Apple Payments Are Coming; EBay Investors, Beware
9to5 Mac reported on Tuesday a “three-part vision” from Apple (NASDAQ:AAPL) retail chief Angela Ahrendts. Clearly, revamping the Apple stores was part of this vision, as was an emphasis in China. However, the third vision included a focus on mobile payments, a clear threat to eBay (NYSE:EBAY).
Over the last three months, there have been countless whispers and speculation regarding Apple’s interest in payment processing, but nothing as concrete as 9to5 reported on Tuesday. The payment processing industry is a large, important, and fast-growing segment of the market, especially to current market leader eBay, or PayPal.
Last year, PayPal accounted for more than 40 percent of eBay’s $16 billion in revenue, and with growth of nearly 20 percent, it’s expected to become a $10 billion business by next year. Furthermore, PayPal has created this revenue from its 143 million users, and with high margins, it has become eBay’s single most important segment.
However, eBay’s important PayPal segment could be facing serious competition in the coming months, not only from Apple, but also Facebook (NASDAQ:FB) among others. Reportedly, Facebook is planning to launch a mobile payment services, and might even take the plunge in offering bank-like services. Facebook is already close to launching its service in Ireland after seeking approval from the Central Bank of Ireland, which will allow customers to store, pay, and exchange currency on its platform.
In regards to Apple, it has a shot to generate substantial revenue and profits if it can build a successful payment processing system. In the process, it, along with peers like Facebook, might just put PayPal out of business, especially if Apple’s system can be used with all apps where goods and services are sold. Already, Apple has more than 600 million users on iTunes with credit card information stored – Facebook has 1.3 billion monthly active users — thus implying that integrating a full-blown payment processing segment shouldn’t be too difficult. Furthermore, consumers already use platforms such as iOS and Facebook, meaning both would likely be preferred to the likes of PayPal.
Albeit, at this stage in development it’s impossible to know whether payment processing will be insignificant to its top and bottom line, or if 10 years down the road Apple’s payment business will become the next Visa, or perhaps a full-blown bank. While we can’t know for sure, the one thing we do know if for payments to be put in the same conversation as Apple stores and China in order of importance, the company has big plans, and this could be crippling to eBay.