Browser-based Apple Pay predicted to chip away at PayPal's dominance with both consumers & merchant

Posted:
in General Discussion edited June 2016
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.
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Comments

  • Reply 1 of 49
    applesauce007applesauce007 Posts: 1,621member
    That's for sure.
    It is easier to use, more secure and more flexible.
    patchythepiratelostkiwilolliverlatifbp
  • Reply 2 of 49
    irelandireland Posts: 17,669member
    PayPal works, but in the past when I've had issues their support was so bad it's not funny. I literally got locked out of my account for 3 months through no fault of my own because that was their policy.
    edited June 2016 SpamSandwichlostkiwi
  • Reply 3 of 49
    slprescottslprescott Posts: 753member
    Does Apple plan to expand this to support non-Safari browsers on Windows?  (Chrome, Firefox, etc.)  I assume not, since a Windows PC can't support Continuity to a Touch ID-enabled device for user authentication.
  • Reply 4 of 49
    freediverxfreediverx Posts: 1,408member
    Munster believes a "significant portion of PayPal users" will elect to use Apple Pay over PayPal when given a choice of both. 
    Except none of those users will ever see an Apple Pay option unless they're using Safari. With a desktop browser market share of under 5%, how many people are likely to use this on non-mobile devices?

    I use Safari exclusively myself, but I'm part of a tiny minority.
    edited June 2016 croprcnocbui
  • Reply 5 of 49
    freediverxfreediverx Posts: 1,408member
    ireland said:
    PayPal works, but in the past when I've had issues their support was so bad it's not funny. I literally got locked out of my account for 3 months through no fault of my own because that was their policy.
    Everything about PayPal's user experience is terrible, from their relentless attempts to use your checking account instead of your credit card to their obnoxious interstitial ads when you're trying to quickly access your account information.
    monstrositylostkiwilolliverbill42
  • Reply 6 of 49
    Damn right it will. iOS now accounts for somewhere around 24% of all online shopping (according to Google). I doubt anyone would pick PayPal over Apple Pay when using their iOS device to purchase products online.

    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.
    davenjony0radarthekatlostkiwilolliver
  • Reply 7 of 49
    freediverxfreediverx Posts: 1,408member
    Damn right it will. iOS now accounts for somewhere around 24% of all online shopping (according to Google). 
    But the other 76% of online shopping is still done on desktops, where Safari accounts for a minuscule segment of the browser market. This story is focused on the desktop Apple Pay feature, which only works on Safari.
    lostkiwi
  • Reply 8 of 49
    loekfloekf Posts: 37member
    ireland said:
    PayPal works, but in the past when I've had issues their support was so bad it's not funny. I literally got locked out of my account for 3 months through no fault of my own because that was their policy.
    Everything about PayPal's user experience is terrible, from their relentless attempts to use your checking account instead of your credit card to their obnoxious interstitial ads when you're trying to quickly access your account information.
    I thought it was my settings, but you are right, despite of what you do, it ALWAYS picks your checking account as primary account.

    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 ?
    lostkiwicnocbui
  • Reply 9 of 49
    freediverxfreediverx Posts: 1,408member
    loekf said:

    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 ?
    I don't think that's very important for now. Capturing the US market alone would be a huge win for Apple, both for their users and for their bottom line.

    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.
    edited June 2016 patchythepirate
  • Reply 10 of 49
    dachardachar Posts: 330member
    I too have had bad experiences with PayPal and now refuse to use it. Irrationally l now think that any company which accepts PayPal  is not one l wish to do business with. When ApplePay becomes an alternative l am sure there will be lots of switches from PayPal very quickly. 
    mike1lostkiwilolliverlatifbp
  • Reply 11 of 49
    SoliSoli Posts: 9,259member
    Does Apple plan to expand this to support non-Safari browsers on Windows?  (Chrome, Firefox, etc.)  I assume not, since a Windows PC can't support Continuity to a Touch ID-enabled device for user authentication.
    1) I doubt it. This helps to both support Safari on Macs in usage, which helps build some revenue for searches, and may even help grow Mac OS X. It certainly doesn't hurt Apple.

