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Square and PayPal Shouldn't Fear Google's Fintech Push – Motley Fool



Alphabet‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google recently launched a major redesign for its Google Pay app on Android and iOS, and at least one analyst believes that upgrade could threaten Square (NYSE:SQ) and PayPal (NASDAQ:PYPL).

However, I believe Square and PayPal probably won’t lose much sleep over Google’s latest efforts. Let’s take a look back at Google Pay’s evolution, why it’s attracting more attention now, and why it probably still can’t hurt Square or PayPal.

Woman on smartphone with money symbols above it

Image source: Getty Images.

Tracking Google Pay’s growth

Google Pay started out as Android Pay, a basic replacement for credit cards, in 2015. But in 2018, Google merged Android Pay with its mobile wallet, Google Wallet, to create Google Pay — which also offered deeper integration with third-party apps and websites.

The latest redesign adds new personal finance tools, which let users link the app to their bank accounts, track their spending habits, search through past transactions, apply online discounts to purchases, and more. It also broadened its support for contactless payments at gas stations, and added integrated payments for parking fees in select cities.

Google Pay currently serves about 150 million users across 30 countries. That gives it five times the reach of Square’s Cash App, but it’s still dwarfed by PayPal’s 361 million active accounts.

Why are the analysts raising red flags?

Piper Sandler (NYSE:PIPR) analyst Christopher Donat recently called the new Google Pay app a “threat” to Square and PayPal. Donat mainly cited Google Pay’s rise on the app store charts as evidence of that growth.

Donat also noted that downloads of Square’s Cash App had decelerated from nearly 80% year-over-year growth in April to about 12% in December. He claimed that recent downloads of PayPal’s Mobile Cash app were largely driven by its recent addition of cryptocurrency purchases.

Why the app store rankings could be misleading

At first glance, it certainly seems like a lot of people are downloading Google Pay. According to Sensor Tower, Google Pay is currently the top finance app on Google Play, and the 12th most popular finance app on Apple‘s (NASDAQ:AAPL) App Store.

However, Android users already use Google Pay to process payments on its Play Store, so it isn’t surprising that downloads of the Android version temporarily surged after the latest update. Furthermore, Google recently announced that it would eliminate web-based payments in early 2021, which forced those users to download the app instead.

Apple’s App Store rankings tell a different story. Google Pay briefly became the App Store’s top finance app in mid-December, according to Sensor Tower, but it dropped out of the top 10 by the end of the month. As of this writing, Square’s Cash App ranks first again, followed by PayPal’s Mobile Cash, the IRS app, and Venmo.

That abrupt decline indicates the “new” Google Pay doesn’t have that much staying power — and its Google Play ranking could follow the same trajectory once the initial interest wears off.

Why Square and PayPal aren’t worried

Google Pay seems to serve a lot of users worldwide, but many of those payments likely originate from the Play Store instead of from third-party apps and stores.

According to McKinsey’s 2019 Digital Payments Survey, Google Pay isn’t one of the top three methods for in-app payments, online payments, or peer-to-peer payments. The only method where it’s gained a foothold was in-store payments, where it still trails far behind Apple Pay.

Comparison of popular payment methods.

Source: McKinsey.

PayPal likely remained well ahead of Google throughout 2020. PayPal’s total payment volume rose 36% year over year in constant currency terms last quarter, marking its strongest growth rate ever.

Meanwhile, Square’s Cash App pulled ahead of PayPal’s Venmo — its top rival in peer-to-peer payments — in total downloads last year, according to Nomura Instinet. Square’s Cash App hit 30 million active users last June, up from 24 million at the end of 2019. PayPal stated Venmo had 52 million active users at the beginning of 2020.

Millennial and Gen Z users also generally favor Venmo and Cash App, respectively, over other payment apps. Venmo became a popular way for millennials to split checks while dining out, while Cash’s expanding ecosystem of fintech services made it easier for Gen Z users to not only send money, but to buy bitcoin and execute free stock trades.

By comparison, Google Pay faces two major challenges. First and foremost, its Google branding immediately raises privacy concerns, even though the tech giant says a user’s financial data won’t be sold to third parties or used for targeted advertising.

Second, Google has a long history of over-promising, under-delivering, and then abruptly abandoning its new apps. The new Google Pay sounds innovative, but its interest in improving the app could quickly wane as users stick with Square and PayPal for peer-to-peer and online payments.

