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"Processors and merchants will want to see evidence of Digital wallets were created
increased sales conversions, reduced cart abandonment
rates, lower fraud, higher average tickets, etc., before com- primarily to digitize payments
mitting to the time, expense and payment page clutter of between friends and family, PayPal
a new payment button integration," Crone said. "All of
which is premised on seeing the service in live operation being the first successful such
with a real merchant and how it works compared to other wallet. Mobile wallets are a subset
existing options in this very crowded, mature market."
of digital wallets that leverage near
Daniel Keyes, senior analyst, merchant services at Jav- field communication technology on
elin Research & Strategies, offered a similar assessment.
"Powerful companies have teamed up before to take on mobile devices.
the digital payment space and have come up short," Keyes
wrote in a recent analysis. "Paze could be a different story
if it can replicate Zelle's success, which was also based on every purchase made using Apple's cards.
consumers' existing relationships with their FIs, but it will
need to quickly scale up its merchant and consumer net- Herman, pointing to additional moves Apple has made
works to succeed." into financial services—the Apple Card co-issued with
Goldman Sachs; Apple Pay Later (a buy now, pay later
Anderson said Paze is in discussions with merchants and option); and most recently a high-yield savings account—
has "some commitments to working with us." The com- suggested Apple will be its toughest competitor. "Apple is
pany also hopes to engage the acquirer/ISO sales channel. creating a moat around technologies its customers are al-
Several of EWS owner banks are major acquires, includ- ready using to make sure companies like Paze don't move
ing Bank of America, Chase and Wells Fargo. Several also in," he said.
are major card issuers. Merchants will pay interchange.
"There will be no upcharges to distributors," Anderson Opinions mixed on need for another wallet
noted.
Most analysts expect Paze will find it tough to sign up
Navigating the Apple moat merchants. "No big merchant that's looking to reduce in-
terchange is going to want another way to accept cards,"
Morning Consult wrote that its analysis "reveals that a Herman said.
big bank-backed digital wallet will face several challeng-
es," including "a crowded competitive landscape with a Morning Consult is a bit more optimistic, stating that
clear front runner," PayPal, with 71 percent of U.S. adults while other digital wallets have struggled to survive,
reporting they had used the service as of February 2023. "Paze could be a different story if it can replicate Zelle's
The next closest competitor is Block's Cash App with 44 success, which was also based on consumers' existing rela-
percent usage; followed by Venmo (39 percent), which is tionships with their FIs, but it will need to quickly scale up
owned by PayPal; Google Pay (36 percent); and Apple Pay its merchant and consumer networks to succeed."
(31 percent).
Crone insisted there's not much of a merchant market up
"It's an extremely crowded market," said Tim Astanov, vice for grabs. "Two thirds of all ecommerce sales are at the top
president, product, at TabaPay, an instant payment net- five retailers," he said, noting Amazon and Walmart are
work that supports early wage access and loan payouts. among them. And they all have Click-to-Pay, a wallet-type
"Can anybody really catch up to Venmo and Cash App?" service introduced by the card brands back in 2019. Then
To succeed, Astanov suggested, "They will need to come there is Apple Pay, which already has significant market
up with a killer user experience." traction.

Other merchants Crone expects to take a pass on Paze in-
To be clear, credit and debit cards are still used more than clude Target, which prefers to steer customers to Red Card,
any other payment method for online purchases, account- its decoupled debit card, and eBay, which has its own click-
ing for 40.5 and 22.8 percent of transactions as of December to-pay button. Add to that aggregators, like GrubHub, and
2022, according to Morning Consult. PayPal accounted for it diminishes the universe of potential ecommerce mer-
13.5 percent of monthly consumer payments, Apple Pay chants that necessarily need Paze. Crone calculates that
made up 4.3 percent, and other digital wallets accounted when all is said and done, the addressable market for Paze
for 3.8 percent. is just 15 percent of ecommerce merchants. "Is there a busi-
ness case for that?" he asked.
Anderson identified three major competitors for Paze: a
website's guest checkout, PayPal and Apple Pay. The no-
tion of unseating Apple appeals to card issuers, who chafe Patti Murphy is senior editor at The Green Sheet and self-described
at having to pay Apple a fee (a percentage of the ticket) for payments maven of the fourth estate. She also co-hosts the Merchant
Sales Podcast.
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