay which will prove useful for Apple passport app which stores gift cards, coupon and ticket data.