People don’t think of Apple as a fintech company, but is this true?
Apple’s current financial products and services:
Apple Pay debuted in October 2014 and this was the first Apple innovation in the financial sector. The most recent figures are from the end of 2020, when 507 million people worldwide used the service. In comparison Google Pay reached 150 million users in 2022.
Apple partnered with Goldman Sachs and Mastercard to launch its own credit card
called “Apple Card” which came into life in 2019. However, things have not gone so smoothly so far.
In September 2022 it was revealed that Goldman Sachs, the financial institution behind the Apple Card, has a credit card portfolio with an unprecedentedly high credit loss rate (2.93%), and this is mainly due to the Apple Card. However, Goldman Sachs still managed to acquire 10 million new users, thanks to Apple Card.
Apple has taken on new money transfer trends by building instant payments into the iMessage app. Users can easily send money to each other in the chat window. First, they get a virtual debit card; the Apple Cash Card, which they can easily top up. Later, they can send money from this balance, and receive incoming transfers.
The money sending process is thus built into a popular application that is already used widely. This ensures an advanced and seamless customer experience, and helps maximise the use of its functionality. Apple is not the only one to have noticed this opportunity, with many applications in Meta’s portfolio starting to offer payment options in chat interfaces.
Apple Wallet is a comprehensive wallet application that hosts digital documents, debit cards and the majority of Apple’s financial services. It can store ID cards and driver’s licenses, public transport tickets and boarding passes, debit and credit cards, event tickets and coupons, or even house and car keys.
Apple Wallet acts as the central hub for credit cards, BNPL loans, money transfers and mobile payments. The application stores the Apple Cash virtual debit card, and allows for the full management of the Apple Card. It also acts as a home base for Apple Pay, which cannot be used without the digital wallet.
Apple Tap to Pay
Apple’s Tap to Pay service was introduced in 2022, allowing merchants to accept payments from customers via their iPhones; be it a contactless payment via Apple Pay or a debit or credit card. This essentially allows iPhones to act as payment terminals. The service is available on all devices in the
US starting with the iPhone XS.
Apple Future Financial Products and Services
In October 2022, Apple’s traditional account, Apple Savings, was unveiled
(still not active), and traditional financial companies should worry. Especially as the account is likely to come with highly favourable interest rates. Although the exact rate is not known, some reports suggest an interest rate of around 3-3.5%. This is particularly attractive when you consider that the average annual interest rate on savings accounts in the US was 0.23% in February 2022.
Apple Pay Later
Apple Pay Later is reportedly coming soon, but will initially only be available in the US. Importantly, it is only available for debit card payments, not credit cards. Customers can choose to pay in full or in instalments for each purchase. If they choose the latter, Apple will run a quick credit check and authorise access in light of the result.
The first instalment must be paid immediately, while the remaining three will be paid every two weeks over the next six weeks. Essentially, Apple is providing short-term credit. The best part is that no interest or late payment fees are charged for the service.
SO…IS APPLE A FINTECH OR NOT?
Author: BRAM VREUGDENHIL @PaymentGenes