At the start of this year’s developer conference WWDC, Apple presented numerous new product and service offers at the beginning of the week – including an installment payment option for purchases using Apple Pay. This isn’t the tech group’s first foray into the fintech space, but there’s something special about it.
With the new “Apple Pay Later” payment option, users in the US will be able to split their Apple Pay purchases into four equal installments over six weeks without incurring interest or other fees, the company announced at the beginning of the week. Apple is thus jumping on the “Buy now, pay later” (BNPL) payment trend and is in direct competition with fintechs such as Klarna, Affirm, Paypal or Block.
This time without external partners
Apple is thus granting users a loan for a limited period of time and is further expanding the range of functions of its wallet app and the range of services in the financial sector. In contrast to previous fintech functions, however, this time the group is not using external banks and financial service providers as partners.
According to one BloombergAccording to the report, a wholly-owned subsidiary, Apple Financing LLC, handles the supply of credit, including credit assessment, underwriting and risk management. It is the first time that Apple itself performs the key tasks in one of its financial products.
The US bank Goldman Sachs, with which Apple cooperates on the “Apple Card” credit card, is said to play only a subordinate role as a technical service provider in the processing of Apple Pay payments via the Mastercard network. The institute is not involved in the decision on and the granting of loans.
More control over your own services
For Bloombergexpert Mark Gurman, that would only be logical, because with the “Breakout” initiative, Apple has been working behind the scenes for months to bring more parts of the fintech offering under its own control. The advantages are obvious: With financial services, Apple can integrate users even more closely into the constantly growing product and service ecosystem and also gain valuable insights into consumer behavior.
Seen in this light, it does not come as a surprise that the offering in the financial sector should continue to grow in the future. A long-term BNPL program called “Apple Pay Monthly Installments” is also under discussion, with which users can also obtain larger loans with individual terms and interest rates. However, they are working with Goldman Sachs again, reports Bloomberg. Because Apple does not (yet) have a banking license.
In the rapidly growing service division, the fintech business is undoubtedly one of the most exciting and promising areas for Apple. Perspectively, it offers the group another opportunity to use the lush cash flow and cash on hand of around 200 billion dollars most recently.
In the mixed overall market, this does not initially provide any significant impetus for the Apple share. However, the arguments for Apple as a long-term basic investment remain unchanged.
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Notice of Conflicts of Interest:
The CEO and majority owner of the publisher Börsenmedien AG, Mr. Bernd Förtsch, has taken direct and indirect positions on the following financial instruments mentioned in the publication or related derivatives that may benefit from any price development resulting from the publication: Apple.
The author holds direct positions on the following financial instruments mentioned in the publication or related derivatives that can benefit from any price development resulting from the publication: Apple.
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