PayPal Holdings, Inc. (PYPL) Shares Fall

PayPal Holdings, Inc. (PYPL) shares were negatively affected by Apple's latest move in the digital payments space.

At its WWDC keynote, Apple introduced “Tap to Cash,” a simplified peer-to-peer payment feature that will be part of the upcoming iOS 18 update. Thanks to this feature, iPhone users will be able to touch their phones to exchange money without sharing their personal information.

While Apple Pay and Apple Wallet are already strong players in the US digital payments market, the addition of Tap to Cash poses additional risks to PayPal's growth ambitions.

In this case, PayPal may need to consider the potential impact on plans for the popular P2P payment solution Venmo.

The Tap to Cash feature, introduced by Apple in iOS 18, allows iPhone users to transfer money to each other by touching their devices.

Users hold their iPhones close to each other and choose the option to send cash. This feature uses the same NFC functionality as Apple Pay, making it quick and easy to exchange money without sharing personal information.

Funds for Tap to Cash transactions come directly from users' Apple Cash account within Apple Wallet. This account is linked to Apple Pay and serves as the source of funds for P2P payments.

Tap to Cash competes directly with Venmo. While Venmo is a strong player in the US digital payment market, Apple's new feature aims to expand into Venmo's reach.

Apple prioritizes user privacy. All P2P fund transfers made through Tap to Cash do not require access to personal payment information, increasing security.

Apple's massive installed base and the convenience of Tap to Cash could impact Venmo's growth and engagement, especially among Millennial and Gen Z users. As PayPal navigates this environment, implementation risks become critical.

My comment: The launch of Apple Tap to Cash could pose significant challenges to PayPal's long-term outlook. While PayPal maintains strong cash flows and returns on capital, the competitive landscape is changing. It is a company that is in my focus until the third quarter balance sheet.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.

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