PayPal is working on a new consumer app for its mobile customers and has suggested it will be “ready” to take advantage of the new EU regulation, the Digital Marketing Act (DMA), when it comes into effect next month for the technological “gatekeepers”. ”, like Apple. For PayPal, one of the big changes coming to DMA is the ability for third-party apps to access the NFC technology that currently powers Apple Pay in their own mobile wallet apps. iPhone users will also be able to switch to another mobile wallet as their default, under the new guidelines.
In its Q4 earnings call, PayPal didn’t share much about its plans for Apple’s DMA compliance or how it would specifically affect PayPal. In part, that’s because Apple is a company PayPal works closely with today, offering checkout and payment services on Apple devices from Macs to iPhones, as well as integrations with Apple Wallet, including support for “Click to pay“contactless payments leveraging Apple Wallet.
Noted PayPal CEO Alex Chriss, a former Intuit executive he started his new role at PayPal in September, “We’re watching it closely,” in response to an investor question about how PayPal would take advantage of the new access to NFC technology enabled by DMA. “Apple is a great partner for us,” he added.
However, Chriss also suggested that PayPal customers were looking for a way to use PayPal outside of the world of online payments, and that the company was working to provide that.
“…Our customers who love PayPal on the e-commerce side of the web demand that they also have an omni-channel and offline solution. So we will work closely on that. And when it’s available, we’ll be ready to be able to deliver for our customers, both online and offline,” he replied.
It’s not a definite answer, but it certainly suggests that the payments giant is working on something in the field of NFC mobile wallets, especially given the “offline solution” comment.
Offline payments, meaning those made at physical retail stores, are an area PayPal has been unsuccessfully trying to expand into for years. Over the past decade, PayPal has tried a number of initiatives on this front, including partnerships with national retailers in the U.S., deals with point-of-sale software and terminal manufacturers, local store payment capabilities through its app, acquisitions of mobile wallet technology, use of codes QR for retailer payments, credit card partnerships in offline payments, tools for merchants selling offline and more.
However, even though the COVID-19 pandemic has led to faster adoption of contactless payments, Apple Pay has remained the leading player in mobile payments, at least in the US
As for the EU, Europe has a high penetration of mobile wallets, with a 2023 study noting that the majority (72%) are actively engaged in technology. Another analysis says that the size of the European mobile payments market is estimated to reach $108.35 billion in 2024 and then $373.29 billion by 2029. While Apple and Google have gained ground here, 90% of of Europeans has used PayPal services, the study says.
Simply put, PayPal has a pretty good chance to take advantage of Apple’s relaxed rules in the coming days, if it so chooses.
Changes based on Apple’s DMA will include new APIs that allow app developers to use NFC technology in their mobile banking and wallet apps across the EU. In addition, Apple is adding new controls that will allow consumers to choose a third-party contactless payment app as their new default. In other words, PayPal could be replaced by Apple Pay if it adopts this feature.
Chriss didn’t share when PayPal would implement the “offline” solution that DMA would enable, saying only that the company would be “ready” to do so sometime after the new functionality becomes available.
Possibly related, PayPal also offered hints about a new consumer app in development at the company.
“This year, we’re launching and evolving a new PayPal app to build familiarity,” Chriss noted.
Later, he also admitted that PayPal’s “mobile experience for our consumers has been incredible. And it’s something that with the new innovations that we’ve just introduced, I expect we’ll be able to continue to see improvement there,” he added.
PayPal recently introduced a number of AI-powered features, including personalized in-app cashback offers and smart receipts that offer suggestions on what to buy next from the same brand, for example. These features and more were announced as part of it a “first look” experience. in January, which Chriss said was done in 60 days, instead of the “months or years” it could have taken.
Investors didn’t ask more questions about DMA or the mobile wallet, but the company has already announced when select new features will roll out, such as CashPass (personalized cash back) coming in March, with Smart Receipts said to be coming soon.
PayPal in Q4 beat in profits with EPS of $1.48, above expectations of $1.36 and revenue of $8.03 billion, above expectations of $7.87 billion o the stock fell after the earnings announcement, however, due to weaker-than-expected guidance for the first quarter.
