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Killer blow to PayPal? Facebook powered by Apple Pay

So Apple has just announced record Q4 profits, and we all go ooh and aah, but I went: what’s happening with Apple Pay?

After calling Apple Pay a winner two months ago, several people claimed it would fail (although many have personal stakes for saying so).

I called it because of the sheer size and power of Apple and their brand, and that they don’t do things that will fail big time often.  They thought long and hard about Apple Pay and, in that Q4 earnings call, made clear the numbers are starting to deliver. 

From CNET.com:

It's now up to 750 banks and credit unions [from 500 at launch in October 2014] and makes up more than $2 out of every $3 spent on purchases using contactless payments.  [Tim] Cook [CEO] also highlighted Apple Pay's rollout to over 200,000 payment kiosks, including parking meters, laundry machines and vending machines, through a partnership with USA Technologies announced earlier in the day.

Bank of America is one of the major partners for Apple Pay and, in their earnings call, announced that nearly 800,000 customers have started using Apple's new payment method. As a result, more than 1.1 million cards have been added to Apple Pay just from Bank of America alone.

ITG Investment Research Inc. stated last year that Apple Pay is “doing exceptionally well,” considering its time in the marketplace. Because Apple is competing with PayPal and Google Wallet — which the latest stats from ITG Investment Research show capture 78% and 4% of the digital payment dollars spent, respectively — there’s a lot for Apple to prove. November figures from the company’s research shows that Apple Pay made up for 1% of digital dollars spent. Based on that same research, ITG believe that 20%-30% of people who buy the new iPhone activate Apple Pay.

That’s why Apple’s CEO is “more confident than ever that 2015 will be the year of Apple Pay” and maybe, just maybe, Tim Cook said that because he knew the deal about to be struck with Facebook.

From Motley Fool:

David Marcus, Facebook's vice president of messaging services, told an audience in Munich last week that he has an ambitious roadmap for Facebook Messenger in 2015. That roadmap includes ways for the company to generate revenue, but he said it won't include building a payments business on top of Facebook Messenger or WhatsApp.

Instead, Facebook wants to help remove friction from the buying experience. This shift opens the door for mobile payments providers to capitalize on Facebook's scale as it connects businesses with consumers. Specifically, Marcus wants to allow people to share private information — like their credit card data — with confidence.

Apple is already working on solving that problem and offers an excellent mobile payments solution. Therefore, it would make sense for Facebook to work with Apple over competitors like Google or PayPal. However, the need for a universal solution — not just iPhones and iPads — bodes well for competitors, but not necessarily Google and PayPal.

Meanwhile, I hear all the Android guys groaning out there that Google will not let Apple just walk away with Facebook's business, but think about this:

(a) Google is no friend of Facebook (or Apple or Microsoft for that matter); and

(b) Apple's been wooing Facebook for three years.

So I guess that the Android guys will just need to download the Apple Pay app too.


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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