Apple Pay Poses Threat to PayPal

Well, it look like Apple has done it again. On September 9, they announced the launch of Apple Pay, an online payment service that I predict will transform the way we make payment transactions. Apple Pay is an innovative tap-to-pay technology that allows iPhone 6 users to make “ easy, secure and private” purchases at participating stores.

Apple pay poses a huge threat to other mobile payment companies, particularly PayPal (who is owned by Ebay), whose share price dropped approximately $3.50 since Apple’s new venture was leaked in August. In order to counter the threat that Apple Pay now poses to Ebay, Ebay has just announced that they will be spinning off PayPal, a company that they bought just eight years earlier, sometime within the next year. I think that Ebay’s decision to differentiate themselves from Paypal is a very smart move. Now, the company Ebay is protected from the threat of Apple Pay, and if the share prices continue to drop and Apple Pay is successful then only PayPal will be affected. Shareholders have responded very well to this decision, which has resulted in Ebay’s share price shooting up 7.54% on Wednesday September 30th.

Ebay’s response to Apple Pay validates my belief that this is a perfect example of Apple doing what they do best. Apple is known for choosing a market, observing the competition, and coming out with a simplified, elegant product that disrupts the market. We have seen it with mobile phones, computers, music, and I believe that now we will see it with online payment market.