)
But the service, expected in the coming weeks, already has the technology industry scrambling to profit from a future in which apps could regularly replace cash, cheques and credit cards.
If doubts remained about the far-reaching implications of Apple's entry into the market, they were almost surely cast aside on Tuesday. In a surprise announcement, the e-commerce giant eBay said it would spin off PayPal, long the dominant digital payment service - a move meant to make PayPal more nimble in a fast-changing market.
"The era of digital payments is upon us," said John Donahoe, chief executive of eBay, announcing the split to investors.
The swift reaction by the company in the three weeks since Apple Pay was unveiled makes clear that how we normally pay for goods and services is ripe for transformation.
Square, a prominent payment start-up, plans to allow merchants the ability to accept Apple Pay transactions in the future. Stripe, a payment processing start-up based in San Francisco, has agreed to work with Apple to help more small businesses accept Apple Pay.
PayPal probably has the most to lose if Apple Pay becomes successful.
Part of the scramble among companies comes from Apple's reputation for upending other industries. The iPod, for instance, revolutionised how consumers buy digital music. The iPhone has changed the way people use their cellphones in their daily life.
Companies large and small think Apple's payments service could potentially have the same effect. "Apple has a reputation of harnessing and mobilising an ecosystem," says Denee Carrington, an analyst at Forrester Research.
Perhaps no company has more to lose from a new payment system than PayPal. Started in 1998 by a handful of entrepreneurs, PayPal quickly grew to become the dominant online payment company, widely recognised as a safe and easy way to send and receive money over the Internet.
In 2002, eBay bought PayPal for $1.5 billion. It now has more than 150 million regular users, and last year, it had revenue of $6.6 billion.
"Everyone is gunning for PayPal," Carrington says. "PayPal needs speed and flexibility to effectively defend and grow its business."
Shortly after Apple unveiled its payment product in early September, PayPal took out a series of full-page print advertisements in several major newspapers, criticising Apple for its perceived weaknesses in software security.
When a purchase is made, the iPhone wirelessly transmits a one-time code along with encrypted customer data, which the company says is more secure than swiping a traditional credit card.
"We the people want our money safer than our selfies," the advertisement read, an apparent reference to a recent episode in which some celebrities had nude photographs stolen from their Apple online storage accounts.
Donahoe says multiple factors played into the decision to split eBay and PayPal, including the successful Wall Street debut of Alibaba, the huge Chinese e-commerce company. By being separate from eBay, Donahoe says, PayPal would have more agility, an attribute some analysts have said that PayPal has lacked for years.
Some people say PayPal, especially if standing alone, could benefit from Apple Pay's introduction.
"For one, there is no equivalent yet of Apple Pay on Android devices," says Colin Sebastian, an analyst at Robert W Baird and Company, referring to devices that run Google's operating system. Android smartphone users, he says, could flock to PayPal, which runs on both Apple and Google operating systems.
In an appearance on CNBC, Donahoe said: "The way technology's evolving, the way mobile technology's evolving, we think you're going to continue to see profound changes in how consumers shop and how they pay."
©2014 The New York Times
