Press wires were abuzz this week as Apple Inc. (NASDAQ:AAPL) announced its latest iteration of the iPhone, and while the mainstream media largely focused on what this means for Apple Inc. (NASDAQ:AAPL), its suppliers, and other tech companies, this announcement could actually yield significant benefits to three companies in the financial services industry.
With the iPhone 5s announcement came news of the “Touch ID” — a biometric piece of technology that is a fingerprint scanner built underneath the singular home button on the front of the phone. This security feature will make for easier unlocking of the phone, but will also (and perhaps more importantly), allow users to authorize purchases through their phones.
Discover Financial Services (NYSE:DFS), eBay Inc (NASDAQ:EBAY), and Intuit Inc. (NASDAQ:INTU) are three companies that could reap huge rewards as users gain greater peace of mind in terms of making payments with their phones.
While known for its ever-popular e-commerce platform, eBay Inc (NASDAQ:EBAY) is also the parent company of PayPal, a payments service that allows its 132 million active users in 193 markets to send money securely without sharing their financial information.
eBay Inc (NASDAQ:EBAY)’s Payments business unit accounted for 42% of the company’s total revenue in the last quarter and saw its overall revenue jump 20% year over year. Yet while that is impressive growth in and of itself, what is even more impressive is that the transactions processed by PayPal outside of eBay Inc (NASDAQ:EBAY) were up 29% (to almost $30 billion) versus just 15% for those on eBay Inc (NASDAQ:EBAY).
In 2012, PayPal processed $14 billion in mobile payment volume, versus just $4 billion that it processed in 2011. They were expecting to only process $10 billion in mobile payments last year and beat their own expectations by 40%. Mobile payments represented just 3% of those on PayPal in 2011, versus almost 10% in 2012:
In all of this, PayPal is poised to continue its position as a market leader in payments, and if consumers feel more secure making payments through Apple Inc. (NASDAQ:AAPL)’s new technology, eBay Inc (NASDAQ:EBAY) could reap great rewards.
In August 2012 PayPal and Discover Financial Services (NYSE:DFS) announced their joint effort to “bring PayPal into millions of in-store locations” across the globe. In this relationship, PayPal is given access to brick and mortar locations by utilizing the technological infrastructure provided by Discover Financial Services (NYSE:DFS).
In April of this year, Discover Financial Services (NYSE:DFS) announced it had signed contracts with 50 merchant acquirers that allow businesses to accept payments from customers. This allowed the companies to forecast that PayPal would be accepted at more than 2 million stores by the end of this year. Just a few weeks ago, it was also announced that TSYS, the world’s 10th largest payment processor per a 2012 Nilson Report, would also begin accepting PayPal through its relationship with Discover Financial Services (NYSE:DFS).