Following Apple’s entrance onto the P2P payment provider list in 2017, PayPal isn’t staying behind. PayPal might be one of the oldest digital payment methods out there, but they have just recently announced a new update of the PayPal app. It focuses on the user experience and P2P transactions more than ever.
However, many people are worried about PayPal’s future as a P2P provider. Now that there are so many new competitors like Apple around, the world’s leading e-wallet seems to be in a tricky situation. PayPal seems to not be going down easy and still wins against Apple and other providers of P2P payments because:
- PayPal offers its services throughout the different OS, devices and locations
- PayPal continues to grow despite the emerging competition
- P2P payments is a $100 trillion market that is still waiting to be fully shared
First things first:
By the time you’re reading this, the PayPal update should already be in effect on your device. What does it do, exactly? PayPal has been allowing peer-to-peer payments for what now seems like ages. So, why bother with an update at all?
This question is particularly important considering the competition. Apple is relatively new to the P2P market. And, being the world’s largest public company, it certainly poses a threat to its competitors. Besides, in the case of peer-to-peer services, PayPal is one of the strongest too. So, it has the most to lose.
In short: The new PayPal app update would need fundamental changes to stay on top of Apple. However, the situation isn’t what it seems at first.
Growing Popularity of P2P Payments
The industry experts and businesses have seen a massive growth in peer-to-peer transactions. In 2017, the volume of P2P payments increased by 21%, reaching $348 billion.
As they’re getting more popular among the users, companies try to capitalize on the new opportunities. This is why Apple has decided to launch their Apple Pay Cash feature in the first place.
Apple Pay Cash P2P
Before that, Apple Pay was all about e-commerce and retail payments. You could use the mobile app to pay for items online, and for services and purchases in real life.
However, you couldn’t transfer money to other users or receive money from them. Everything changed when Apple introduced Apple Pay Cash into Apple Pay and iMessage.
With that, Apple users could send funds to anyone they want. What’s more, adding this service into the messaging app allows use it while chatting.
In other words:
- Apple Pay has become a P2P service while retaining its previous functions
- Its integration in iMessage has made peer-to-peer transactions easy and quick
PayPal didn’t think much of it, but they decided to go in the same direction. As a result, we’ve got the PayPal app update a few days ago.
PayPal App P2P Payments Update
PayPal is trying to counter Apple Pay Cash with their recent update. The Apple service is only available on iOS, so PayPal also focused on iOS users specifically.
Here’s what changed in the newest PayPal app update:
- The app has been redesigned, streamlined and simplified for everyday mobile use
- Send and Receive buttons were moved right under your thumb. Plus, less-used buttons like Order and Donate were moved back
- You can now add photos to your contacts and personalize the list to make it easier to navigate
- The home page is further personalized, including your history, frequent contacts and notifications
The PayPal app update affects users in many countries. Plus, the update will be released for both Android and iOS devices.
PayPal and Apple P2P Functionality
With renewed features like that, the PayPal app is probably on par with Apple Pay Cash in terms of ease of use. In fact, it may be even better.
Consumer Reports have published an analysis of the most popular peer-to-peer payment services a few weeks ago. According to it, Apple Pay is the best in the field, though PayPal’s Venmo isn’t far behind.
However, this was done before the PayPal app update. So, the new streamlined user experience and improved security are bound to shake things up.
We believe that Apple has lost its edge against PayPal. This leaves Square and Zelle, the other main competitors in the field, even further behind.
After the update, PayPal seems as alluring as Apple Pay for P2P payments.
PayPal vs Apple Pay Cash
PayPal has been the most popular peer-to-peer service in the world for years. They have both the PayPal app and Venmo in the US for user transactions. Each platform is considered successful as well.
Knowing this, it’s not surprising that Apple doesn’t intimidate PayPal. Even as the new Apple Pay Cash feature launched, the staff at PayPal felt confident they can pull it off and they provided more than one reason for it.
3 Reasons Why PayPal Wins
Dan Schulman, CEO of PayPal, and other company officials point out three important things. According to them, there’s no reason for the company to be afraid. These reasons are:
- PayPal is available to everyone
- Both PayPal and Venmo have the most volume in P2P transactions
- There can be more than one player in the field
Let us explain these points right now.
Apple Pay Is Limited, PayPal Isn’t
Apple Pay has a lot of potential as a peer-to-peer service. In fact, millions of Apple users are already using it, although only months have passed since its launch. What you should pay attention to are the words ‘Apple users.’ Indeed, like all Apple services, the option to transfer funds to anyone is limited to people using Apple products.
Since iMessage and Apple Pay are available on iOS and Apple products only, so are the payments.
This is not the case with PayPal. While Venmo is a US-based app, the core PayPal platform is global. Regardless of the device, operating system or location, you can use PayPal without any further limits.
This advantage that PayPal has puts them ahead of other competitors as well. For example, Zelle is only available to certain banks and credit unions (only about 150 of them) and their users. Meanwhile, PayPal is much more widespread.
PayPal Still Grows in P2P
Venmo has recently released a Venmo debit card and is increasing in popularity. The same applies to the PayPal app itself. People may have downloaded Square app more often than Venmo recently. Yet it doesn’t tell anything about the number of transactions or their volume.
That’s where it gets interesting.
Number of Transactions
Apple Pay has just passed the 1 billion peer-to-peer transaction threshold over the last quarter. That’s around ten times as much as Zelle can boast of.
Meanwhile, PayPal has reached 2.5 billion transactions in the second quarter of 2018. Which means that they’re still more popular than all of their main competitors combined. At least when it comes to the number of transactions, anyway.
Regarding their volume, PayPal users have transferred $139 million among themselves during that same quarter. It isn’t clear how much money Apple has processed via peer-to-peer operations, however.
In any case, the company is still on the rise. Despite the sceptics and their predictions, following the emergence of many competitors, there’s little to worry about.
Number of Users
Zelle and Square are still quite small compared to the internet giants of Apple and PayPal. But PayPal wins in this respect as well. While PayPal has more than 200 million users, Apple has half of that.
The numbers aren’t clear right now, but we have some information from last year: Apple Pay has over 86 million users in total as of November 2017.
But that’s not it. Even if the sceptics were right to worry about the conversion rates and revenue, Schulman has yet another counterargument.
‘The Common Enemy is Cash’
The demand for person-to-person payment services is huge. PayPal’s Venmo app alone has seen a 114% year-over-year increase in 2017. Despite the fact that new businesses launch, offering P2P services, most of them keep growing. For this reason, PayPal doesn’t see their competitors are a huge issue. PayPal is the undisputed leader in this field, but most likely there’s enough space for more than one player in the field.
Schulman, CEO of PayPal, was asked about this in 2017. He replied:
‘We don’t see it as a winner-take-all scenario. We welcome any effort to move folks to more digital payments and move toward the smartphone as the central point of financial life. The common enemy is cash.’
In another interview conducted just weeks ago, the leading officer still held the same opinion.
He explained why the growing competition doesn’t scare him as much. While it remains an important dynamic, especially for the investors, PayPal’s situation isn’t hopeless, because:
‘I’d say it’s obviously not a zero-sum game. Yes, we’re operating in what we think is $100 trillion total addressable market which is rapidly digitizing as online and offline is blurring. And we have a very small share of that total TAM.’
So, while there’s still room for several services in the same niche, PayPal has nothing to worry about. For a while, at least, they’ll remain the largest P2P payment service provider in the world.
**This is a contributed article.