Apple’s new service scares the banking industry

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

Apple’s service is reserved for small amounts not exceeding one hundred euros

Apple has decided to intensify its offensive in the world of financial services. The group already launched its Apple Pay service a few years ago. The simplest tier, offered everywhere, turns your iPhone or Apple Watch into a credit card. You store information about Carte Bleue in the Apple Wallet wallet, and then you can pay contactlessly by holding your smartphone to the payment terminal. The second level of service offered in the United States is that Apple has launched its own credit card. The group cooperates with Goldman Sachs. This way, you can benefit from a dematerialized card that is fully managed by Apple. Now he has 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 paying for a purchase, you can say that you do not want to pay immediately. We may then decide to split the payment into 3 or 5 payments over several weeks. This service is usually reserved for small amounts not exceeding one hundred euros.

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Apple comes to this market because there is demand. Young people or households with difficult ends of the month appreciate this option. Then, if Apple is mainly a seller of electronic equipment, the group offers more and more services. It offers music, video, games and financial services. The idea is to promote new uses by easily integrating equipment and services. Apple knows how to make things simple. Then the goal is to help increase customer loyalty. If you have a lot of services related to your iPhone, you are less likely to change providers. The ultimate goal is to earn a steady income. We may charge for the service monthly, while we change the iPhone on average every 18 or 24 months. Finally, these new services will potentially allow the group to increase its margin.

Apple attacks banks and financial startups

This offensive by Apple frightens the entire banking sector. In fact, the group attacks banks and financial startups that attack banks called Fintechs like Klarna. So, the problem for Apple is twofold. Indeed, first the brand with the apple comes to try to steal some of their turnover. While we are used to seeing Gafa as Apple or Amazon, this new profession is not central to them. This is a small extra thing that doesn’t have to be profitable. It is a loss leader who can therefore break prices. Thus, it is likely to reduce everyone’s margin and profit. Moreover, in the current version offered in the United States, Apple’s offer is free and without penalties in case of late payment. The group is tearing the carpet out of the financial system, which makes a lot of money on consumer loans. It should be noted that the banking sector was already afraid of tightening regulation, as this activity developed very quickly and supervision was very low.

David Barr

efind Economic Decryption