PayPal Soon To Face A Horde Of Competitors In P2P Payments

Paypal Holdings Inc PYPL would likely continue to witness intensifying competition, and this is expected to exert pressure on margins, CLSA’s Tom McCrohan said in a report. He maintained an Underperform rating on the company, with a price target of $38.

Competition Heating Up

Checks indicate that the major US banks would launch their mobile P2P service at the upcoming Money 2020 conference in late October, analyst McCrohan mentioned. In response, PayPal has decided to launch a nation-wide campaign for Venmo. There would be a national ad campaign on TV and billboards ads in targeted cities over the next couple of months.

McCrohan pointed out that PayPal’s new advertising campaign would put pressure on the company’s margins.

PayPal Needs Apple

PayPal’s head of product had indicated that PayPal and Venmo users would be able to initiate contactless payments in-store in early 2017. Such payments require PayPal to access the NFC chip on the mobile device. However, the NFC chips embedded in iPhones are closed.

“Given Apple has its own proprietary contactless payment product (Apple Pay), it seems counterintuitive to believe that it would be in Apple’s best interest to provide PayPal access to this NFC chip so PayPal can then compete with Apple Pay,” the analyst wrote.

Apple Inc. AAPL also plans to launch an in-browser version of Apple Pay this fall, albeit only in Safari.

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