Market Overview

The Payments World: PayPal Vs. Apple Pay Vs. Visa Checkout Vs. Masterpass Vs. Amazon Payments Vs. Facebook Payments

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The Payments World: PayPal Vs. Apple Pay Vs. Visa Checkout Vs. Masterpass Vs. Amazon Payments Vs. Facebook Payments
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In 2014 and 2015, a number of companies launched payment wallets; however, the spotlight shifted away from the wallet wars for most of 2016, Bernstein’s Lisa D. Ellis said in a report. She added that the payment wallet companies are faced with a “chicken vs. egg dilemma,” which would likely take a long time to overcome.

The Wallet Wars Begin

The companies that entered the battlefield in 2014 and 2015 were:

  • Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) with Android Pay
  • Amazon.com, Inc. (NASDAQ: AMZN) with Amazon Payments
  • American Express Company (NYSE: AXP) with American Express Checkout
  • Apple Inc. (NASDAQ: AAPL) with Apple Pay
  • Facebook Inc (NASDAQ: FB) with Facebook Payments
  • JPMorgan Chase & Co. (NYSE: JPM) with Chase Pay
  • Mastercard Inc (NYSE: MA) with Masterpass
  • Paypal Holdings Inc (NASDAQ: PYPL)
  • Samsung (OTC: SSNLF) with Samsung Pay
  • Visa Inc (NYSE: V) with Visa Checkout

The Dilemma

These companies face the choice between trying to gain users without being at scale with merchants and gaining merchants without being at scale with users, Ellis explained.

How The Wallet Wars Are Progressing

  • PayPal is the clear leader: PayPal has more than 180 million active consumer users, which is higher than the user base of other major wallets by double to ten times. Moreover, PayPal's merchant acceptance and geographic reach are also substantially better. It has 15 million merchants (versus ~300,000–350,000 for Visa Checkout and Masterpass) and has a presence in 200 countries (around six times higher than Masterpass, the closest competitor in this regard).
  • Other leading wallets are making progress: This is particularly true for Apple Pay. In 2016, Apple Pay and Visa Checkout grew new accounts by 200 percent and 90 percent, respectively, versus only 10 percent for PayPal.
  • Total dollar value of transactions of major wallets: The analyst estimated the wallet TPV of the major players at ~$420 billion, with PayPal at $290 billion (representing ~70 percent of the total), Apple Pay at ~$60 billion, and Visa Checkout, Masterpass and Amazon Payments all in the $20 billion–$25 billion range.
  • Wallet adoption: “Overall, wallet adoption among U.S. adults is at scale – it appears to be in the 33–52 percent range, primarily driven by PayPal” Ellis wrote.
  • Wallet usage: This continues to be low, estimated at ~2 percent of total U.S. retail volumes. “Wallet usage within online/mobile channels is much higher – we estimate it at ~20 percent of online/mobile volume flowing through wallets,” Ellis added.

Ratings

  • Apple: Rated Outperform, with price target at $140
  • MasterCard: Rated Outperform, with price target at $123
  • PayPal: Rated Market Perform, with price target at $44
  • Visa: Rated Outperform, with price target at $104 and named Top Pick

Related Link:

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  • Latest Ratings for PYPL

    DateFirmActionFromTo
    May 2017Stifel NicolausDowngradesBuyHold
    May 2017FBN SecuritiesUpgradesSector PerformOutperform
    Apr 2017PiperJaffrayUpgradesUnderweightNeutral

    View More Analyst Ratings for PYPL
    View the Latest Analyst Ratings

    Posted-In: Bernstein Lisa D. EllisAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga

     

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