How we normally pay for goods is ripe for transformation.
Last month, Apple announced their new payment system called Apple Pay. E-Bay just announced that it will spin off its PayPal business into an independent company allowing for it to be more nimble and quick. The bet these companies are making is that there is a game-changing application that replace cash, checks and credit/debit cards.
Apple Pay uses the fingerprint reader on recent iPhones to confirm identities. Square, a prominent payment start-up company plans to allow merchants the ability to accept Apple Pay transactions in the future. Stripe, a payment processing start-up has also agreed to work with Apple to help more small businesses accept Apple Pay.
Many believe that the company that has the most to lose is PayPal. Started in 1998, PayPal quickly grew to become the dominant online payment company, widely recognized as a safe and easy way to send and receive money over the Internet. In 2002, eBay bought PayPal for $1.5 billion. It now has more than 150 million regular users, and last year, it had revenue of $6.6 billion.
The spin-off independent PayPal needs to be innovative to grow or keep its share of the pie. Valued now at $47 billion based on competitors’ valuations, it will have the capital and already established retailer relationships to forge ahead.