Should PayPal Be Worried About Apple's Peer-to-Peer Payment Service?

Apple (NASDAQ:AAPL) unveiled its new peer-to-peer mobile payment service at its annual Worldwide Developers Conference on Monday. Now that the world’s largest technology company has entered into the scorching hot, millennial-driven payment market, should the rest of the mobile money-moving industry be nervous?

On the first day of Apple’s WWDC conference, senior vice president of software engineering Craig Federighi introduced Apple’s first ever person-to-person, non-business related payment service.

The company’s brand new offering will be integrated directly into iMessage via its own mobile payment app as part of the new iOS 11 operating system, which will debut in the fall. “You can send and receive money right in your transcript,” Federighi said in a speech on Monday. “If you receive money with iMessage, it goes directly into your Apple Pay Cash Card.”

Federighi went on to note that once the money is transferred to a user’s new cash card, they can choose to spend it wherever Apple Pay is accepted, use it to send their next Apple peer-to-peer payment, or transfer the money to their bank account.

The new mobile payment app will be available across all iOS devices including the iPhone, iPad and Apple Watch. Apple did not make it clear whether it would charge either party for transactions.

Mobile Peer-to-Peer Payments Market

As the world becomes more mobile, it is also becoming increasingly less reliant on cash. This is especially true for millions of people in younger generations. Millennials use mobile peer-to-peer payments services and apps to split the cost of everything from a night out to more substantial costs, such as rent.

Fintech companies including Square (NYSE:SQ) give small-scale users the ability to process credit card payments, while Visa (NYSE:V) has focused on contactless payment options via smartphones—which is similar to Apple Pay.

However, PayPal (NASDAQ:PYPL) and its and Venmo app are dominating the more youthful world of peer-to-peer, mobile-to-mobile payments. PayPal’s social media-like Venmo processed $6.8 billion worth of payments in the first quarter alone, which was up 114% year-over-year.

In March, Facebook (NASDAQ:FB) entered this growing market as it announced its own way for users to easily send money via Facebook Messenger.

Apple might seem a bit late to this smartphone payment game, especially when considering it still won’t officially enter the space until the fall. But with the ubiquity of the iPhone and the hype surrounding its upcoming 10^th anniversary offering, it’s not hard to envision its new peer-to-peer payment app becoming Apple users’ new go-to based on convenience alone.

If you want to know more about the mobile payment world, read here: PayPal vs. Visa: Which Mobile Payment Stock Should You Buy?

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