Head to Head: How PayPal and Apple Pay Compare

What you need to know before using a mobile wallet.

ByABC News
October 1, 2014, 11:08 AM

— -- With Apple Pay set to launch this month and PayPal's plan to split from eBay, a battle is brewing in the world of mobile payments.

While PayPal emerged as a mobile payments pioneer in the late 1990s, the allure of Apple Pay is expected to convince more people than ever to ditch their credit cards in favor of a digital wallet.

PayPal has made the move to defend its turf. Although its "divorce" from eBay won't be complete until late 2015, it's expected that the move will allow both companies to be even more competitive and focused in their respective areas.

Here's a look at how PayPal's app compares to what we know so far about Apple Pay.


When it comes to ease of access, PayPal is the clear winner.

PayPal's app is available for Apple, Android and Windows devices. As it stands right now, only iPhone 6 and iPhone 6 Plus owners will be able to take advantage of Apple Pay.

Ease of Use

When making an in-store purchase, PayPal requires users to open the app, find the store and check-in. From there, users are given the option to order ahead at a restaurant and choose which account they'd like to pay with. With that -- the transaction is complete.

While Apple Pay hasn't been rolled out to the masses just yet, Eddy Cue, Apple's senior vice president of Internet software and services, showed how easy it is to pay at Apple's media event last month. All users have to do is position their iPhone near a payment point at a store, hold their finger on their Touch ID and they're good to go. A vibration and a beep will let users know the transaction was successful. There's no need to do anything else.

Security Features

One of the benefits of using a mobile wallet is not having to expose your credit card information to retailers during a transaction. However, it's all moot if the service you choose doesn't have top notch security measures in place.

PayPal stores personal information, like credit card numbers and billing addresses, on its servers and promises it is "heavily guarded, both physically and electronically," according to the company's website. However, the company said it never shares the information with merchants.

As a precaution, PayPal said it does not directly connect its firewall-protected servers to the Internet. Users also receive an email after every transaction to help them monitor their account for any unauthorized activity.

With Apple Pay, Apple and merchants don't see or store any of your private information. Instead, users take a photo of their credit card and add it to their phone's Passbook where it is assigned an unique device account number, encrypted and store in the phone's Secure Element Chip. When it's time to make a purchase, the device account number and a dynamic security code are used to complete the transaction. Apple will never know what you purchased, the company said, and you'll still get rewards points on the credit cards you use.

If an iPhone 6 or iPhone 6 Plus is misplaced or lost, users can go to Find My iPhone where they can put the device in "lost mode" or wipe it completely -- making sure their private information never falls into the wrong hands.