Will eBay's PayPal Survive the Apple Mobile Payments Threat?

Before you go, we thought you'd like these...
Before you go close icon

News that tech giant Apple is laying the groundwork to move into the mobile payment business has left eBay investors worried about the implications that this move will have on PayPal. PayPal is eBay's most important cash cow, earning the company a whopping $20 billion in revenue in 2013; this was about 41% of eBay's overall revenue.  PayPal also stands out as eBay's fastest-growing business segment with revenue jumping 20% in fiscal 2013. eBay has been selling off since the new development hit news feeds, and this is hardly surprising given the size of Apple and the mettle it commands in the market today.

How serious is the threat?
At this point in time, it is still unclear whether Apple's mobile payment services will only cover transactions that take place in physical stores, or if it will extend to also cover mobile e-commerce transactions. The latter option would be a much bigger threat to PayPal, since that's its main forte. Although PayPal processed a huge number of mobile transactions worth $27 billion in 2013, these were largely e-commerce related. PayPal has only a small presence in offline payment processing, although eBay is working feverishly to change that.

The good news for eBay shareholders is that given Apple's history, an Apple mobile payment service would be very unlikely to support Google's Android OS. This would quite naturally severely limit merchant interest in Android strongholds where the mobile OS holds the dominant market share such as Latin America, the EU, China and huge parts of mainland Asia.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading


S&P 5002,126.41-6.63-0.31%
HANG SENG22,954.81-177.54-0.77%
NIKKEI 22517,446.41109.990.63%
USD (per EUR)
USD (per CHF)0.99-0.01-0.61%
JPY (per USD)104.70-0.49-0.46%
GBP (per USD)
More to Explore