Apple turns your iPhone into a fintech service with PayPal, Affirm and more
Apple turns your iPhone into a fintech service with PayPal, Affirm and more
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Apple is becoming a fintech company.

The company announced at its developer conference on Monday several new features for the iPhone Wallet app that directly compete with offerings from other fintech companies such as Affirm and PayPal. Most importantly: a “buy now, pay later” service called “Apple Pay Later.” The announcement sent Affirm shares up more than 5% on Monday and another 4% on Tuesday morning.

Apple is also launching a new payment system later this month that will allow you to pay by tapping your iPhone with theirs. It is a direct competitor of Block’s Square. With Wallet in iOS 16, you can track online orders purchased with Apple Pay.

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All of which point to one of the most interesting corners of the Apple ecosystem – the ever-growing suite of financial products in the Wallet app. Many of these features aren’t designed to make money directly for Apple, but they do make Apple Pay more appealing to those who haven’t tried it yet. (Apple only accounts for a small percentage of every Apple Pay transaction, so the more people using it, the better for Apple.) Like most major new iOS features, it ties customers to the Apple ecosystem Another mechanism for binding to the new iPhone when the system is ready.

But Apple’s new Wallet feature also comes at a time of economic uncertainty. Inflation is still frantic. Natural gas prices continue to hit record highs. There are many very real concerns about an impending recession. If these trends continue throughout the year, Apple may struggle to launch a new product designed to get people to buy more.

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Apple’s new buy now pay later rival has struggled in recent months as consumer spending has shifted from goods to services. Other fintech and crypto companies such as Robinhood, PayPal and Coinbase have also struggled this year.

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

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But things have been slow in some areas, like the feature that allowed you to add your driver’s license, which was only available in a few U.S. states last year, and is expected to add some more soon. Even so, you can only use your ID at the TSA checkpoint at the Phoenix Airport. Automakers have also been slow to adopt an iOS feature that lets you store a digital version of your car keys on your phone.

Still, Apple told me yesterday that there is little concern about this slow rollout. The hope is that consumer demand will drive third-party adoption of the technology.

On the fintech side, however, Apple is growing its payments business by adding more features to Apply Pay and Wallet than just paying with an iPhone instead of a credit card. Because of Apple’s size, with more than 1 billion devices in use, more people will be exposed to these products.

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