Apple’s foray into the BNPL sector is another step towards becoming a bank in 2023

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Apple has been steadily expanding its financial services offerings. Its foray into the financial services segment is part of a broader strategy to increase revenue and diversify its business beyond hardware sales. Through a combination of partnerships and in-house development, Apple is positioning itself as a provider of a wide range of financial services, from credit cards to digital wallets to investment platforms.

By entering the financial services industry, Apple is able to capitalize on the growing trend towards digital payments and mobile banking, as well as providing a seamless and integrated experience for its users. One of Apple's flagship financial products is the Apple Card, a credit card designed specifically for use with Apple Pay. Launched in 2019 in partnership with Goldman Sachs, the card is deeply integrated with the Apple ecosystem, allowing users to manage their account through the Wallet app and receive detailed spending analysis.

Beyond the Apple Card, Apple has also launched a number of other financial services, including Apple Pay. Since its launch, Apple Pay has become an increasingly important part of Apple's ecosystem, offering a convenient and secure way for users to make payments using their Apple devices. Consequently, Apple has been expanding the capabilities of Apple Pay, integrating a range of services to create a more comprehensive financial services platform. One of the most recent additions to the Apple Pay ecosystem has been the integration of a buy now pay later (BNPL) service.

• In March 2023, Apple announced the launch of Apple Pay Later, the BNPL service, for a select few users in the United States. The feature will enable users to split their purchases into four equal payments, spread over six weeks at zero interest.
• While Apple is working with Goldman Sachs and Mastercard on the BNPL service, it has also set up a wholly-owned subsidiary, Apple Financing, to offer short-term credit to its users directly. Furthermore, Apple is also conducting credit checks in-house through Credit Kudos, which it acquired in 2022.

One key advantage for Apple in this space is its existing user base. With over 500 million users worldwide, the firm has a massive potential market for its BNPL offering. Furthermore, by leveraging its deep integration with the Apple ecosystem, Apple can provide a more streamlined and cohesive experience for users than many other BNPL providers.

This could be a significant challenge for other BNPL firms, particularly those that rely on partnerships with retailers or online platforms to reach consumers. By offering a fully integrated service that can be used at any merchant that accepts Apple Pay, Apple has the potential to disrupt the industry and capture a significant share of the BNPL market. Furthermore, Apple is a well-known and respected brand with a loyal following. This could give the firm an advantage in terms of marketing and customer acquisition, as consumers may be more likely to trust and adopt a BNPL service from a brand they already know, trust, and use. Other BNPL providers will, therefore, need to innovate and differentiate themselves in order to remain competitive in the face of this new challenge in 2023.

While Apple is seen as a major threat to BNPL providers, the firm’s growing presence in the financial services segment has also made the tech giant a major threat for conventional banking players. In addition to the consumer-facing products like BNPL, Apple has also been expanding its offerings for small businesses. In 2020, the company launched the Apple Card for Business, a credit card designed specifically for small businesses that offers similar benefits to the consumer version.

While it remains to be seen whether Apple will ultimately seek to become a fully-fledged bank, the firm’s expansion into financial services has already had a significant impact on the industry. By offering innovative and user-friendly products, Apple has helped to drive the adoption of digital payments and mobile banking. With its foray into the BNPL segment, which is growing at a rapid pace amid the current macroeconomic environment, PayNXT360 expects Apple to become a major player in the world of finance.

To know more and gain a deeper understanding of the BNPL market in the United States, click here.