The bottom line

Google launched Google Play over five years ago. But over the past five years, Square’s stock surged 1,630% as PayPal’s stock rallied over 530%.

Both fintech companies dazzled investors with their robust growth rates and forward-thinking expansion strategies. Those trends won’t end anytime soon, and I don’t believe Google’s latest efforts will derail either company.

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Britain in talks with 6 firms about building gigafactories for EV batteries



Britain is in talks with six companies about building gigafactories to produce batteries for electric vehicles (EV), the Financial Times reported on Wednesday, citing people briefed on the discussions.

Car makers Ford Motor Co and Nissan Motor Co Ltd, conglomerates LG Corp and Samsung, and start-ups Britishvolt and InoBat Auto are in talks with the British government or local authorities about locations for potential factories and financial support, the report added .


(Reporting by Kanishka Singh in Bengaluru; Editing by Himani Sarkar)

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EBay to sell South Korean unit for about $3.6 billion to Shinsegae, Naver



EBay will sell its South Korean business to retailer Shinsegae Group and e-commerce firm Naver for about 4 trillion won ($3.6 billion), local newspapers reported on Wednesday.

EBay Korea is the country’s third-largest e-commerce firm with market share of about 12.8% in 2020, according to Euromonitor. It operates the platforms Gmarket, Auction and G9.

Shinsegae, Naver and eBay Korea declined to comment.

Lotte Shopping had also been in the running, the Korea Economic Daily and other newspapers said, citing unnamed investment banking sources.

South Korea represents the world’s fourth largest e-commerce market. Driven by the coronavirus pandemic, e-commerce has soared to account for 35.8% of the retail market in 2020 compared with 28.6% in 2019, according to Euromonitor data.

Shinsegae and Naver formed a retail and e-commerce partnership in March by taking stakes worth 250 billion won in each other’s affiliates.

($1 = 1,117.7000 won)


(Reporting by Joyce Lee; Editing by Edwina Gibbs)

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Canada launches long-awaited auction of 5G spectrum



Canada is set to begin a hotly anticipated auction of the mobile telecommunications bandwidth necessary for 5G rollout, one that was delayed more than a year by the pandemic.

The 3,500 MHz is a spectrum companies need to provide 5G, which requires more bandwidth to expand internet capabilities.The auction, initially scheduled for June 2020, is expected to take several weeks with Canadian government selling off 1,504 licenses in 172 service areas.

Smaller operators are going into the auction complaining that recent regulatory rulings have further tilted the scales in the favour of the country’s three biggest telecoms companies – BCE, Telus and Rogers Communications Inc – which together control around 90% of the market as a share of revenue.

Canadian mobile and internet consumers, meanwhile, have complained for years that their bills are among the world’s steepest. Prime Minister Justin Trudeau’s Liberal government has threatened to take action if the providers did not cut bills by 25%.

The last auction of the 600 MHz spectrum raised C$3.5 billion ($2.87 billion) for the government.

The companies have defended themselves, saying the prices they charge are falling.

Some 23 bidders including regional players such as Cogeco and Quebec’s Videotron are participating in the process. Shaw Communications did not apply to participate due to a $16 billion takeover bid from Rogers. Lawmakers and analysts have warned that market concentration will intensify if that acquisition proceeds.

In May, after Canada‘s telecoms regulator issued a ruling largely in favour of the big three on pricing for smaller companies’ access to broadband networks, internet service provider TekSavvy Inc withdrew from the auction, citing the decision.

Some experts say the government has been trying to level the playing field with its decision to set aside a proportion of spectrum in certain areas for smaller companies.

Gregory Taylor, a spectrum expert and associate professor at the University of Calgary, said he was pleased the government was auctioning off smaller geographic areas of coverage.

In previous auctions where the license covered whole provinces, “small providers could not participate because they could not hope to cover the range that was required in the license,” Taylor said.

Smaller geographic areas mean they have a better chance of fulfilling the requirements for the license, such as providing service to 90% of the population within five years of the issuance date.

The auction has no scheduled end date, although the federal ministry in charge of the spectrum auction has said winners would be announced within five days of bidding completion.

($1 = 1.2181 Canadian dollars)


(Reporting by Moira Warburton in Vancouver; Editing by David Gregorio)

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