Apple leaves PayPal out in the cold with an omission from its list of preferred Apple Pay payment platforms

By Michael Carney , written on September 15, 2014

From The News Desk

Nobody likes to be left out when the cool kids send out invitations to the hottest party. That’s exactly where PayPal finds itself today as details emerge of Apple’s list of preferred payments platforms for merchants looking to support its recently announced Pay (or Apple Pay) product.

According to Apple’s Developer guidelines for Apple Pay,

Payment providers make processing payments with Apple Pay simple by managing the credentials and/or processing of purchases from your app. You will need to work with a provider who offers APIs that integrate Apple Pay with their payment platform. Current providers include:
  • Authorize.Net
  • Chase Paymentech
  • CyberSource
  • First Data
  • Stripe
  • TSYS
In a more detailed note to developers, Apple adds the stern sounding advice:
Using one of these SDKs is highly recommended. Contact your payment provider for more information. The alternative is to provide your own server-side solution to receive payments from your app, decrypt payment tokens and interface with the payment provider. Handling credit and debit card payments can be complicated and unless you already have the expertise and systems in place, an SDK from a payment provider is the quickest and most reliable way to support Apple Pay in your app.
PayPal (and subsidiary Braintree) is nowhere to be found on that list of preferred payments platforms, but several of its fiercest rivals are, including Silicon Valley darling Stripe and several legacy giants.

This marks a souring of the long-standing relationship between Apple and PayPal, which integrated nearly a decade ago to facilitate online payments from the earliest days of the iTunes store.

The reality is that merchants already using PayPal will be able to continue doing so without any adverse effects, according to conversations I’ve had in the last week with Braintree CEO Bill Ready who points to the flexibility of his Braintree V.Zero SDK (the future of both the Braintree and PayPal platforms), which is designed to incorporate a variety of third-party mobile wallets such as Coinbase for bitcoin.

But for new adopters of online payments – like the vast majority of American small businesses who are about to adopt NFC to get in on this Apple-fueled trend – it’s likely that they will simply pick off of the list of recommended partners. And in that way, PayPal stands to lose out.

This all carries increasing importance for PayPal which, despite being among the largest and most widely known online payment platforms, is suffering its own identity crisis at the moment. With the search for a replacement CEO underway after David Marcus’ surprise departure and ongoing calls from Wall Street for the company to spin out from its parent eBay, PayPal needs to project strength and clarity of direction now more than ever.

V.Zero and the subsequent launch of OneTouch make PayPal a more compelling product for both developers and consumers than perhaps at any other time in its history. But when your reputation is wrapped up in more than a decade of bad customer service and lackluster product innovation, it can be difficult to get anyone to notice even the most impressive of product updates.

Add to that the fact that Apple, which has proven itself to be the world’s most formidable driver of headlines and consumer electronics trends, has told the world that Apple Pay is the greatest thing since sliced bread. It doesn’t even matter if it’s true. Anyone savvy enough to know the difference between this marketing spin and the truth likely doesn’t need PayPal to explain why its platform is as compatible and appealing as ever.  What matters is that for the majority of merchants and consumers, Apple Pay will be the first payments product that they care enough to think about.

Like the alpha girl in the popular clique at high school, Apple Pay is attempting to dictate who’s cool and who’s not. PayPal may say that it doesn’t care and that the tater tots are just as delicious in its corner of the cafeteria, but that will hardly ease the sting of this slight.

[illustration by Brad Jonas for Pando]