PayPal Could Shake Up EU Wallet Market With Potential Challenger to Apple Pay
PayPal has been hinting at developing a mobile wallet in recent weeks. l Credit: Jaap Arriens/NurPhoto via Getty Images
Key Takeaways
- PayPal has teased a potential mobile wallet in Europe.
- The wallet could be a game-changer for PayPal.
- PayPal is currently used by over 300,000 people daily in Europe.
A new challenger may soon emerge in the European mobile payments space, as PayPal is reportedly exploring the development of a mobile wallet that could rival Apple Pay.
The move comes after Apple’s decision to grant third-party developers access to the technology powering its contactless transactions.
Despite PayPal not directly confirming it will develop a mobile wallet, TechCrunch reported how the company has hinted several times at its potential plans due to its new access to near-field communications (NFC) and Secure Element APIs.
PayPal Has Been Hinting at a Mobile Wallet in Recent Weeks
PayPal has been dropping hints about its plans for a mobile wallet in recent weeks, and it seems like the company is on the cusp of making a major announcement.
During its second-quarter earnings call on July 30, PayPal CEO Alex Chriss sparked interest among investors by revealing that changes in European NFC technology would soon open up opportunities for the company to enter the mobile wallet space. Chriss stated that with these changes, PayPal would be “prepared shortly to be able to play in that space.”
This isn’t the first time Chriss has hinted at PayPal’s mobile wallet ambitions. Looking back, The PayPal CEO has been building up to this moment for months.
In the Q1 2024 earnings call, he noted that NFC changes would make it “very easy” for the company to “provide a wallet in an Android or iPhone operating system.”
In February, he declared 2024 a “transition year” for PayPal, emphasizing that the company was closely tracking its access to NFC technology. This tracking was not just idle interest; Chriss has clarified that PayPal sees NFC as a critical component in its plans for a mobile wallet.
Chriss also stated the company was working on delivering a way to use PayPal offline.
“…our customers that love PayPal on the online eCommerce side are demanding being able to have an omnichannel and offline solution, as well,” he said. “So, we’ll be working closely on this. And when it is available, we will be ready to be able to deliver for our customers, both online and offline.”
A mobile wallet could be a game-changer for PayPal
Offering a mobile wallet could be a game-changer for PayPal, which has not yet been able to provide its users with a comprehensive offline service.
The US e-commerce giant has attempted to break into offline retail for years.
In 2020, at the height of the COVID-19 pandemic, PayPal introduced QR codes for in-person payments. Retailers could display QR codes at checkout, and customers could scan them with their PayPal app to complete transactions.
PayPal is currently used by over 300,000 people daily in Europe , making a potential NFC wallet in the bloc an extremely attractive prospect for the company.
Johannes Kolbeinsson, CEO and co-founder at fintech company PAYSTRAX told CCN: “As with all new digital alternatives, introducing an alternative to Apple Pay can serve to increase diversity and market options.
“For example, it might increase competition for services and innovation from services like PayPal, leading to the development of new features and services.”
However, Google Pay and Apple Pay continue to lead when it comes to mobile payments.
“We certainly need more competition in the digital wallet space, especially to encourage innovation,” Kolbeinsson said. “The digital wallet landscape will soon become highly competitive, and companies need to be motivated to innovate in order to differentiate themselves and attract new customers.”
CCN reached out to PayPal for commentary but did not receive a reply at the time of publishing.
Apple and the EU’s Digital Markets Act
Notably, PayPal’s prospects for launching a mobile wallet with NFC payment capabilities would not have been possible without the DMA’s intervention, which has leveled the playing field for competitors to access Apple’s previously restricted technology.
The Digital Markets Act (DMA), which came into effect on Nov. 1, 2022, aims to regulate major tech platforms to ensure fair competition and protect consumers.
Due to its dominant position in the tech market, Apple is classified as a “gatekeeper” under the DMA, which means Apple Pay has been subjected to increased scrutiny.
As part of an antitrust investigation into Apple Pay, the European Commission found that the iPhone maker abused its dominant position by limiting access by third-party developers of mobile wallets to NFC technology.
The technology giant was forced to open its NFC “tap and go” technology to third-party developers in the bloc, paving the way for companies like PayPal to develop new mobile wallets.
The DMA’s rules aim to prevent anti-competitive practices and ensure that dominant platforms like Apple’s don’t unfairly advantage their own services over competitors.
