Apple expands fintech ambitions in iOS 16

Apple pays later

Courtesy: Apple Inc.

Apple is transforming itself into a fintech company.

The company announced on Monday several new features for the iPhone’s Wallet app at the developer conference that directly compete with other fintech companies’ products such as to assert Other PayPal. The most important one: a buy now, pay later service called Apple Pay Later. That announcement sent Affirm shares down more than 5% on Monday and fell another 4% on Tuesday morning.

Apple also wants to roll out a new payment system later this month that lets you pay someone by tapping your iPhone against theirs. It is a direct competitor of to block‘s Square. And Wallet in iOS 16 will allow you to track the online orders you purchase through Apple Pay.

All of this points to one of the most interesting corners of the Apple ecosystem: a growing suite of financial products within the Wallet app. Many of these features aren’t designed to make money directly for Apple, but they make Apple Pay more attractive to those who haven’t tried it yet (Apple takes a small percentage of each Apple Pay transaction, so the more people use it, the better it is for Apple. .) Like most of the major new features in iOS, it’s also another mechanism for keeping customers stuck in the Apple ecosystem and switching to a new iPhone when they’re ready.

But the new features of Apple’s wallet are also coming at a time of great economic uncertainty. Inflation is still going crazy. Gas prices continue to hit record highs. And there are a lot of very real fears about an impending recession. It may be a tough time for Apple to launch a new product designed to entice people to buy more stuff if these trends persist throughout the year.

Apple’s new rivals in space buy now, pay later have struggled in recent months as consumer spending has shifted from goods to services. Other fintech and crypto companies such as Robin Hood, PayPal Other Coinbase they fought again this year.

Apple has a long-term vision for Wallet. When the company revealed the latest features on Monday, executives said the ultimate goal is for the digital wallet app to replace everything in your physical wallet.

But things are moving slowly in some areas, like last year’s feature that lets you add your driver’s license, which is only available in a couple of states in the US and with a few more expected soon. Again, you can only use the ID at TSA checkpoints at a Phoenix airport. Car manufacturers have also been slow to adopt the iOS feature which allows you to store a digital version of your car key on your phone.

However, Apple told me yesterday that there is little concern about that slow adoption. The hope is that consumer demand will push third parties to adopt the technology.

On the fintech side, however, Apple is building a foundation to provide a boost to its payment business by layering more features in Apply Pay and Wallet beyond just using your iPhone, instead of your credit card, to pay for things. And due to Apple’s size with over a billion devices in use, many more people are about to be exposed to these products.