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When iPhone owners update to iOS 11 mobile operating system Tuesday, they will gain new augmented reality capabilities, photo processing tools and a version of Siri that Apple  (AAPL) - Get Apple Inc. Report  says is "more natural and useful" than before.

What they will not get is Apple Pay Cash, the new person-to-person payment feature that was expected to be part of the update but will instead come this fall. While belated, S&P Global Market Intelligence analyst Kellsy Panno suggested that it is important for Apple to move into a niche where PayPal's (PYPL) - Get PayPal Holdings, Inc. Report Venmo, Snap's (SNAP) - Get Snap, Inc. Class A Report Snapcash and Square's (SQ) - Get Square, Inc. Class A Report Square Cash already have a presence.

"It's about time Apple did this," S&P Global Market Intelligence analyst Kellsy Panno.

Person to person payments have better growth profiles than in-store mobile payments, she said, and have been important to PayPal and Venmo.

"PayPal and Venmo have been allowed to own that segment," she said. "Apple pay sort of ceded that."

PayPal CFO John Rainey discussed Venmo's importance at a September investor conference. "To say it's the crown jewel of PayPal, I don't think is an overstatement," he said.

The app is popular among consumers aged 25 to 34 and is making inroads among younger users. "Every quarter since we've announced the results of Venmo, you've seen in excess of 100% growth," he said. "And then today as we sit here, we're processing well in excess of $20 billion of annual [total payment volume] on Venmo." Venmo does not charge for most of its services, and so far has provided negligible revenues to PayPal. However, PayPal is rolling out a "Pay with Venmo" feature that allows users to make purchases at stores that will generate fees. The company plans to have the service in millions of locations by the end of the year, and Barclays analyst Darrin Peller suggested in a mid-September report that Venmo can also generate revenue by selling advertising on the app. 

As for Apple Pay Cash, users will be able to make payments through messages, or tell Siri to make a payment, and they can keep money on a virtual card in their Apple Wallet.

Apple has large, loyal customer base. Focusing on iOS users will limit the market for Apple Pay Cash, however. Panno suggested that Apple should borrow from Paypal's playbook, and ensure that the app works across other mobile platforms, just as Venmo does.

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"Apple in general hasn't been known to sort of embrace cross-platform cooperation," she said. 

For Apple Pay Cash to be truly successful, Panno suggested, it must be device agnostic. 

PayPal and Venmo have a large lead on Apple, but should prepare for serious competition. 

"Their interest should be piqued," Panno said.

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.

Go Inside PayPal's Big Reinvention: TheStreet's Full interview with CEO Dan Schulman

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