NEW YORK (TheStreet) -- Apple's (AAPL) launch of a mobile payments system could have big implications for both eBay (EBAY) and Google (GOOGL) and the larger payments ecosystem. For the two companies as it relates to their own payments applications, PayPal and Google Wallet, Apple Pay has very different implications, according to analysts.
The Cupertino, Calif.-based company launched Apple Pay in conjunction with its new iPhone 6 and iPhone 6 Plus and smart watch. To use Apple Pay, customers simply have to tap their phone to the credit card reader, while holding down the Home button on their iPhones. "Apple Pay will forever change the way all of us buy things," said Apple's CEO Tim Cook during Tuesday's event.
Apple has signed up a slew of retailer partners for the service, including Macy's (M) , Bloomingdale's, Nike (NKE) , Target (TGT) , Subway, Walgreens (WAG) , McDonald's (MCD) , Starbucks (SBUX) , Whole Foods (WFM) , Disney (DIS) and several others. It's also working with MLB, Instacart, OpenTable, Groupon, Sephora and Uber for Apple Pay support inside the respective apps.
At launch, Apple is working with the major credit card companies (American Express (AXP) , MasterCard (MA) and Visa (V) , as well as major banks Citigroup (C) , JPMorgan Chase (JPM) , Bank of America (BAC) , Wells Fargo (WFC) , and Capital One (COF) ) to create a system where each transaction is authorized with a one-time, unique number to make purchases.
Analysts say that Apple's mobile payments is a threat to eBay's PayPal, while Google on the other hand could ultimately benefit from it long term.
Shares of eBay were down 2.7% $51.30, while Google shares were down 0.27% to $590.39. Here's what analysts are saying.
Gene Munster, Piper Jaffray (Downgraded eBay to Neutral; $55 PT)
While unlikely to impact eBay's business over the next 6-12 months, we believe the unknown competitive threat of Apple Pay will further weigh on EBAY's multiple over the next 3-6 months as Apple Pay has the potential to disrupt the competitive mobile payments market. We believe a lower multiple on EBAY is deserved given the change to the competitive market, even though over the next 6-12 months fundamentals on the core PayPal business remain intact. As a result, we are downgrading shares to Neutral and lowering our PT to $55 from $63.
For the past six months, we have been expecting Apple to announce a payment platform, so today's news was expected from a high level. What we did not expect was for Apple to have Visa, MasterCard, and American Express on board along with meaningful retail partnership like Macy's and McDonald's. Additionally, the integration in passbook and iOS is further along than we expected, making for a more attractive experience than we anticipated and a strong competitor to PayPal. While PayPal digital wallet/point-of-sale accounts for almost no revenue today, the hope of this segment becoming a larger portion of its business has had a positive effect on eBay's multiple in the past. We expect that investors will begin to question PayPal's longer-term role in offline payments and may question the staying power of online payments; we expect investors in the near term will be more conservative with the PayPal multiple.