Browser-based Apple Pay predicted to chip away at PayPal's dominance with both consumers & merchant
Convenience and brand recognition should help Apple Pay on the web pose a serious threat to PayPal right out of the gate, a new analysis predicts, forecasting that Apple's new browser-based payment service will see a major overlap with PayPal acceptance when it launches this fall.
Analyst Gene Munster of Piper Jaffray spoke with developers and industry partners, who signaled that Apple Pay's forthcoming browser integration will be simple and will compare feature-for-feature with PayPal checkout.
Munster noted that 21 of the top 100 online retailers have already pledged support for Apple Pay at launch, and he believes another 10 will be ready soon after. In comparison, the longstanding PayPal service is accepted at 54 of the top 100 online retailers, including Office Depot, Target, HSN, Overstock.com, and J.C Penney.
Dubbed "Pay with Apple Pay," Apple announced that its web-based payment service will launch as part of its Safari browser this fall. Users will see an Apple Pay button during checkout with supporting merchants, and simply authorize the transaction via Continuity using Touch ID on their iPhone, or with a currently-worn, unlocked Apple Watch. It will be available on any Mac running macOS Sierra.
Munster has confidence in merchant adoption of Apple Pay for the web, predicting that as many as 43 percent of PayPal's merchants will accept Apple Pay at launch. In addition, Piper Jaffray estimates that about 30 percent of PayPal's transaction volume is already authorized via Apple devices.
"We do not believe online retailers will shy away from Apple Pay because of a 'cluttering' problem, as placing a well-trusted brand alongside existing checkout options will likely improve overall conversion," he wrote.
As for consumers, Munster believes a "significant portion of PayPal users" will elect to use Apple Pay over PayPal when given a choice of both. He believes that PayPal may be hurt, in part, by the fact that it does not feature a customer loyalty program.
"Consumers are incentivized to simplify their lives and Apple Pay reduces the ecosystem of platforms they interact with," Munster wrote. "When faced with identically sized buttons next to each other, we believe Apple Pay will begin taking share."
Apple Pay launched in late 2014 as a service for both point-of-sale tap-to-pay transactions, as well as in-app purchases. It relies on a secure enclave for credit card data found in newer Apple hardware, like the iPhone 6s and Apple Watch, and it relies on a tokenization system that helps to prevent credit card fraud.
To date, without support on the web, Apple Pay adoption is estimated to be at 12 million active users per month. In contrast, PayPal was estimated to have 116 million active accounts, accounting for $10.9 billion in transactions as of the first quarter of 2016.
Analyst Gene Munster of Piper Jaffray spoke with developers and industry partners, who signaled that Apple Pay's forthcoming browser integration will be simple and will compare feature-for-feature with PayPal checkout.
Munster noted that 21 of the top 100 online retailers have already pledged support for Apple Pay at launch, and he believes another 10 will be ready soon after. In comparison, the longstanding PayPal service is accepted at 54 of the top 100 online retailers, including Office Depot, Target, HSN, Overstock.com, and J.C Penney.
Dubbed "Pay with Apple Pay," Apple announced that its web-based payment service will launch as part of its Safari browser this fall. Users will see an Apple Pay button during checkout with supporting merchants, and simply authorize the transaction via Continuity using Touch ID on their iPhone, or with a currently-worn, unlocked Apple Watch. It will be available on any Mac running macOS Sierra.
Munster has confidence in merchant adoption of Apple Pay for the web, predicting that as many as 43 percent of PayPal's merchants will accept Apple Pay at launch. In addition, Piper Jaffray estimates that about 30 percent of PayPal's transaction volume is already authorized via Apple devices.
"We do not believe online retailers will shy away from Apple Pay because of a 'cluttering' problem, as placing a well-trusted brand alongside existing checkout options will likely improve overall conversion," he wrote.
As for consumers, Munster believes a "significant portion of PayPal users" will elect to use Apple Pay over PayPal when given a choice of both. He believes that PayPal may be hurt, in part, by the fact that it does not feature a customer loyalty program.
"Consumers are incentivized to simplify their lives and Apple Pay reduces the ecosystem of platforms they interact with," Munster wrote. "When faced with identically sized buttons next to each other, we believe Apple Pay will begin taking share."
Apple Pay launched in late 2014 as a service for both point-of-sale tap-to-pay transactions, as well as in-app purchases. It relies on a secure enclave for credit card data found in newer Apple hardware, like the iPhone 6s and Apple Watch, and it relies on a tokenization system that helps to prevent credit card fraud.
To date, without support on the web, Apple Pay adoption is estimated to be at 12 million active users per month. In contrast, PayPal was estimated to have 116 million active accounts, accounting for $10.9 billion in transactions as of the first quarter of 2016.
Comments
It is easier to use, more secure and more flexible.
I use Safari exclusively myself, but I'm part of a tiny minority.
And with the security of Apple Pay shoppers no longer have to worry about sticking to the major sites (like Amazon). If you find a niche shop selling something you want, and they take Apple Pay, then you can place an order without worrying about your card numbers getting stolen.
Apple Pay on the web is going to be very empowering to the small online business, who currently have to rely on third party processors to handle their credit card transactions for them.
On the other hand, sometimes I wonder if these analysts are sober. Apple is available in the US, but still hardly outside the US. So how can it take away marketshare from Paypal ?
But again, the real challenge is that this only works on Safari, which very few people use. Most users on both Windows and macOS are using the Chrome browser. I assume this is due to the popularity of Google's "free" services as well as the desire to have browser data synced across different devices from different manufacturers.
In retrospect, it may have been a mistake for Apple to abandon the Windows version of Safari. Google has capitalized on this to Apple's detriment.
2) I wonder if Android Pay will also find its way to Chrome on various OSes which will help their phones and wearables.
I assume that other browsers than Safari could be enabled by the addition of a browser plugin or extension -- or it could take advantage of already built-in browser capabilities. For example Chrome has a built-in ability to use camera on a Mac. IDK, but I suspect that most popular browsers have the capability to recognize and communicate with local, nearby devices using BT and WiFi.
Likely, Apple will start with support for Safari on Macs and iDevices -- then when the initial rollout is complete, add support for other browsers.