Apple Readies BNPL Launch | Fintech Schweiz Digital Finance News – FintechNewsCH

Apple is running an internal test of its buy now, pay later (BNPL) product, preparing for the public release of the new service in the US. The feature, which was announced at the Worldwide Developers Conference 2022, is currently being tested by Apple employees and will “launch soon,” Apple CEO Tim Cook told CNBC in an interview.

Announced in June 2022, Apple Pay Later is a new BNPL product that aims to let users split the cost of a purchase made with Apple Pay into four equal installments over six weeks without charging any fees or interest. The service is meant to be integrated with the mobile payment service as well as Apple Wallet, allowing users to track what they owe and when they owe it.

A new report from Bloomberg’s Apple and consumer technology reporter Mark Gurman revealed that the company could launch Apple Pay Later in the coming week after releasing the test to thousands of retail employees earlier this month.

Details of the scheme’s mechanism and criteria were shared with the reporter, revealing that the service evaluated borrowers based on their spending history, which Apple devices they own, and whether they had applied for an Apple Card credit card or other cards linked to theirs. Apple Pay accounts. The evaluation determined whether the company was willing to lend money to the applicant and how large the amount would be. Many testers said they saw loan approvals for $1,000 and under.

An Apple Pay Later loan offer will expire after 30 days, the report says, and applications will sometimes require a copy of a government identification card, full social security number and two-step verification on an Apple account.

Apple Pay Later mockup, Source: Apple.com

Apple Pay Later was originally scheduled to be released in the fall of 2022 as part of the company’s new operating system, iOS 16. However, the service did not debut until the September 2022 release.

“This leads me to believe that the company isn’t quite sure when Apple Pay Later will be ready for launch. It’s possible the feature won’t arrive until iOS 16.4 in the spring,” Bloomberg’s Gurman wrote in his Power On newsletter. “I’m hearing that there have been quite significant engineering and technical challenges in rolling out the service, which led to the delays.”

Apple’s upcoming BNPL scheme is part of a wider push into financial services that the technology giant perceives as a major growth opportunity. The firm is focusing on new services to maintain growth and expand beyond consumer electronics and software.

Apple’s product sales for the end of the quarter were down more than 7% compared to the same period in 2021, according to the company’s financial results for the first quarter of 2023. However, net sales of services grew by more than 6%, reaching a record revenue of 20, 8 billion USD.

BNPL has been one of the fastest growing fintech segments in recent years. According to Worldpay, BNPL accounted for 3.8% of North American e-commerce transaction value in 2021, more than double the share of the previous year (1.6%). By 2025, BNPL is projected to more than double again to 8.5% of the regional e-commerce transaction value in the region.

Apple’s fintech move

Apple Pay Later will mark the first time the company uses its own payment platform and carries out lending itself. Last year, it established a wholly owned subsidiary called Apple Financial which is meant to handle applications, lending and credit approvals from Apple Pay Later.

A Bloomberg report also revealed in June 2022 the secret “Breakout” initiative launched by the company. The plan reportedly seeks to bring more financial services functions including payment processing, risk and fraud analysis, credit checks, subscription programs for hardware purchases and BNPL in-house, further hinting at a desire by Apple to reduce its reliance on third parties. parties and bank partners.

Apple entered the financial sector in 2014 with the launch of its Apple Pay mobile payment service. This was followed in 2017 by the introduction of Apple Cash, a solution that allows users in the US to send and receive money, hold an Apple Cash balance and easily transfer money back to a bank account.

In 2019, it launched the Apple Card, a credit card created by Apple and issued by Goldman Sachs. The card is primarily designed to be used with Apple Pay on Apple devices such as iPhone, iPad, Apple Watch or Mac. It is currently only available in the US and had 6.7 million US cardholders in early 2022.

Besides the upcoming Apple Pay Later, other consumer fintech products are reportedly in the works, including the Apple Savings account, a “high-yield” interest-bearing savings account that will be managed by Goldman Sachs.

Apple, which has operated in the financial market for less than a decade, has nevertheless managed to gain a remarkable foothold in a relatively short time.

According to a 2023 report by Dutch consulting and M&A advisory firm Flagship Advisory Partners, Apple controlled an estimated US$800 billion in payments in 2022.

Around 3% of all Visa and Mastercard consumer card value and 10-12% of Visa and Mastercard card transactions in North America and Europe went through Apple Pay last year, the report claims, making the US technology company a significant fintech player globally.

Featured image credit: edited from Freepik