Payments: Apple Pay was launched in partnership with JPMorgan Chase in the United States and supports credit and debit cards from the three major payment networks, including American Express, MasterCard, and Visa. In the United Kingdom, Nationwide, NatWest, Santander, and the Royal Bank of Scotland were the launch partners for the mobile payment system. Owing to the high adoption rate of Apple devices in developed and developing countries and the growing popularity of digital wallets and instant payment features, Apple Pay has increased its footprint to over 76 countries. However, since partners like Green Dot are focused on the US, services such as peer-to-peer payments and Apple Cash are available only in the tech giant’s home soil, limiting its ability to grow. 

Cards: Apple’s desire to reach as many of its customers as possible with a credit product dates back to the late 1990s when Apple held discussions with Capital One about creating a joint card. Apple card, the company’s co-branded credit card that launched in 2019, counted 6.7 million users as of early 2022, according to a Cornerstone Advisors survey of credit card users. According to CNBC, Apple’s proprietary credit card reportedly approves customers with moderate to low credit scores in a bid to appeal to underserved users. The tech giant currently partners with Goldman Sachs to carry out credit checks for its credit card. The approval process is done through the iPhone wallet app by Goldman, with the bank leveraging Provenir’s and TransUnion’s capabilities to confirm a user’s identity and credit bureau records. The Apple Card presently uses CoreCard as its core processor, overseeing the process of sending transaction details to a bank for approval. Credit card issuers like Visa and Mastercard split interchange fees with Apple and issuing bank partner Goldman Sachs. Daily cash rewards from spending on Apple’s credit card are deposited into Apple Cash, a prepaid digital card held in the iPhone’s digital wallet and issued by Green Dot Bank. Apple Card Family, the tech giant’s latest update to its credit card, allows two people to co-own an Apple Card and share and merge their credit lines while building credit together equally. It also enables parents to share their Apple Card with their children while offering optional spending limits and controls to help teach smart and safe financial habits.  

Credit: Apple’s launch of its BNPL offering, dubbed Apple Pay Later, was quick to grab attention, as the tech giant sidestepped its partners to offer lending services via its wholly owned subsidiary, Apple Financing LLC. The business has acquired necessary lending licences across 15 states in the USA to offer the feature and doesn’t plan on shifting that responsibility to a financial service, according to reports from Bloomberg. Apple Pay Later will allow customers to split up the cost of any Apple Pay transaction over four instalments across six weeks. The company funds the loans largely from its own balance sheet, which had about $165B in cash and marketable securities as of the first quarter of 2023, with total debt of $111B. Apple’s credit card partner Goldman Sachs retained a small role, with the bank being the issuer of the Mastercard payment credential used to complete Apple Pay Later purchases. Apple’s longer-term BNPL program, called Apple Pay Monthly Instalments, involves partners including Goldman Sachs and has a higher maximum lending amount, with competitive plans offering different interest rates and payoff deadlines.

Small Medium Businesses: Apple’s Tap to Pay – a system for collecting electronic payments via an iPhone or iPad – marked the bigtech’s entry into the payment processing space. The feature enables merchants to accept Apple Pay, contactless credit and debit cards, and other digital wallets through a simple tap on their iPhone without the need for any additional hardware or payment terminal. When making a payment, the iPhone uses its NFC chip to verify the transaction, and the amount to be paid is displayed on the screen along with a small NFC logo that guides the customer on where to place their iPhone, Apple Watch, or NFC-enabled bank card. According to a 451 Research survey, 42.5% of businesses felt offering shoppers alternative payment methods (APM) like Apple Pay was of high importance to their organisations. Apple’s $100M acquisition of Canadian start-up Mobeewave has been pivotal in the development of a closed-loop payments business as a sequel to Apple Pay. With Stripe, Adyen, Square and Fiserv already accepting Tap-to-Pay, Apple remains poised to capitalise on the growing APM market, fueled by the increasing willingness of both retailers and consumers to adopt digital payment methods. 

Savings: At a time when the American banking industry is plagued by the frequent debacles of financial institutions, Apple introduced a co-branded high-yield savings account in partnership with Goldman Sachs, offering 4.15% annual returns to savers. According to Forbes, the savings account attracted nearly $1B in deposits over its first four days, with over 240,000 accounts having been opened by the end of launch week. The account will be displayed on a dashboard in Apple’s digital wallet, where users can track their balance and interest earned. Apple’s savings account is available only to its credit card users in the USA, which in turn will require an iPhone – thus fulfilling its long-term goal of keeping users within its ecosystem. The savings account, which has no fees or minimum deposits or balance requirements and is FDIC insured, is indicative of the fact that while the traditional banks take a more cautious approach, Apple is moving at warp speeds to broaden its fintech footprint. 

According to Bloomberg, Apple’s in-house innovations are part of a broader “Project Breakout”, whose aim is to break away from its existing fintech partners. But even if future products don’t rely on partnerships, Apple doesn’t plan on dropping their partners from present offerings. Apple is not the only tech company to foray into financial services, with its industry counterparts Meta and Google having also pursued ambitious financial initiatives only to later scale them back. However, Apple remains best placed to decrypt the financial industry puzzle, having already received a head start with Apple Pay.