Apple Pay at Six Months: A Medium-Term Outlook

April 2015

2015 Mercator Advisory Group

Just 20 days before it will begin trading under its own ticker again on the Nasdaq, PayPal announced its intention to buy Xoom for $890 million. Xoom is a digital-focused remittance player that has enjoyed blistering growth with its total transaction volume recording a compounded annual growth rate (CAGR) of 68% in the last five years. Nevertheless, its new customer acquisition costs are high and it has struggled to retain a profit in the face of increased price competition from incumbents in the space like Western Union, MoneyGram, and Ria Money Transfer.

Despite the fact that over half of PayPal’s transaction volume comes from outside the United States, it has struggled to establish itself in fast-growing e-commerce markets like China and India. Mercator’s latest research note, Why PayPal Bought Xoom: Emerging Markets Opportunity Too Good to Ignore, strategically analyzes the competitive advantages of both these companies and argues there is a strong case for synergies to be realized that can prove mutually beneficial.

Why PayPal Bought Xoom: Emerging Markets Opportunity Too Good to Ignore

2015 Mercator Advisory Group

Nikhil JosephAnalystEmerging TechnologiesAdvisory ServiceMercator Advisory Group

“In emerging markets especially, prepaid digital wallets are a hugely popular means of funding e-commerce purchases, a trend that PayPal has been unable to capitalize on as local players such as Alipay in China and Paytm in India have established their dominance. Remittances could be the Trojan horse that enables PayPal to crack these markets, representing a cost-effective way of acquiring new PayPal users,” comments Nikhil Joseph, Emerging Technologies Analyst at the Mercator Advisory Group and author of the note.

2015 Mercator Advisory Group

• Overview of the key trends in the global remittance business

• Analysis of Xoom’s growth over the last five years and what its weaknesses have been

• Review of where PayPal stands today at separation from eBay and what its strategic priorities need to be

• Identification of the opportunity that exists in emerging markets and why Xoom could prove useful in helping PayPal capitalize on them

Highlights of the note include:

Figure 3: How Apple Pay Works

© 2014 Mercator Advisory Group

Source: Mercator Advisory Group

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The research note contains 12 pages and 8 figures.

Companies mentioned in this research note include: Alibaba, Alipay, eBay, Money Gram, PayPal, Paytm, Ria Money Transfer, and Xoom.

Members of Mercator Advisory Group’s Emerging Technologies Advisory Service have access to these reports as well as the upcoming research for the year ahead, presentations, analyst access, and other membership benefits.

For more information and media inquiries, please call Mercator Advisory Group's main line: (781) 419-1700, send e-mail to media@mercatoradvisorygroup.com. For free industry news, opinions, research, company information and more visit us at www.PaymentsJournal.com. Follow us on Twitter @ http://twitter.com/MercatorAdvisor.

About the full research note:

2015 Mercator Advisory Group

About Mercator Advisory Group

Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs.

Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com.

2015 Mercator Advisory Group