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Apple Pay’s mobile Web arrival could spell trouble for PayPal

Apple is reportedly planning to bring Apple Pay to the mobile Web before the year is out, a move that could reduce mcommerce friction and threaten PayPal’s dominant role.

Apple Pay has already made inroads in stores and applications thanks to its ease of use. As mobile shopping becomes more popular, bringing a similar experience to new customers visiting a merchant’s Web site could go a long way toward addressing lower mobile conversion rates.

“The introduction of Apple Pay to the mobile Web is a significant development,” said Jordan McKee, senior analyst of mobile payments at 451 Research, Boston. “While friction on the path to purchase is evident in native apps and in-store, it is most apparent on the mobile Web.

“Major pain points exist here for merchant and consumers, leading to poor conversion rates and a high frequency of abandoned carts,” he said.

“Apple Pay offers a strong solution by negating the need to enter payment credentials or a username and password. It boils the checkout process down to putting your finger on Touch ID, eliminating multiple steps.”

Quick and easy payments
The ability to pay with Apple Pay will reportedly be available to iPhone and iPad users on the Safari browser.

After years of very slow growth, mobile payment adoption began to pick up following the launch of Apple Pay, which leverages near-field communications technology and fingerprint authentication for a quick and easy payment process.

With bricks-and-mortar retailers still dragging their feet in making the transition to new point-of-sale systems that would support mobile payments, the stronger headwind behind Apple Pay seems to be in applications.

Recently, Expedia and became the latest to adopt Apple Pay into their commerce applications, reflecting retailers’ enthusiasm for online payments (see story).

Retails such as American Apparel and Rue La La also recently added Apple Pay to their mobile apps.

Acquiring new customers
Since apps are an important way for retailers to engage their most loyal customers, providing a streamlined payment method is important.

However, as mobile shopping becomes more popular, many merchants are also looking to acquire new customers via their mobile Web sites. As the checkout process is often cumbersome on these sites, conversion rates are typically lower than on desktop. Integrating Apple Pay could help merchants simplify checkout and thereby drive conversions.

PayPal is a leader in online checkout on the Web. Others have tried before to put a dent in PayPal’s leadership, with mixed results, including Google Checkout and Log In and Pay with Amazon.

However, because Apple Pay is already available across a number of channels, this could help drive adoption with both consumers and merchants.

“This is troubling news for dominant Web players such as PayPal who will be forced to contest with Apple on their home turf,” Mr. McKee said.

“Apple Pay’s growing availability across channels increases its utility for users and enhances its prospects for consumer and merchant adoption,” he said.