    2) I wonder if Android Pay will also find its way to Chrome on various OSes which will help their phones and wearables.
    lostkiwibestkeptsecret
  • Reply 12 of 49
    levilevi Posts: 344member
    ireland said:
    PayPal works, but in the past when I've had issues their support was so bad it's not funny. I literally got locked out of my account for 3 months through no fault of my own because that was their policy.
    Agree regarding support. I've had a couple of very frustrating interacts with them. Most recently when  my account was hacked a few years ago. I notified them immediately and they still went forward with processing the fraudulent charge. My bank and the vendor were dumbfounded by this. When my bank cancelled the transaction, PayPal then defaulted to my secondary card on file through another bank. And good luck getting a suoport person on the phone. 
    lostkiwi
  • Reply 13 of 49
    freediverxfreediverx Posts: 1,408member
    dachar said:
    I too have had bad experiences with PayPal and now refuse to use it. Irrationally l now think that any company which accepts PayPal  is not one l wish to do business with. When ApplePay becomes an alternative l am sure there will be lots of switches from PayPal very quickly. 
    I doubt we'll be seeing ApplePay as an option on eBay, the only place I use PayPal.
    edited June 2016
  • Reply 14 of 49
    wizard69wizard69 Posts: 12,860member
    Munster believes a "significant portion of PayPal users" will elect to use Apple Pay over PayPal when given a choice of both. 
    Except none of those users will ever see an Apple Pay option unless they're using Safari. With a desktop browser market share of under 5%, how many people are likely to use this on non-mobile devices?

    I use Safari exclusively myself, but I'm part of a tiny minority.
    It isn't that tiny of a minority. Besides I can see Apple bringing back Safari for Windows, maybe even a Linux version just to capture as much of the user base as possible.
  • Reply 15 of 49
    wizard69wizard69 Posts: 12,860member
    dachar said:
    I too have had bad experiences with PayPal and now refuse to use it. Irrationally l now think that any company which accepts PayPal  is not one l wish to do business with. When ApplePay becomes an alternative l am sure there will be lots of switches from PayPal very quickly. 
    I doubt we'll be seeing ApplePay as an option on eBay, the only place I use PayPal.
    Why?    It would be in E-Bays best interest to support Apple Pay.
  • Reply 16 of 49
    brucemcbrucemc Posts: 1,540member
    Damn right it will. iOS now accounts for somewhere around 24% of all online shopping (according to Google). 
    But the other 76% of online shopping is still done on desktops, where Safari accounts for a minuscule segment of the browser market. This story is focused on the desktop Apple Pay feature, which only works on Safari.
    I haven't look at this in detail yet.  Will Apple Pay on the web also work with mobile Safari on iOS?  I know it is supported through Apps today, but opening to mobile shopping on Safari would greatly broaden the use of Apple Pay (for iPads specifically).
  • Reply 17 of 49
    dick applebaumdick applebaum Posts: 12,523member

    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.

  • Reply 18 of 49
    croprcropr Posts: 961member

    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.
    A merchant can't steal your credit card details when using PayPal, so this is a bogus argument
    cnocbui
  • Reply 19 of 49
    davendaven Posts: 543member
    Damn right it will. iOS now accounts for somewhere around 24% of all online shopping (according to Google). I doubt anyone would pick PayPal over Apple Pay when using their iOS device to purchase products online.

    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.
    Good point about no longer sticking with major sites.
    lostkiwi
  • Reply 20 of 49
    volcanvolcan Posts: 1,791member
    Websites are supposed to be ubiquitous and all features should work with all browsers on all platforms. That is where Microsoft got into trouble by using proprietary Active X  and JScript functionality in Internet Explorer. It only took them 20+ years to finally undo that crap. The new Edge browser is now supposed to be WC3 compliant. Even so, some developers write crap code that breaks in some browsers. Occasionally I've had issues with Safari not working and had to switch to Chrome. I attribute most of the problems to complicated Javascript in forms which I don't think works as well in Safari as in Chrome. I've never had a website that didn't function as expected in Chrome, although I use Safari by default.
    edited June 2016
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