The European Union has forced software giant Apple‘s hand into allowing other financial service providers to use its NFC chip, and in turn, its tap-to-pay tech. This has led to speculation about notable names in the payments space offering a mobile wallet: one of these being PayPal.
In mid-July, Apple announced it would level the playing field for paytechs by enabling users to change the default mobile wallet on its phones. To this point, every iPhone user had to use Apple Wallet to store payment details. However, this is no longer the case. Almost a month after this initial announcement, Apple further announced its support for third-party providers as it launched its Secure Element infrastructure, offering greater security and protection for developers utilising the NFC technology.
In late 2023, the EU announced that Apple was classified as a tech ‘gatekeeper‘, meaning it would need to democratise access to its technology. Following this news, PayPal expressed that it was ready to capitalise on the Digital Markets Act (DMA). However, there was no official announcement made about PayPal launching a mobile wallet – only that it would be looking towards ‘offline’ payments.
PayPal’s position in the payments market
It should come as no surprise that PayPal could be interested in getting involved in the mobile wallet market. Given PayPal’s reputation in the payments market and the growing popularity of mobile wallets, a PayPal wallet could be considered the perfect storm.
According to research from YouGov Profiles, PayPal was the most common mobile payment app in the US, with 32 per cent of respondents typically using the paytech. Meanwhile, 14 per cent of respondents said they used Apple Pay while only four per cent used Google Pay.
Research from eCommerceDB also found similar results. However, these findings revealed that PayPal’s popularity extended beyond the US too. Ninety per cent of Germans, 85 per cent of French and 82 per cent of UK respondents claim to use the paytech. This was considerably more than:
Apple Pay (16 per cent in Germany, 19 per cent in France and 37 per cent in the UK)
Google Pay (15 per cent in both Germany and France, and 22 per cent in the UK)
Amazon Pay (28 per cent in Germany, 14 per cent in France and 21 per cent in the UK)
So if PayPal launched its own mobile wallet, could it succeed and rival Apple and Google wallets?
Uprooting the mobile wallet sector
Kristian Gjerding, CEO of CellPoint Digital
A lot would need to happen for PayPal to upset the current mobile wallet ecosystem as Apple and Google have established themselves as powerhouses. As Kristian Gjerding, CEO of CellPoint Digital, the payment orchestration platform, notes: “Apple Pay and Google Wallet already dominate this space, and it’s uncertain whether PayPal’s online retail presence will suffice to reshape the landscape.
“If PayPal can leverage its reputation as the go-to payment method for e-commerce to make the case that using its mobile wallet will result in a more unified cross-channel payment experience for users, it might entice some to switch. If they are able to integrate their account-to-account payment capabilities into the mobile wallet, that could also be a differentiator, as users typically don’t think of Apple Pay or Google Wallet first when transferring money among peers.”
More hype than reality
While PayPal is an established name, the sheer number of neobanks and other fintechs already offering mobile wallets means many consumers have already found something they like and have loyalty for. Therefore, PayPal will face a big challenge if it launches its own wallet.
Ivo Gueorgueiv, co-founder and executive chairman at Paynetics
Ivo Gueorguiev, co-founder at embedded finance provider Paynetics, explains: “The idea of PayPal going head-to-head with Apple in the mobile wallet space is more hype than reality. Apple opening up Near-Field-Communication (NFC) won’t dramatically shift the payment landscape. The EU may drive this narrative to demonstrate action on their side, but the true impact is different.
“Google Pay, for example, allows for custom wallet development. Most fintech players – including us – use it because it’s free and reliable. Apple’s approach is different. The tech giant charges for NFC access, so it’s uncertain how much advantage PayPal would gain.
“The real challenge for PayPal is adoption. They missed the chance to capitalise on their first-mover advantage a decade ago. Now, with neobanks and traditional banks offering robust mobile wallets, PayPal faces an uphill battle. A head-to-head with Apple? Unlikely. At best, they might internalise tokenisation, but the benefits of that remain unclear”.
What can turn heads?
Michael Seaman, CEO and founder of Swipesum
Although it will be difficult for PayPal to have an instant impact on the space, it is still possible. Exploring what it would take, Michael Seaman, CEO of Swipesum, the payment processor, said: “Compelling incentives and a superior user experience are key factors to consider. Consumers are generally resistant to changing default settings unless there’s a clear benefit. If users see tangible benefits, such as cashback, discounts, or lower fees for using PayPal as their primary wallet, they may be more inclined to make the switch.
“When paying for anything, enhanced security features are expected and probably won’t attract users… money talks.”
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