PayPal has also introduced other payment methods at Home Depot, Abrecrombie & Fitch and Barnes Noble. In addition, eBay has partnered with Coinstar, a service which allows customers to convert their spare change into paper currency via kiosks. Now customers can directly deposit coins into their PayPal accounts and withdraw from their accounts as well.
The two A’s and their story with the moulah
Apple Inc. (NASDAQ:AAPL) has over 400 million users who spend a significant amount of money in the iTunes store. They’ve actually got a customer base larger than that of both eBay Inc (NASDAQ:EBAY) and Amazon.com, Inc. (NASDAQ:AMZN). As of now, credit cards and bank accounts have to be linked to their accounts for payments to go through–but Apple’s already on the look out for other options rather than having to rely on banks for their customers to make payments.
Interestingly, Apple Inc. (NASDAQ:AAPL) has already patented technologies that are payment-related. Wave to pay, peer to peer and fingerprint technologies are included in these patents. Rumors have it that Apple Inc. (NASDAQ:AAPL) is already working on a near field communication (NFC) payment method on their next iPhone release.
Amazon has a very secure and extensive payment system of its own, but sadly customers need a credit card to be linked to their account. Amazon.com, Inc. (NASDAQ:AMZN) hasn’t given into competition yet, as they’re still not accepting payments through PayPal or Google Inc (NASDAQ:GOOG) checkout. They’ve invested in TV shows and cable TV related hardware rather than widening their payment methods, which is working out well for them to an extent. However, with the introduction of brick and mortar payments they might be inviting trouble. Google and eBay have the option of lowering their fees and stealing customers from Amazon.com, Inc. (NASDAQ:AMZN) because credit card payments are the only option available in Amazon.com, Inc. (NASDAQ:AMZN).
Verdict
Investors should keep a keen watch on tech companies and their latest announcement related to the payment industry. Banks and credit card companies might not have the dominance they have now. Let’s face it, consumers would rather have tech companies handling their money with the option for lower merchant fees.
The challenge for credit card companies and other institutions would be to go lower, or at least meet the interest rates of these up and coming competitors. If they do finally bow down and take on this sort of competition, it would require them to make a lot of changes. A big opportunity would arise if we do spot a panic amongst banks and financial institutions.
Ashley Sales has no position in any stocks mentioned. The Motley Fool recommends Apple Inc. (NASDAQ:AAPL), eBay Inc (NASDAQ:EBAY), and Google. The Motley Fool owns shares of Apple, eBay, and Google Inc (NASDAQ:GOOG).
The article Are Tech Companies a Threat To Banks? originally appeared on Fool.com.
Ashley is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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