Apple will allow PayPal payments in its digital stores, offering customers another check-out option on iTunes, iBooks, Apple Music and the App Store.
The partnership, rolled out Tuesday in the U.S., U.K., Canada, Mexico, Australia and parts of Europe, lets users choose the San Jose-based secure payment service — a platform that many online shoppers are comfortable with, said Brendan Miller, a payments expert and analyst at Forrester.
"PayPal is by far the most used digital payment method besides debit and credit cards," Miller said. "That alone will mean more transactions for Apple from customers who might have been leery of using their payment information online. This translates to less carts left abandoned in checkout."
Miller said he talks to retailers who see 20% or more of their online transactions go through PayPal. More than 40% of U.S. adults online have used PayPal in the last three months to pay for a product or service, according to data from Forrester.
PayPal will also integrate with Siri and bring PayPal's One Touch feature to Apple ID accounts, allowing for purchases with fewer clicks, PayPal said in a statement.
Customers with an Apple ID will be able to select "PayPal" as a preferred payment method — once selected it will become the default payment method and all future purchases will be charged to the PayPal account. This includes one-time purchases as well as monthly fees such as Apple Music subscriptions and iCloud storage, PayPal said in a statement.
Apple has its own wallet feature, Apple Pay. Miller said he doesn't foresee a competition between the two transaction methods, but rather a partnership.
"It's not a win-lose battle," Miller said. "I think we'll see a lot more partnerships in this space."
Moshe Katri, managing director and analyst covering payments at Wedbush, said PayPal's model that appeals to both merchants and consumers is what is driving its growth and leading to partnerships.
"This means that Apple isn't out to destroy PayPal with their [Apple Pay] feature," Katri said. "Apple doesn't care what people are using to pay — they are agnostic in that sense — all they want to do is sell."
Shares of PayPal closed up 3.27% at $56.55 Wednesday.