PayPal is working on a new consumer app for mobile customers and says it's “ready” to take advantage of the Digital Markets Act (DMA), a new EU regulation that comes into effect next month for technology “gatekeepers.” ” like Apple. For PayPal, one of the key changes with DMA is that third-party apps will be able to access the NFC technology that currently powers Apple Pay in its own mobile wallet application. Based on the new guidelines, iPhone users can also switch to another mobile wallet as their default.
PayPal didn't say much during its fourth quarter earnings call about Apple's plans for DMA compliance or how it specifically impacts PayPal. Part of the reason is that Apple now works closely with PayPal, offering checkout and payment services on Apple devices from Macs to iPhones, as well as Apple-powered “Tap to Pay.” It's also because the company offers integration with Apple Wallet, including support for contactless payments. wallet.
PayPal CEO Alex Chriss, a former Intuit executive who started a new role at PayPal in September, responded to an investor's question about how PayPal will leverage its new access to NFC technology. “We are following this closely.” This is made possible by DMA. “Apple is a great partner for us,” he added.
But Chris also suggested that PayPal customers are looking for ways to use PayPal outside of the world of online payments, and the company is working on providing this.
“…our customers who love PayPal on the online e-commerce side want omnichannel and offline solutions available as well. So we will be working closely on this and making sure it is available. Once we do, we will be ready to serve our customers both online and offline,” he replied.
That's not a clear-cut answer, but it certainly suggests that the payments giant is working on something in the area of NFC mobile wallets, especially considering the comment “offline solution”.
Offline payments, or payments made in brick-and-mortar stores, are an area where PayPal has tried and failed to expand for years. PayPal has experimented with a variety of initiatives on this front over the past decade, including partnerships with national U.S. retailers, deals with point-of-sale software and terminal manufacturers, the ability to pay to local stores through its app, and the acquisition of a mobile wallet. It's here. Technology, the use of his QR codes in retail payments, collaboration with credit cards in offline payments, tools for merchants selling offline, etc.
But even as the coronavirus pandemic accelerated the adoption of contactless payments, Apple Pay remained the top player in mobile payments, at least in the US.
When it comes to the EU, mobile wallet penetration is high in Europe, with a 2023 survey showing that a majority (72%) are actively engaged with the technology. According to another analysis, the European mobile payments market size is estimated to reach $108.35 billion in 2024 and $373.29 billion by 2029. While Apple and Google are rising here, 90% of Europeans use PayPal services, the survey says.
Simply put, PayPal has a huge opportunity to take advantage of Apple's deregulation in the coming days if it wants to.
Apple's DMA-driven changes include new APIs that allow app developers to use NFC technology in banking and mobile wallet apps across the EU. Additionally, Apple is adding new controls that will allow consumers to select third-party contactless payment apps as their new default. In other words, if PayPal adopts this feature, it could potentially replace Apple Pay.
Chriss did not say when PayPal would implement the “offline” solution enabled by DMA, saying the company is “ready to implement it” at some point after the new feature becomes available. ” he simply said.
Perhaps related to this, PayPal also gave a hint about a new consumer app the company is developing.
“This year, we are launching and evolving the new PayPal app to create familiarity,” Chriss said.
Later, he also acknowledged that PayPal's “mobile experience for consumers has been underwhelming.” And we expect that to continue to improve with the new innovations we've just introduced,” he added.
Recently, PayPal introduced a series of AI-powered features, including personalized cashback offers within the app and smart receipts that suggest what to buy next with the same brand. These and other features were announced in January as part of a “first look” experience, which Chris said was completed in 60 days instead of “months or years.”
Investors did not ask detailed questions related to DMA or mobile wallets, but the company has already announced release dates for some new features, including CashPass (personalized cash back), which is scheduled to be released in March. , Smart Receipt is also said to be released soon.
PayPal beat earnings in the fourth quarter, with EPS of $1.48, beating estimates of $1.36, and revenue of $8.03 billion, beating estimates of $7.87. However, the stock price fell after the company announced its financial results as the outlook for the first quarter was lower than expected.