PayPal is gearing up to make a significant move in the European market by leveraging the iPhone’s newly accessible NFC (Near-Field Communication) capabilities to potentially develop a mobile wallet of its own. Earlier this month, Apple announced that it would open up its NFC and Secure Element APIs—technology that powers contactless payments and transactions like those enabled by Apple Wallet—to third-party developers. While PayPal has not yet officially confirmed plans to develop a competing wallet using these new APIs, the company has strongly hinted at such a development in recent weeks.
During the payment giant’s second-quarter earnings call on July 30, PayPal CEO Alex Chriss addressed the company’s European strategy. When asked about potential opportunities in the region, Chriss noted that the changes in NFC regulations in Europe present an opportunity for PayPal, stating that the company is “prepared shortly to be able to play in that space.”
This wasn’t the first time Chriss has teased the possibility of a mobile wallet. In the previous quarter, he more explicitly stated that the NFC changes would make it “very easy” for PayPal to provide a wallet on both Android and iPhone operating systems.
PayPal has long aspired to establish a foothold in offline retail, and a fully functional mobile wallet could be a game-changer in that regard. Over the years, the company has explored various avenues to penetrate the offline market, including partnerships with national retailers in the U.S., collaborations with point-of-sale software and terminal manufacturers, features enabling payments at local shops via its app, and even acquisitions of mobile wallet technology. However, despite these efforts, Apple Pay has continued to dominate many markets, driven by the rapid adoption of contactless payments.
In Europe, where NFC-based transactions are increasingly popular, PayPal sees a golden opportunity. As of 2022, 90% of Europeans had used PayPal’s services, although Google Pay and Apple Pay still led in mobile payments. With the introduction of a PayPal NFC-based wallet, the company could finally close the gap and establish itself as a serious competitor to Apple Wallet.
One of the driving forces behind this potential shift is the European Union’s Digital Markets Act (DMA), which mandates that consumers be allowed to set third-party wallets as their default option on iPhones. This regulation opens up new possibilities for app developers, including the ability to distribute apps outside of the App Store, use alternative browser engines, and request interoperability with iOS hardware and software features, such as the Secure Element involved in NFC transactions.
For PayPal, this regulatory change could be the key to unlocking the offline retail market, a space the company has been eager to enter. An omnichannel solution that offers both online and offline payment options would be a significant win for PayPal, especially given the company’s efforts to cater to merchants who seek seamless integration across all sales channels.
While PayPal has yet to disclose specific details about its NFC wallet plans—such as a launch timeline or functionality—the company pointed to its recent earnings statements as an indication of its intentions. However, all eyes will be on Chriss as he takes the stage at the Goldman Sachs Conference on September 9, where it is expected that PayPal’s European strategy, including any developments related to an NFC wallet, will be a key topic of discussion.
In summary, with the EU’s new regulations and Apple’s decision to open up its NFC capabilities, PayPal is poised to make a bold move into the mobile wallet space. If successful, this could mark a significant shift in the competitive landscape of digital payments in Europe, potentially challenging Apple Wallet’s dominance and reshaping how consumers interact with payment technologies.
