PayPal Prepares for Offline Payments

PayPal is developing a new consumer app for its mobile users. It has stated that it is ready to take advantage of the new European Union regulation, the Digital Markets Act (DMA). It also will first be enforced for tech giants like Apple.

One of the significant changes brought by the DMA is the ability for third-party apps to access NFC technology. It powers Apple Pay, as their e-wallet app. iPhone users will also be able to switch to another mobile wallet as their default under the new guidelines.

Responding to Regulation and Consumer Needs

In its fourth-quarter earnings report, PayPal didn’t share much about its plans for Apple’s DMA compliance partly. Because Apple is a current PayPal partner, offering checkout and payment services on Apple devices.

PayPal’s CEO responded to investor questions about the new NFC technology. He is saying that PayPal is closely monitoring the situation and that Apple is a great partner. He added that PayPal customers want to use PayPal beyond the online payment world. So that the company is working to make that happen.

Chriss said that PayPal will work with Apple and is ready to provide services to customers both online and offline when the new NFC technology becomes available.

Previous Attempts and European Market Potential

This is not a clear answer, but it certainly suggests that the payments giant is working on something in the NFC mobile wallet space. It’s especially given the “offline solution” comment. Offline payments, meaning those made in physical retail stores, is an area that PayPal has failed to expand into for years.

In the European Union, mobile wallet penetration is relatively high. A 2023 study found that the majority (72%) actively use the technology. Another analysis expected European mobile payments market size to reach $108.35 billion by 2024 and $373.29 billion by 2029.

While Apple and Google have made significant progress, according to the study, 90% of Europeans have already used PayPal services. In short, PayPal has a huge opportunity to take advantage of Apple’s relaxed rules in the near future.

Apple’s Changes and PayPal’s New App

Apple’s DMA-driven changes will include new APIs that will allow app developers to use NFC technology within their banking and mobile wallet apps across the EU.

Plus, Apple is adding new controls that will allow consumers to choose third-party contactless payment apps as their new default. In other words, PayPal could be swapped in for Apple Pay, if it adopts this functionality.

Chriss did not elaborate on when PayPal would implement the DMA-enabled “offline” solution, only saying that the company would be “ready” to do so, at some point after the new functionality becomes available.

It is also known that PayPal is developing a new consumer app to help users build better financial habits. Chriss acknowledged that the current PayPal mobile experience is not good enough, and he hopes the new app will improve it.

Recently, PayPal introduced a series of AI-powered features, including personalized in-app cashback offers and smart receipts. Smart Receipts will offer suggestions on what to buy next from the same brand.

PayPal itself has not announced when specific new features will be launched. CashPass (personalized cashback) is set to launch in March, with Smart Receipts to follow.

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