The Race Is On: Comparing Apple Pay and PayPal

Comparing Apple Pay and PayPal. That is what a lot of consumers interested in ditching the plastic in their wallets will be doing now that PayPal has made it clear that it’s going to make a play for the growing mobile payments market.

For well over a decade now it has been impossible to think of eBay without also thinking of PayPal. True, PayPal has been a subsidiary of eBay since it was acquired in 2002, but the connection in the consumer’s mind was probably more visceral: In order to buy something online at eBay required a PayPal account. On September 30, though, that bond was snapped when eBay announced that it would spin off PayPal, which is set to now become its own publicly traded company in 2015.

Although repeatedly denied by eBay executives over the past year, the move does not come as a major surprise. And the reason it is happening, many speculate, is simple: Mobile payments. Indeed, while PayPal has become the go-to method of online payment, many consumers don’t even consider it when it comes time to make a purchase with a smart phone. Making that transition to become a leader of the quickly evolving mobile payment industry is a huge opportunity. Market research firm eMarketer expects the mobile payments industry in the U.S. to grow to $118 billion by 2018, up from just $3.5 billion this year.

Of course, PayPal is not alone in pursuing this large market. Google Wallet and other mobile payment options like Square have been around for years. Earlier in September, Apple threw its hat into the ring with the unveiling of Apple Pay, the announcement of which included deals with large retailers, such as Whole Foods and McDonalds.

Many observers believe that Apple will provide stiff competition for PayPal. A large measure of its advantage comes from the fact that Apple Pay is incorporated into the iPhone 6 and iPhone 6 Plus, which were purchased by 10 million customers during the first weekend it was available. “Competitors will be forced to counter Apple’s smart phone advantage,” Citicorp analyst Donald Fandetti said in a Bloomberg article. “We see good merchant and consumer adoption over time.”

Still, other observers contend that an independent PayPal will be more able to innovate and come up with mobile payment services and products that will challenge Apple, Google and other competitors. While it’s impossible to predict which individual company will flourish in the mobile payments industry, the sheer level of interest by big brands does indicate that the days of plastic cards are numbered.

 

Author: Chris Warren

  • The Race Is On: Comparing Apple Pay and PayPal

    The Race Is On: Comparing Apple Pay and PayPal

    Comparing Apple Pay and PayPal. That is what a lot of consumers interested in ditching the plastic in their wallets will be doing now that PayPal has made it clear that it’s going to make a play for the growing mobile payments market.

    For well over a decade now it has been impossible to think of eBay without also thinking of PayPal. True, PayPal has been a subsidiary of eBay since it was acquired in 2002, but the connection in the consumer’s mind was probably more visceral: In order to buy something online at eBay required a PayPal account. On September 30, though, that bond was snapped when eBay announced that it would spin off PayPal, which is set to now become its own publicly traded company in 2015.

    Although repeatedly denied by eBay executives over the past year, the move does not come as a major surprise. And the reason it is happening, many speculate, is simple: Mobile payments. Indeed, while PayPal has become the go-to method of online payment, many consumers don’t even consider it when it comes time to make a purchase with a smart phone. Making that transition to become a leader of the quickly evolving mobile payment industry is a huge opportunity. Market research firm eMarketer expects the mobile payments industry in the U.S. to grow to $118 billion by 2018, up from just $3.5 billion this year.

    Of course, PayPal is not alone in pursuing this large market. Google Wallet and other mobile payment options like Square have been around for years. Earlier in September, Apple threw its hat into the ring with the unveiling of Apple Pay, the announcement of which included deals with large retailers, such as Whole Foods and McDonalds.

    Many observers believe that Apple will provide stiff competition for PayPal. A large measure of its advantage comes from the fact that Apple Pay is incorporated into the iPhone 6 and iPhone 6 Plus, which were purchased by 10 million customers during the first weekend it was available. “Competitors will be forced to counter Apple’s smart phone advantage,” Citicorp analyst Donald Fandetti said in a Bloomberg article. “We see good merchant and consumer adoption over time.”

    Still, other observers contend that an independent PayPal will be more able to innovate and come up with mobile payment services and products that will challenge Apple, Google and other competitors. While it’s impossible to predict which individual company will flourish in the mobile payments industry, the sheer level of interest by big brands does indicate that the days of plastic cards are numbered.

     

  • Consumer Financial Protection Bureau Under Fire For Mismanagement, Discrimination

    Consumer Financial Protection Bureau Under Fire For Mismanagement, Discrimination

    When it was first established as part of the sweeping Dodd-Frank bill in 2010 the Consumer Financial Protection Bureau (CFPB) was envisioned as something of a white knight – a good guy with some muscle that could help protect American consumers from too powerful Wall Street bankers. But if recent allegations by CFPB employees that have been aired by congressional investigators and in an in-depth story in The Washington Times are true, many of the agency’s own workers need protection themselves.

    Among the charges included in The Washington Times story about disgruntled Consumer Financial Protection Bureau workers include those of Ali Naraghi, a bank examiner with the CFPB who claims that he was called a “f’ing foreigner” by superiors when he questioned the methodology used to assess financial institutions. Naraghi, who filed a complaint about his treatment by CFPB supervisors and testified before congress, formerly worked at the Federal Reserve, where he received glowing reviews for his performance. By contrast, Naraghi has received the lowest performance rating possible from his bosses at the CFPB since he joined the agency in 2011, a fact he attributes to his raising concerns about what he considered the lack of objectivity in the CFPB’s methodology.

    Other allegations about how the CFPB is run are equally troubling. The Washington Times reports that dozens of agency employees have complained that managers run their departments like “fiefdoms.” “The bureau’s lack of accountability is enabling managers to create their own mini-fiefdoms, stock the ranks of inexperienced and unqualified friends and retaliate against anybody who disagrees with their agenda,” reads the story, written by reporter Kelly Riddell.

    Citing internal agency documents, the newspaper also reports that white employees at the CFPB were twice as likely to receive the highest employee rating than black or Hispanic employees. According to Angela Martin, a CFPB enforcement attorney, there is a division of the CFPB referred to as “The Plantation.” “There is an entire section in Consumer Response Intake that is 100 percent African-Americans, even the contractors, and it’s called “The Plantation.” And people tell me it’s very hard to leave The Plantation. You must be extremely savvy, or you must [have] somebody else [help you] to get out,” Martin testified to congress last spring.

    For its part, the CFPB says it is working with the union representing its employees to address employee complaints and what are alleged to be systemic problems. At the same time, a CFPB spokesperson told The Washington Times that, on average, a survey of employees shows that the agency’s workers are more satisfied with their managers than federal employees as a whole. According to the survey, nearly 75 percent of employees said they had a high level of respect for the agency’s senior leaders, compared to 54 percent of employees across the entire federal government.

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