Apple’s new service scares the banking industry

Apple just announced a new split payment service called “Buy now, pay later.” This service, which allows you to distribute your payments, competes with offerings from banks and highlights the growing position of the American giant in the financial sector.

The Apple service is reserved for small amounts not exceeding one hundred euros.

Apple has decided to step up its offensive in the world of financial services. The group already launched its Apple Pay service a few years ago. The most basic level, offered everywhere, turns your iPhone or Apple Watch into a credit card. You store your Carte Bleue information in your Apple Wallet, and then you can pay contactlessly by holding your smartphone near the payment terminal. The second tier of service offered in the US is that Apple has launched its own credit card. The group cooperates with Goldman Sachs bank. Thus, it is possible to benefit from a dematerialized map fully managed by Apple. Now he just announced a new split payment service called “Buy Now, Pay Later” in English. This is a kind of consumer loan that is very easy to get, so when you pay for a purchase, you can say that you do not want to pay right away. We may then decide to split the payment into 3 or 5 installments over the course of a few weeks. This service, as a rule, is intended for small amounts, not exceeding one hundred euros.

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Apple enters this market because there is demand. This option will be appreciated by young people or households with difficult months. Then, if Apple is primarily a seller of electronic equipment, the group offers more and more services. It offers music, video, games, and financial services. The idea is to first promote new uses through the seamless integration of equipment and services. Apple knows how to keep things simple. The goal then is to help build customer loyalty. If you have a lot of services related to your iPhone, you are unlikely to switch providers. The ultimate goal is to create a regular income. We may charge for the service every month, while we only change iPhones every 18 or 24 months on average. Finally, these new services will potentially allow the group to increase its profits.

Apple attacks banks and financial startups

This offensive by Apple scares the entire banking sector. In fact, the group is attacking banks and financial startups that are attacking banks, the so-called Fintechs, such as Klarna. So the problem for Apple is twofold. Indeed, the apple brand comes first to try and steal some of the turnover from them. Then, as we are used to seeing with Gough, like with Apple or Amazon, this new profession is not central to them. It’s a little extra thing that doesn’t have to be profitable. This is a loss leader, so it can break prices. So, it will probably lower everyone’s margins and profits. What’s more, in its current version offered in the United States, Apple’s offer is free of charge and there are no late payment penalties. The group is tearing the ground out from under the feet of a financial system that makes a lot of money from consumer credit. It should be noted that the banking sector was already afraid of tightening regulation, since this activity developed very quickly and was practically not controlled.

David Barru

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