Apple Pay and PayPal are two of the biggest payment platforms available today, allowing quick and easy digital transactions both online and in stores. But how exactly do they stack up across key factors like security, features, availability for users and merchants? As a payments technology specialist, I‘ve evaluated both services in depth to highlight the main pros and cons of each and help you determine which (if either) is better suited for your needs.
Overview
To kick things off, let‘s look at some key background details on both Apple Pay and PayPal:
Apple Pay
- Launched in 2014 as mobile wallet for Apple devices
- Uses NFC technology and stores cards via tokenization
- Primarily for in-person payments in stores/apps
- Over 507 million user accounts as of 2022
PayPal
- Founded in 1998 as a digital wallet and money transfer service
- Allows online money transfers via email and debit/credit cards
- Used heavily for ecommerce but expanding in-store
- Has over 429 million active user accounts globally
Now that we‘ve covered some of the basic history and stats, let‘s look at how the two services compare across some of the main decision factors:
Availability and Acceptance
Apple Pay is only accessible to people using recent Apple devices – it utilizes Apple‘s proprietary NFC chip functionality and biometric identity verification with Touch ID. So if you don‘t have an iPhone or Apple Watch, Apple Pay is likely not an option.
That said, Apple Pay is now accepted at over 90% of US retailers, including most major stores. Its in-store transaction volume continues to show steady growth as more users adopt it for point-of-sale payments.
Apple Pay in-store transaction volume in billions, via Statista
PayPal has much wider availability – it can be used by anyone with phone/tablet access and works across iOS, Android, desktop sites, and apps. All you need is an internet connection to send money or pay for goods.
As primarily an online payments company, PayPal is accepted at a vast number of ecommerce merchants – often serving as a key checkout option alongside credit cards. It does not have quite as much brick-and-mortar presence as Apple Pay yet, but you can now request the PayPal QR code in various apps to pay in person when available.
Security Protections
Security is always a major concern with digital payments and money transfers. Apple Pay pulls ahead here in certain ways due to its tight platform integration:
Apple Pay provides enhanced security through:
- Tokenization – payment card details are never passed to the merchant
- Dynamic security code – unique one-time code verified with each transaction
- Biometric authentication – Touch ID or Face ID required to confirm payments
This combination of encryption, one-time codes, and biometrics makes it very difficult for user payment data to be intercepted or used fraudulently.
PayPal uses a more traditional SSL encryption standard to protect information entered for payments as well as two-factor authentication for logging into accounts. It also acts as an intermediary for transactions – money does not transfer directly from bank to merchant.
While PayPal offers extensive fraud and purchase protection policies to safeguard users, Apple Pay provides the best-in-class security model through Apple‘s proprietary on-device protections.
Features and Offerings
Both platforms now go beyond just standard payments to offer a suite of financial services accessible right from the mobile apps:
Apple Pay integrates with the Apple Card credit card, includes peer-to-peer payments via the Messages app, and offers installment plans for purchases via Apple Pay Later.
PayPal allows direct deposits, bill pay, buyer protection plans, PayPal Credit accounts, crypto purchasing capabilities, money transfer subscriptions, and more.
PayPal undoubtedly provides more breadth of features at this point for managing finances, though Apple Pay‘s offerings are handy for those already embedded in the Apple ecosystem.
Fees and Pricing
For standard payments, Apple Pay itself does not charge any transaction fees – merchants accept it as they would physical credit/debit cards. However, users need to consider card-specific fees like interest rates, foreign transaction fees, etc. based on their chosen bank.
PayPal charges merchants transaction fees per sale but nothing for buyers making personal account payments. Sending or receiving money from friends/family is also free with a personal account. Fees can come into play depending on currency conversions, business accounts, payment types, and non-standard financial services. As an example, the PayPal Credit account charges deferred interest fees when not fully paid off.
So neither Apple Pay nor PayPal pings consumers directly with fees in most typical purchase situations – the charges get worked into merchant processing rates. But both platforms provide optional financial accounts and services that do include more complex fee structures.
Ease of Use
One of Apple Pay‘s major selling points from day one has been enhanced convenience – the ability to store your cards once then tap and pay quickly with your phone or watch.
Apple Pay shines when it comes to:
- Fast checkout process
- Payment via biometric ID
- Interoperability between Apple devices
PayPal checkout can require a bit more user effort to enter emails/passwords and confirm funding sources, but provides flexibility across platforms. Paying in apps or tapping to pay with the QR code has also improved ease of use.
So Apple Pay delivers immense speed and convenience if a retailer has NFC terminals. And PayPal minimizes headaches with password entry through features like one-touch login. For the quickest contactless transactions, Apple Pay still stands supreme.
Market Outlook
Between the two, Apple Pay seems better positioned for growth at physical retail locations as NFC terminals become more ubiquitous. Contactless payments overall are expected to keep rising rapidly.
However, PayPal has the lead in global ecommerce – 90%+ of internet users recognize the brand according to Statista. The online payments market still shows room for massive expansion as more business moves digital, playing into PayPal‘s strengths.
My prediction? PayPal stays the top online processor but Apple Pay catches up for point-of-sale volume as shopping habits shift. The tech giants seem poised to coexist as payment share keeps shifting away from cash to digital wallets and cards.
The verdict? While Apple Pay provides better security and convenience for iOS loyalists, PayPal‘s everywhere availability and financial tools give it the overall edge in flexibility. But integrating both into your personal finance mix is a winning combo.
