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How PayPal Views P2P Competition from Apple

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Apple enters P2P payments ring

At its Worldwide Developer Conference event, Apple (AAPL) announced it would add a new peer-to-peer (or P2P) payment service to its iMessage, which would compete with PayPal’s (PYPL) Venmo. Soon after the announcement, PayPal shrugged off the potential threat. Venmo is PayPal’s mobile peer-to-peer payments platform with a social touch. The service has gained a lot of traction over a short period with its transactions rising more than 100.0% in one year to $6.8 billion in 1Q17.

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Apple’s move could be a boon to P2P industry

In an email to Barron’s Next, a PayPal spokesperson said Apple’s entry into the P2P payment business could help grow the industry. “We welcome any development that helps people address the awkwardness of dealing with cash when paying friends or family back.” The spokesperson added, “the news that more financial institutions and companies will be introducing similar services will only bolster the central role of smartphones in our day-to-day lives.”

Forrester Research forecasts that global P2P transactions will hit $17.0 billion by 2019. Venmo is aiming for transactions of $20.0 billion annually. The above chart shows Venmo’s transactions in each of the past five quarters.

It’s never always a blessing for incumbents

While Apple’s entry into the smartwatch business has helped grow the market, incumbents like Garmin (GRMN), Fitbit (FIT), and Samsung (SSNLF) seem to be paying for the growth. Fitbit’s share of the wearable tech market diminished to 13.2% in 1Q17 from 24.7% a year earlier while Apple’s share of the market rose to 15.9%, according to Strategy Analytics.

So P2P industry growth supported by Apple many not always favor PayPal.

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