Paypal eyes European market with NFC wallet plans amid Apple changes

PayPal is preparing to take advantage of the newly opened NFC capabilities in iPhones, planning to create its own mobile wallet for European Union users. What does Apple think about this?

Apple recently announced that it is shutting down one of its services and simultaneously allowing third-party developers access to new NFC and Secure Element programming interfaces, which currently enable contactless transactions similar to those offered by Apple Wallet. PayPal has not yet directly confirmed that it will develop a competing wallet using these new APIs, but the company has indicated that such a plan is currently considered.

During a discussion about PayPal's financial results for the second quarter, the company's CEO, Alex Chriss, responded to a question about PayPal's strategy in Europe, noting that "certain changes, especially in Europe around NFC," open new possibilities for PayPal, allowing it to "effectively establish a presence in this space soon."

This was not Chriss's first mention of a mobile wallet that will allow secure online shopping. In the previous quarter, he directly mentioned that changes in NFC would enable PayPal to "easily provide a wallet on the Android or iPhone operating system." The company has previously emphasised its desire to provide customers with a "both online and offline" solution, indicating that an NFC transaction offering via the PayPal mobile app is planned.

In the European Union, consumers will be able to set a wallet from another company as the default instead of Apple Wallet as part of Apple's compliance with new EU regulations—the Digital Markets Act (DMA). This law creates additional opportunities for app developers, including distributing apps outside the App Store, using alternative browser engines, and requesting interoperability with hardware and software functions on iOS, such as the Secure Element used in NFC transactions on iPhones.

For PayPal, full functionality of a mobile wallet would be a significant achievement, considering the company's long-term efforts to enter the offline retail market. Over the years, PayPal has pursued various opportunities, including partnerships with national retailers in the USA, agreements with software and POS terminal manufacturers, in-store payment functions via app, acquisitions of mobile wallet technologies, use of QR codes for in-store payments, partnerships with credit cards in offline payments, and tools for sellers offering offline sales.

Although Apple Pay still dominates many markets due to the rise of contactless payments, in Europe, PayPal has a chance with an NFC-based wallet, as 90% of Europeans had used its services by 2022, even though Google Pay and Apple Pay led in mobile payments. PayPal declined to comment further on plans for the NFC wallet, referring only to recent statements from financial results. However, Chriss is set to speak at the Goldman Sachs conference on 9 September, where PayPal's plans for the EU will certainly be discussed.