How PayPal blew their chance to be an Apple Pay preferred partner

“Sources close to Apple and PayPal and in the financial services industry have confirmed that PayPal and Apple were indeed in talks for PayPal to be a ‘preferred payment process’ for Apple Pay,” Ian Kar reports for Bank Innovation. “However, PayPal pissed Apple off so much that Apple excluded PayPal from Apple Pay altogether.”

“Apple and PayPal started talking early on in Apple’s development of Apple Pay, as Apple was setting up partnerships with the card issuing banks and card networks,” Kar reports. “Since PayPal’s a payments industry leader, it would have been shortsighted for Apple to not reach out to PayPal.”

“But while these talks were going on, PayPal went ahead and partnered with Samsung on the Galaxy S5 fingerprint scanner, a move that was reportedly forced onto PayPal by eBay CEO John Donahoe,” Kar reports. “PayPal’s now-former president David Marcus was purportedly categorically against the Samsung deal, knowing that it would jeopardize PayPal’s relationship with Apple. Donahoe won the day, however.”

MacDailyNews Take: Won the day and lost the war. John Donahoe is obviously a fool.

Kar reports. “Apple was said to be absolutely furious that PayPal did the deal with Samsung, which led Apple to cut PayPal out of the Apple Pay process entirely. (One source said: ‘Apple kicked them out of the door.’)”

Read more in the full article here.

MacDailyNews Take: This really couldn’t be any simpler to understand, so it prompts the question: How do people like John Donahoe end up as a CEO of anything?

The majority of people with money and the proven will to spend it are Apple customers. So, what does PayPal, which is in the money business, do? They go with a scheme that any random person off the street could have told you will fail and choose a company and a platform that caters to cheapskates and the poor, in the process alienating the one company with which they desperately needed to partner, in order to not be steamrolled into oblivion. At no time was Donahoe’s move ever a good idea. His fecklessness is appalling. At least PayPal employees know who to blame for what’s coming their way.

This hilariously atrocious episode will soon be a featured case study in Business 101: “Boneheaded Moves To Avoid.”

Stripe must absolutely love John “Dummy” Donahoe.

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  1. So can someone explain how this announcement got eBay stock to go up more than 7.5% today? And is Paypal expected to also go up? That is what I am reading. Is that possible?

  2. This explains PayPal’s marketing tactics after Apple Pay was announced. It’s just like what Samsung does. Feel threatened? Lets link celebrities who are dumb enough to put naked selfies on iCloud with a weak account password, with the security of Apple Pay. Next, PayPal will start touting obscure features that no one wants as reasons why PayPal is better…

    And these announcements (from today) may be related to this story of leadership failure: (New CEO and separation from eBay)

  3. There is currently only one stock. It’s up today because they announced that 1) Donahoe is out and 2) PayPal will be spun off into a separate company/stock. Not sure this is going to be enough to open discussions with Apple again, but I’m sure they’ll try.

  4. If I were on eBay’s board, I would send Donahoe off to be the CEO of the split off PayPal. “You put the holes in the the bottom of this ship, you have to fix it, or you go down with the ship.”

  5. My business plan:
    1) Establish successful secure financial transfer company, a field in which reputation and trust is essential.
    2) Have said company establish close partnership with a company whose leader has been convicted of embezzlement, bribery, and tax evasion.
    3) ???
    4) Profit?

  6. What a catastrophe. But it gets WORSE. Dummy Donahoe himself just got ‘Kicked Out The Door!’

    Carl Icahn Wins Again: eBay To Spin Off PayPal, CEO John Donahoe Is Out

    And so Carl Icahn wins again, this time with his demand that eBay spin off PayPal. As a reminder, eBay swore up and down it would never spin off its best performing asset, then swore again, and swore some more. And then 3 minutes ago, revealed it was only kidding, because eBay just reported PayPal will be spun off in a move that will cost CEO John Donahoe his job: “Neither Donahoe nor Swan will have an executive management role in the new eBay and PayPal companies. But to provide continuity, they each expect to serve on one or both of the boards of the two companies. Oh, and another winner: “Goldman, Sachs & Co. and Allen & Company LLC are serving as financial advisors to eBay Inc.” . . .

    ~ ~ ~ ~ In my crystal balls I see a man,
    ~ ~no a company,
    ~ ~ ~ ~ crawling on their knees to a man,
    ~ ~ no a company,
    ~ ~ ~ ~ begging for forgiveness, asking if they can be friends again.
    ~ ~ ~ ~ My balls grow cloudy. I can see no more…

  7. According to AppleInsider users will be able to use Apple Pay on websites. This is going to greatly impact PayPal’s core business. Another note: the ability to use Apple Pay on website is going to be one of the main features which will fuel sales of Touch ID enabled iPads.

  8. Fact: Never had a problem with PayPal. Actually good experiences.

    However I saw how they treated others, and decided that maybe, doing business with them, was not in my long term best interest.

    Since then I have moved all my online transactions to VISA, and soon ApplePay.

    1. And it will STILL be VISA (assuming that’s what’s on your iTunes account). PayPal was great as it allows you to do cash/bank transactions. This won’t do for Apple Pay. But, I guess the credit card companies will be happy.

    2. With PayPal, you could have touched your touchID and a few minutes later the money could be transferred between two individuals. Big company, or one person. Would be a great way to transfer funds. As it stands, we will have to continue paying the cc company.

      I for one hope that Apple Pay does eventually hook up with paypal.

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