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PayPal purportedly cut out of Apple Pay due to partnership with Samsung

A report on Tuesday claims PayPal was in the running to be a prominent partner in Apple's rollout of Apple Pay, but talks went south earlier this year after the payments company struck a similar partnership with Samsung.

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When Apple unveiled Apple Pay last month's iPhone 6 event, the company highlighted a number of bank and credit card firms working to integrate the technology with existing payment systems. Noticeably absent from the list was PayPal, a prime contender for integration into any new digital wallet system.

Reports from January indicated PayPal was eager to team up with Apple on a mobile payments solution, however. The company was even "willing to white label parts of its payment service" like fraud prevention and processing to get in on Apple's digital wallet system.

Citing people familiar with the matter, Bank Innovation is now reporting that Apple and PayPal were indeed discussing a possible tie-up, but talks were scrapped after PayPal decided to sidle up to Samsung. Specifically, PayPal partnered with the Korean tech giant to handle mobile payments for the Galaxy S5, which uses a fingerprint scanner to access digital wallet functions.

According to sources, Apple was not pleased with PayPal's partner choice, with one person reportedly saying, "Apple kicked them out of the door." Apple ultimately chose to bring payments startup Stripe into the fold, seemingly filling the seat at the table left vacant by PayPal.

The publication claims former PayPal president David Marcus was against the Samsung partnership as it would hinder future operations with Apple, but eBay CEO John Donahoe forced PayPal to accept. The dynamic just got more interesting with news today that PayPal will be spun off from eBay in 2015, possibly opening the door to policy changes and realigned alliances.

Following Apple Pay's unveiling, PayPal ran an ad that questioned how Apple could offer effective payments security in light of the then-current leak of personal celebrity photos stolen from iCloud.

Apple Pay will go active in October at 220,000 retail locations and support from major credit card issuing banks and networks like Visa, MasterCard and American Express. The rollout may happen soon, as the latest iOS 8.1 beta seeded to developers on Monday contained a hidden Apple Pay settings menu, suggesting the company is making final preparations for launch.