PayPal's shares were off on Thursday by 4.7 percent as investors expressed concerns over a new flank in Apple Pay's strategy that would bring the payments service to mobile websites.
PayPal rebounded off lows which took the stock down as much as 8 percent intraday.
To recap the Apple initiative, the Safari browser would be used to make the payments service available to consumers making purchases from merchants that accept Apple Pay using their iPhones and iPads, in turn using the TouchID technology that uses fingerprints as a basis for identification.
This would mean that Apple would compete more directly with PayPal - and as sell side analysts noted, this is the first real direct head to head encounter between the two companies. Piper Jaffray analysts wrote that "this confirms our belief that Apple Pay's evolution will ultimately impact PayPal's business."
Roughly 30 percent of PayPal's total payments volume, as measured last year, came through payments made on mobile devices, including iPhones and Android devices and others.
Also in the wake of the rumors surrounding Apple Pay, another firm, Sterne Agee, initiated a neutral rating with concerns over valuation in addition to risks to the firm's "dominant position in eCommerce."
Separately, Jefferies said that the Apple Pay focus on mobile means that it is competition rather than disruption. But Apple Pay faces customer and merchant adoption hurdles that may make it rough sledding, and PayPal has advantages in having been first mover, and has power in scale and brand.
Apple Pay has been positioned as a threat to PayPal's business since its launch in September of 2014, so the latest doom and gloom chatter is nothing new as Apple Pay, now two years later, expands its presence to the mobile Web. Over that same period of time, PayPal has expanded its focus beyond being just an "online acceptance mark" to network that allows consumers to move and manage payments between people, merchants and other businesses in an effort to boost customer acquisition, usage and create stickiness. Apple Pay's success, like all players in the digital/mobile commerce space, will be tied to its ability to get enough merchants to add it as a payments option. That they will do, if they believe that enough consumers will want to use it, making the integration efforts worth their time and expense.
At least yesterday, analysts' reaction is that they will and that Apple will become a formidable mobile Web force. Of course, they were also bullish on Apple Pay, which has struggled to gain momentum.