Can Apple Pay Beat PayPal?

© Can Stock Photo Inc. / EmiliaUIs the expansion of Apple Pay’s functionality to include website functionality enough to enable the tech company’s payments venture to top PayPal, the reigning king of mobile payments?

Apple Pay will purportedly soon be available to shoppers using Safari browser on models of iPhones and iPads with Apple’s TouchID fingerprint technology. This will put Apple Pay in direct competition with PayPal.

Payments made through mobile wallets are projected to climb to $54 billion this year, according to Javelin Research. Last quarter, PayPal handled about $20.5 billion of mobile payments, 25% of its total payments volume. When choosing a mobile payments provider, 63% of consumers picked PayPal, according to the study. In other words, PayPal has significant marketshare.

Apple Pay doesn’t just have PayPal to contend with. Banks are also favored by consumers. According to Javelin, more than half of mobile wallet users still prefer to bank with their financial institution. This echoes earlier research from bank consultants CCG Catalyst. Emmett Higdon, Javelin’s new director of mobile, theorized that the greatest impediment to mobile wallet ubiquity is the lack of physical stores, markets and vendors willing to accept it. That’s obviously not where Apple Pay in Safari is competing.

Still, Apple Pay will have to contend with financial institutions in ways that are only now presenting themselves. Here’s Higdon:

For that fifty percent of already active mobile [banking users], the enrollment process is effectively already in place…I remember the transition from online to mobile banking. Customer expectation was for that to go smoothly. I expect banks to do something similar here with the next step. Auto-enrollment, I expect to be a common thread in the coming changes. It reduces the friction of customers trying mobile wallet. The big first streamlining step will be auto-enrollment.

Mobile payments, Emmett continued, will in the next few years become integrated into banking experiences. For Apple Pay, PayPal is not just the entrenched leader in mobile payments, and a whole new population of mobile payments competitors is coming to join the fray.

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