2016 is a big year for the online payments market. More and more people around the world are using their phones to make all types of purchases – from paying rent to buying groceries.
We are seeing the introduction of many new online payment services from companies like Apple (NASDAQ:AAPL), which could have a significant impact on the share prices of go-to payment processors like PayPal (NASDAQ:PYPL).
PayPal Remains Strong
In April, PayPal Holdings reported strong first quarter results. The company saw revenue growth of 19% to $2.544 billion and reported a GAAP operating margin of 16%, marking an increase of 90 basis points.
In 2015 alone, PayPal processed 4.9 billion payments and had over 179 million active user accounts in 200 international markets. These numbers suggest that PayPal is doing just fine – but, more and more competition in this market could jeopardize PayPal’s success on the stock market.
Competition From Visa
In recent years, we have seen Visa (NYSE:V) working hard to become a leader in the online payments market. In April, Visa announced the launch of its Developer Platform, which welcomes third-party developers to innovate new services that meet the demands of consumers and sellers. Visa aims to raise the bar, which could threaten PayPal’s stock price and its market share.
Apple Pay Emerges as a Major Competitor
Apple Pay was originally touted to revolutionize the online payments market. It has already surpassed the popularity of Google Wallet, which requires users to open the app and enter a PIN, while Apple Pay only requires users to tap their phone screen to process a payment.
At just over a year old, Apple Pay now accounts for 8% of all payments made. It is emerging as a major competitor in the online payments market, and its success will certainly effect the stock price of other payment processors.
Staying Competitive With New Innovations
For years, PayPal has been known as the go-to online payment solution. It allows users to quickly transfer money and offers convenient management services for sellers. The service even offers a quick and easy way to start a donation. Now, with more and more companies getting involved in online payments, PayPal has started to branch out.
To stay competitive, PayPal continues to launch innovative products. One of its latest ventures is Pay with Venmo, which aims to build on the success of the Venmo mobile app that allows users to easily send money and split payments with friends. Thanks to PayPal, Venmo users will soon be able to pay merchants.
Another new innovation from PayPal is One Touch, an easy way to make payments online. Users can make payments with one click, and there is no need to remember any passwords or card numbers. This aims to make PayPal an even more attractive option for online shoppers.
PayPal keeps users updated about innovations that meet their needs using targeted email campaigns, and it is great example to all business owners who want to stay competitive and boost their profits.
It is important to keep an eye on the proliferation of these innovations. The full launch of Pay with Venmo, and even the extension of PayPal Credit to the UK, could have a positive impact on the company’s share price.