How Apple is winning the financial services game
Add Axios as your preferred source to
see more of our stories on Google.
/2024/06/19/1718816367811.gif?w=3840)
Illustration: Aïda Amer/Axios
The iPhone has become a platform for thousands of financial services companies, including buy now, pay later providers. The one guaranteed winner is Apple, which has ensured it takes no risk itself.
Why it matters: An iPhone doesn't just act as a metaphorical wallet, it's also the store where the money is spent. That means Apple can just collect fees on every transaction, rather than finance them.
Driving the news: Apple has dropped its in-house buy now, pay later (BNPL) product in favor of partnering with specialist providers like Affirm.
- It's also building in the ability to redeem rewards from credit card partners.
Between the lines: Apple Pay has become the most popular digital wallet for consumers paying in stores, with fully five times the market share of Google Pay.
- In most of those transactions, the card is not an Apple Card but one from one of Apple's thousands of global bank partners. Even when it is an Apple Card, that card is issued by Goldman Sachs.
By the numbers: Apple reportedly receives a 0.15% fee on every Apple Pay credit card transaction, no matter the card issuer, and is opposing attempts to bring that fee down.
- The amount it's charging BNPL companies and rewards points providers has not been made public but is probably significantly higher.
Zoom out: Apple is a global company that has little if any desire to become a financial services provider in dozens of different jurisdictions.
- Its short-lived in-house BNPL product served as an effective proof-of-concept, showing how easily such deals could be transacted within Apple's iOS operating system.
- Apple is now opening up that capability to BNPL providers around the world and will be collecting fees from all of them.
The bottom line: Lending money to consumers is risky — ask Apple's partner Goldman Sachs, which has lost a 10-figure sum on the Apple Card.
- Charging fees to financial-services providers, on the other hand, carries almost no downside risk at all.
