PayPal Expands Into U.S. Point-of-Sale Payments, Integrates With Apple Wallet In Bid To Compete With Tech Giants

To attract more consumers, PayPal is offering 5% cash back on eligible purchases up to $1,000 per month.

PayPal Holdings (PYPL.O) is making a major move into the U.S. point-of-sale (POS) payments market, enabling its debit card to be used with Apple’s mobile wallet. According to Reuters, the expansion includes offering 5% cashback on select purchases, positioning PayPal to compete directly with tech giants like Apple and Google and traditional banks.

This strategic shift is part of an ambitious turnaround plan spearheaded by PayPal’s new CEO, Alex Chriss, who took the reins in 2023 after leaving Intuit. Known for its dominance in online payments and peer-to-peer transactions via Venmo, PayPal is now pushing into in-person transactions at physical stores, restaurants, and cafes.

“E-commerce has obviously been one of the fastest-growing areas where people are spending their dollars, but it’s not everything,” Chriss said. “Now consumers can use PayPal for every purchase, everywhere, every time.”

5% Cashback and Mobile Wallet Integration

To attract more consumers, PayPal is offering 5% cash back on eligible purchases up to $1,000 per month. In addition to rewards for everyday purchases, users will benefit from exclusive offers from popular brands like DoorDash and Sephora.

By integrating with Apple Pay, PayPal enables customers to easily make contactless payments through their mobile wallets, leveraging the growing popularity of the “tap to pay” feature. This move aligns with the broader consumer trend towards using mobile wallets for in-store purchases.

U.S. Debit Card Market Growth

The value of U.S. debit card payments has soared in recent years, reaching $4.55 trillion in 2021, compared to $2.47 trillion in 2015, according to the U.S. Federal Reserve. Chriss pointed out that consumers are becoming more cost-conscious and shifting toward debit cards to manage their spending within their limits.

PayPal’s 5% cashback incentive makes its debit card offering one of the most competitive in the market. According to research from purchase rewards firm Valuedynamx, only 24% of debit card users received cashback rewards in 2023, compared to 74% of credit cardholders. This positions PayPal’s debit card as a valuable option for consumers seeking rewards without relying on credit.

Competing with Apple and Google

In mobile payments, PayPal faces increasing competition from tech giants like Apple and Google. To bolster its market presence, PayPal is making its largest-ever marketing investment to promote in-person use of its services. While the company has not disclosed the amount, PayPal indicated that its marketing and branding efforts will significantly increase expenses in the latter half of the year.

Chriss has described 2024 as a “transition year” for the company, focusing on expanding revenue streams beyond traditional transaction-related volume. Earlier this year, PayPal launched new AI-driven tools and introduced a streamlined one-click checkout feature to enhance its product lineup.

Stock Performance and Future Outlook

PayPal’s stock has risen more than 17% since the beginning of 2024, though it still lags behind the S&P 500 index’s 22% gain. The company’s recent moves reflect broader efforts to revitalize its growth trajectory and regain market momentum.

With its entry into the U.S. point-of-sale market, PayPal aims to bridge the gap between its online payments dominance and the growing demand for in-person, mobile-based transactions, ensuring that consumers can use it “everywhere, every time.”