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Square Ups Ante In Payments Battle Against PayPal

Hot off the heals of its November initial public offering, Square ( SQ ) has added a feature that will up the stakes in its battle against payments rival  PayPal ( PYPL ): Square customers can now store cash in the Square Cash service. Square Cash is a peer-to-peer payments service that lets customers send money to anyone in the U.S. with an email address. It’s designed for things such as paying a friend back for a cab ride, or sharing a restaurant bill. The new feature Square announced  Monday is called Cash Drawer, and allows anyone who has the Square Cash app — sending or receiving money doesn’t require the app, just email — to store money and use it to pay people back at a later date. Square stock was up more than 3%, near 11, in afternoon trading on the stock market today . The San Francisco-based firm had a strong first day after making its IPO, with its stock rising 45% that day and touching its still-record high of 14.78, after prices shares at 9. But the stock has mostly fallen since as many bigger companies compete in payments. The new feature makes Square Cash look a lot more like rival PayPal and its peer-to-peer payments subsidiary Venmo, which is popular among millennials . Both PayPal and Venmo already have the capability that Square added Monday. Square Cash is outside the company’s core business, which is a set of digital cash registers and transaction processing, marketing and financial services, which it sells mostly to small businesses. Square CEO Jack Dorsey is also the top boss at microblog  Twitter ( TWTR ). Visa ( V ) has a sizeable investment in Square.

Apple, Samsung Spurring Mobile Payment Adoption

The number of consumers using mobile phones to make payments on the go is expected to reach 148 million worldwide this year, up 64% from 90 million in 2015, U.K.-based research firm Juniper Research said Tuesday. Apple ( AAPL ) and Samsung will account for nearly 70% of new customers for contactless payments this year, Juniper said. Apple Pay and Samsung Pay have been heavily promoted by their respective companies. When Apple Pay arrived in China in mid-February, nearly 40 million payment cards were registered to the service in the first 24 hours. In the U.S., nearly 1 in 5 point-of-sale terminals now supports contactless payments, creating the infrastructure for broader adoption, Juniper said. Contactless-payment systems use near-field communications technology. With NFC, a user simply holds their smartphone near the payment terminal to complete the secure wireless transaction. Apple Pay and Samsung Pay compete with other service providers, including Alphabet ‘s ( GOOGL ) Android Pay and PayPal ( PYPL ).

PayPal Venmo Stacks Up Well Vs. Apple Pay, Google’s Android Pay

Based on a survey of 1,000 PayPal ( PYPL ) customers, an analyst says that the company isn’t getting enough credit for the potential impact of its peer-to-peer payments app, Venmo. According to Jefferies analyst Jason Kupferberg, investor concerns over the  Apple ( AAPL ) Pay competitor are exaggerated — PayPal’s mobile sales continue to grow and have, in fact, accelerated since Apple released its payments app, he says in a research note. Venmo is a mobile app that enables friends and family to share expenses such as rent, meals and cab fare. Google, a unit of Alphabet ( GOOGL ), also competes in the payments game with its Android Pay. Though PayPal executives continue to emphasize the firm’s “platform agnostic” approach — it isn’t tied to an operating system or platform — and say that neither Apple nor Google is a real threat, some industry watchers disagree. Alex Rampell, a general partner at noted VC firm Andreesseen Horowitz, likened the prospects of either Apple or Google taking a bigger interest in payments to the Death Star — the planet-destroying battle station in “Star Wars” — approaching for all other rivals. “This isn’t the ‘Empire Strikes Back,’ ” Rampell has told IBD in the past. “This is the Death Star coming.” Kupferberg wrote in a research note Monday that PayPal earnings will accelerate due to transactions conducted with the Venmo app. Venmo is free for now, but PayPal executives say that they plan to monetize the app, which is popular with millennials. They say that PayPal plans to allow selected PayPal merchants to accept payment via the Venmo app — and PayPal would charge its typical transaction fee (2.9%, according to Fortune magazine) in the process. According to Kupferberg, 67% of Venmo users would use the Pay With Venmo feature one or twice a month, with 44% using it three to five times a month, and 19% using it six to 10 times per month. Kupferberg says that Pay With Venmo transactions will yield larger profit margins because Venmo customers typically fund their accounts with debit cards, bank accounts and stored balances — the result of others sending cash. PayPal stock was up more than 2%, near 38, in afternoon trading on the stock market today . The San Jose-based company has an IBD Composite Rating of 91, where 99 is the highest. The stock has had a choppy few months since its spin-off from eBay ( EBAY ) in July. It hit its high of 42.55 during its first trading session on Nasdaq and has plunged to as low as about 30 on several occasions. At least one analyst says that the sell-off has been too hasty . Kupferberg’s price target for PayPal stock is 44. PayPal has recently settled a lawsuit over a perennial issue that the company faces: locked accounts.