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Tag: paypal
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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.
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Accenture survey: Banks Face Big Threat
North American banks that don’t clue in that their competitors now include companies like PayPal, T-Mobile and even the US Postal Service could be facing big trouble. That’s the conclusion of a recent survey and analysis by the consulting companies Accenture titled, “The Digital Disruption in Banking: Demons, Demands, and Dividends.”
The Accenture survey, which was based on feedback from around 4,000 retail banking customers in the US and Canada, found that evolving technologies and changing consumer attitudes pose real dilemmas to traditional banks. Accenture found that although almost 40 percent of US customers have been with their current bank for a decade or more, a host of factors shows that now is not the time for banks to assume their customers aren’t looking for better options.
For instance, over one quarter of those surveyed by Accenture said they would consider a branchless digital bank if they opted to leave their current bank. Not surprisingly, the number of younger people who see no reason to visit a branch is high, with 39 percent of those between the ages of 18 and 34 saying they would consider all digital banking.
Perhaps even more worrying for traditional banks is the fact that almost three-quarters of US customers said they consider their relationship, such as it is, with their bank to be “transactional.” In other words, the bond between customers and banks is paper-thin, which makes two of Accenture’s other findings hardly surprising. More than half of the customers asked said they want their bank to proactively suggest products and services that can help them meet their unique financial needs. Half would also be interested in an analysis of their spending that was future focused and available in real time.
The Accenture survey also asked bank customers what companies they would consider as financial service providers. This is not merely an abstract question either, given that T-Mobile has launched a prepaid debit card and digital wallet and Walmart now has a partnership with American Express in which it sells the AmEx Serve prepaid card and the Bluebird checking account alternative. Topping the list of companies respondents would consider banking with – not all of them actually offer financial services – are Square, PayPal, T-Mobile, Costco, Apple and Google.
Being a consulting company, Accenture is also in the business of providing solutions to the problems big companies face. Their answer to the threat faced by big banks has three parts. It includes making the customer experience seamless, regardless of whether someone is making a transaction in a branch or digitally. The second part involves extending a bank’s so-called “ecosystem” by offering more services to customers. And finally, Accenture suggests banks offer personalized digital solutions to customers’ financial needs. None of these steps are easy, but responding to changes in how customers bank seems to be a challenge that won’t go away anytime soon.
