Apple Pay's in-app checkout option competes directly with PayPal, could pose a greater threat if Apple offers checkout button for mobile web
Why Apple Pay Will Hurt PayPal — Apple's new payment system hopes to change the way people make purchases both in stores and in apps …
Context & Ripple Effects
Back in January 2014, PayPal was lobbying for a role in whatever mobile payments play Apple was building — a bid to stay inside Apple's ecosystem rather than compete against it. Instead, Apple launched Apple Pay at its September 2014 iPhone event, taking a reported 0.15% cut of purchases, and left PayPal out entirely.
The Re/code analysis argues the immediate battleground is in-app checkout, where Apple Pay now sits alongside PayPal's one-touch option on iOS, and that the threat deepens if Apple extends its checkout button to the mobile web. The story traveled unusually far for an analysis piece — pickups at The Hill, CNNMoney, the Los Angeles Times, PandoDaily, Bank Innovation, ReadWrite, Credit Slips and ValueWalk — with The Hill framing the open question of whether Apple Pay gets regulated like a financial institution.
First-order effects
- iOS app developers choosing a checkout flow now have Apple Pay as a native alternative to PayPal, putting PayPal's in-app volume on iPhones directly at risk.
- PayPal is shut out of the Apple Pay launch despite having sought a partnership role earlier in 2014, leaving it competing against rather than through Apple's stack.
Second-order effects
- Apple's thin 0.15% take gives merchants a price anchor below conventional card-processing and wallet fees, pressuring PayPal and other intermediaries to defend their checkout economics.
- If Apple extends the button to mobile web, every merchant's Safari checkout becomes contested ground, forcing rival wallets and processors to respond on Apple's home platform.
Third-order effects
- A mobile-web checkout button would move Apple from device-level payments into the broader e-commerce interchange layer, positioning it between merchants and the card networks themselves.
- The Hill's regulatory framing points toward the structural question of whether a payments intermediary at Apple's scale gets treated like a financial institution rather than a technology feature.
The trend: Mobile payments are consolidating around whoever controls the checkout surface — the phone maker on-device, the wallet on the web — and Apple's entry forces incumbents like PayPal to fight for placement rather than assume it.