Rabat – American technology giant Apple’s recent announcement of its Buy Now, Pay Later (BNPL) service has sparked discussion about the company’s potential in providing financial services similar to ones offered by banks.
“Apple is now the new largest bank in the world after entering BNPL (pretty much),” said Eddie Donmez, Director at Amplify Trading. “Apple has 1.8 BILLION active devices worldwide, meaning they have 1.8bn customers for their new bank.”
Through its new BNPL service, Apple’s wholly-owned subsidiary, Apple Financing LCC, is set “to oversee credit checks and make decisions on loans for the service,” according to Bloomberg.
This decision marks the first time Apple is set to handle financial tasks like loans, credit assessments, and risk management, added the American newspaper. The technology giant has previously relied on Goldman Sachs Group Inc for the lending and credit assessment for its Apple Card credit card. Yet this time around, Apple Financing LCC will have a bigger say in such operations.
Still, Apple Financing does not have its own bank charter, meaning that it is not a bank in legal terms.
Knowing that the BNPL service will be first released in the US, the popularity of Apple Cards among midsize credit card users is expected to provide support for the new service.
Last year, Goldman Sachs and Apple’s joint product, Apple Card, ranked the highest in the J.D. Power 2021 U.S. Credit Card Satisfaction Study in comparison with other midsize credit cards.
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However, the global success of the Apple service would depend on people’s trust in e-credit services which varies across regions. People in the MENA region, for instance, remain reluctant to use digital services despite the latest acceleration in local digitization efforts due to the COVID-19 pandemic.
Taking the case of Morocco, a recent Mastercard study showed that only 34% of Moroccans make online transactions with apple pay and similar services being the least common services used by both Moroccan and Middle Eastern consumers.
Additionally, in Europe and the US, Apple Wallet and Apple Card services have faced backlash for distorting competition in the mobile wallets market and encouraging “ugly economics” that would impact customer safety
Currently, Apple might have the largest potential customer base for credit services, yet not all of its clients are willing to trust its services.
