Gene Munster Says Apple Pay A Legitimate Threat To PayPal's Staying Power

Gene Munster of Piper Jaffray continues to view Apple Inc. AAPL's Apple Pay as a superior POS mobile payment solution and, with the dawn of availability in online channels, a legitimate threat to Paypal Holdings Inc PYPL's staying power.

At Apple's WWDC developer conference Monday, Apple announced Apple Pay for browser. Although Apple only mentioned desktop integration at the presentation, "its partners (e.g. Shopify) simultaneously announced Apple Pay's availability in Safari on iPhone, iPad and Mac."

"We view this as the first concrete step into direct competition with PayPal, as Apple Pay will now be available on platforms amounting to 30+ percent of PayPal's TPV (Mac, iPad, and iPhone)," Munster wrote in a note.

Related Link: What Apple Pay's Journey To Safari Means For PayPal, Visa And Mastercard

The analyst, who rates Paypal Underweight, attributed the announcement's low impact on the shares of PayPal to the "recent share underperformance and lack of direct mention of mobile browser."

The Technology

Munster noted, "New technology has a natural adoption curve; however, we believe Apple Pay's easy implementation through developer partners (e.g. Shopify is already making it available to 275K merchants) and existing relationships in store will accelerate merchant adoption.

"We expect the proliferation of Apple Pay options on websites to decrease the friction involved with checking out and, over time, to take share from PayPal," Munster highlighted.

Further, the analyst noted that unlike PayPal, Apple is not looking to directly monetize payments. The analyst said, "This competition will likely convert shoppers at similar, if not better, rates than PayPal in the long term and at similarly secure levels, but without burdening the financial system with fees designed to directly monetize the transaction."

"We believe this threat ought to weigh on terminal values investors are willing to pay for PayPal," Munster added.

Other Things Of Note

The analyst is looking forward for the roll-out of SAMSUNG ELECTRONIC KRW5000 SSNLF's Samsung Pay's mobile and desktop web payment functionality.

According to TipRanks, Munster has a success rate of 61 percent with an average return per recommendation of +17.1 percent. The analyst is ranked 6 out of 3,971 analysts.

Shares of PayPal closed Monday's regular trading session at $36.54 and were trading up 0.46 percent at $36.71 at time of writing Tuesday morning. Munster has a price target of $34.