E-Bay (NASD: EBAY) Facing Competition from Apple (NASD: AAPL), and Google (NASD: GOOG) For Paypal

The market for online payment has been dominated by E-Bay’s (NASD: EBAY) Paypal product for much of recent history, though that soon may change if Google (NASD: GOOG) has anything to say about it.

The market for mobile payment transactions is predicted to rise 44% this year to over $235 billion, which includes merchant purchases, money transfers and bill payments. PayPal is extremely important to eBay, as it accounted for about 40% of eBay’s 2012 revenue. PayPal hasn’t had much competition but recently big names have been surfacing as potential competitors. How much would eBay’s stock be affected if a big competitor stepped in?

Paypal has been ubiquitous in the world of e-commerce, and as more customers are continuing to flock to online shopping, more and more firms are seeking to capitalize on the market opportunity. Despite encrypted transactions and insurance for debit and credit card transactions, many consumers remain reluctant to shop online, and appreciate the safety Paypal offers.

Google’s product, Google Wallet, makes sense for the company because it can add purchase behavior to its already massive stockpile of data. Despite some major advantages, like Android, the company has yet been successful in making Google Wallet a household name yet. While Google is the most boisterous and obvious competitor, rumors swirl that both Apple (NASD: AAPL) and Facebook (NASD: FB) are planning to launch a similar product.

Apple’s rumored product is dubbed iWallet, which could prove to be an even bigger threat to PayPal. The key factor is Apple’s iTunes, which the company said has more than a half-billion active iTunes accounts linked to credit cards. Another advantage is its existing partnerships with some of the biggest retailers like Wal-Mart (NYSE: WMT) and Target (NYSE: TGT). Apple could leverage those relationships to help its own iWallet service get started. Apple has been working on iWallet for the past two and a half years and a fingerprint technology to go along with it. Apple bought fingerprint and secure solutions specialist Authentec last year for $356million.The next generation iPhone is expected to be released next month, and is rumored to include a fingerprint sensor and a near-field communications chip for mobile payments.

Though the future remains unclear, what is clear is that the mobile payment space will soon expand and have a vast array of competitors. The prime mover advantage that Paypal has enjoyed and E-Bay has reaped benefits from could soon evaporate, and that could mean big profits on the way for Apple and Google if the rumors are true.