
PayPal (PYPL) Stock Falls as Apple Weighs Mobile Payments
NEW YORK (TheStreet) -- PayPal (PYPL) - Get Report stock is down by 2.92% to $35.27 in late morning trading on Thursday, as Apple (AAPL) begins discussions with U.S. banks about developing a mobile payments system, the Wall Street Journal reported.
Should Apple continue with its plans, its person-to-person payments service would likely compete with PayPal's Venmo payments platform.
Details about Apple's potential service are unclear, but it would connect to banks' existing systems to enable mobile payments to not only businesses but people as well, the Journal noted.
Venmo, which was acquired by PayPal in 2013, links to users' bank accounts and allows users to pay each other with the tap of a button.
For the third quarter of 2015, PayPal reported that $2.1 billion was processed through Venmo, with growth of 200% making it one of the quickest growing apps by dollar volume, according to a statement.
"We welcome any development that encourages people to address the awkwardness of dealing with cash when paying friends or family back," PayPal told CNBC.
Insight from TheStreet Research Team:
Jim Cramer, Portfolio Manager of Action Alerts PLUS and Jack Mohr, Director of Research mentioned PayPal in a recent post. Here is a snippet of what Jim Cramer and Jack Mohr had to say about the stock:
If Apple begins its P2P service, it would undoubtedly pressure Venmo's estimated 8 million to 15 million users (according to Piper Jaffray analysts) as the added convenience of being integrated with Apple Pay will be too hard to ignore. Whereas Venmo is currently only a P2P service, Apple Pay is already accepted by many merchants.
To its credit, Venmo has built a very loyal user-base among Millennials, largely by facilitating the conversations that go along with payments, appealing to the consumers' growing appetite for social media interaction on a mobile platform. The issue, in our view, is that many of these devoted users access Venmo on their Apple iPhones; should an Apple P2P service be released, we would not want to be Venmo competing against the tech-giant for customer loyalty.
-Jim Cramer and Jack Mohr "Apple Takes Aim at PayPal's Venmo" Originally Published on 11/12/2015 on Real Money.
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