Some fintechs will suffer, some will gain from new Apple Pay, Wallet features
Apple's (NASDAQ:AAPL) unveiling of Wallet's Tap to Cash and Apple Pay online and the expansion of its Buy Now, Pay Later features at WWDC 2024 has implications for several publicly traded payment stocks, said KeyBanc Capital Markets analyst Alex Markgraff.
The new Tap to Cash feature allows iPhone users in the U.S. to send and receive Apple Cash by holding two phones together. Another feature on iOS 18 allows Apple Pay use in desktop browsers beyond Safari, such as Firefox, Chrome, and Edge.
"In many ways, we see these updates as bringing greater parity against peers (e.g., PYPL) considering the browser-agnostic nature of most digital wallets and ability to redeem rewards from other issuers in a digital wallet (again, PYPL)," the analyst wrote in a note to clients this week.
The Wallet enhancements also allow an iOS 18 user to access installment financing options from their bank. In addition, users can view rewards or point balances in Wallet and redeem points with Apple Pay online and in apps, it said.
The Apple Pay updates are seen as creating a tougher uphill slog for PayPal (NASDAQ:PYPL), which is "fighting to restart branded payment momentum, presumably against the likes of Apple Pay, Shop Pay, etc.," Markgraff said.
In the BNPL category, "we see Apple Pay installment/BNPL announcements as net negatives to PayPal (PYPL) (Pay in 4) and Block (NYSE:SQ) (Afterpay) and a net positive to Marqeta (NASDAQ:MQ), assuming the company remains tied to Affirm (NASDAQ:AFRM) in the new AFRM/Apple Pay construct," he noted.
A number of the Apple Pay updates align closely with several product introductions that Visa (NYSE:V) announced last month that are scheduled to launch this fall. "Thus, we view these updates as positive for V," Markgraff added.
The SA Quant system has a Hold rating on all five of the stocks mentioned — Paypal (PYPL), Block (SQ), Apple (AAPL), Marqeta (MQ), and Visa (V).
Some of the best investment opportunities in fintech, though, may be outside of the U.S. For payment/data services stocks with market caps over $2B, the SA Quant system ranks PagSeguro Digital (NYSE:PAGS), the Brazil-based fintech, the highest, followed by Euronet Worldwide (NASDAQ:EEFT).