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Apple is shifting its focus in fintech, moving away from balance sheet-based financial products and concentrating on strengthening its iOS ecosystem and proprietary products. This shift is expected to benefit third-party wallets, BNPL providers, and merchants, according to a report by the Boston Consulting Group (BCG).
The report, released in September, analyzes Apple’s recent fintech announcements and their implications for different markets and players. Specifically, it highlights the discontinuation of Apple Pay Later, the end of its partnership with Goldman Sachs, and the opening of its NFC chip and secure element APIs to developers in select regions.
These changes are part of Apple’s strategy to avoid direct involvement in financial products with significant risk and strengthen its ecosystem.
Apple Pay Later, Apple’s BNPL service, was discontinued in June 2024. Instead, Apple has partnered with financial institutions to offer installment payment options via Apple Wallet. This marks Apple’s retreat from offering financial services in-house, likely due to the challenges of overseeing balance sheet-based products.
BCG predicts that BNPL players will benefit significantly from this change, as integration into Apple Wallet will provide them with access to a massive customer base. For example, Affirm’s merchant acceptance is expected to grow significantly.
Another major announcement this year was the opening of Apple’s NFC chip in the European Union and seven other countries. This move will allow developers in these markets access to key elements of Apple Wallet’s infrastructure, fostering greater collaboration with third-party financial providers and increasing competition in the digital wallet landscape.
Leading paytech and e-commerce companies like PayPal, Cash App, and Shopify are expected to benefit from the newly democratized NFC landscape. PayPal and Cash App will have the opportunity to expand their reach in offline transactions.
BCG also expects many merchants to add NFC payment functionality to their proprietary apps and partner with lenders to offer BNPL options within their wallets, enhancing consumer loyalty through in-app rewards and personalized offers.
While most large merchants have enabled contactless payments in their stores, they have hesitated to integrate payments with their standalone apps due to the need to invest in new acceptance infrastructure. However, the ability to drive consumer loyalty through in-app rewards and personalized offers will push many retailers to launch digital wallets and integrate NFC payment functionality.
Besides benefiting third-party wallets, BNPL players, and merchants, BCG expects Apple’s recent moves to benefit payment networks like Visa and Mastercard. This new landscape will strengthen their presence in card payments and position them to dominate POS installment payments over time.
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