Apple has already started its journey towards the “fin-tech” world thanks to Apple Pay Later. This system allows you to make purchases financed in four installments, in a period of six weeks, at 0% interest. Also, who puts the money is Apple. So if Apple doesn’t charge interest, where will the money come from to make the service profitable? In this post we tell you.
Redirect benefits to make the service profitable
Apple Pay Later does not charge interest, but it will not charge you commissions either. In the same way, “traditional” Apple Pay does not charge commissions for making purchases, nor does it charge the establishment where we make the purchase (directly). So if you don’t charge us, who are you getting the money from? The answer lies in the banks and entities that are in charge of the transactions.
Every time we make a payment with our card through the Apple Pay system, we do not have an additional charge. And merchants that accept Apple Pay don’t have to pay commission after the fact. The bank or entity in charge of the transaction is the one who pays the 0.15% commission for each transaction to Apple. In this way, Apple Pay monetizes itself.
And what about Apple Pay Later? Apple advances you the money and you have to pay it back in 4 installments. But the return time is a month and a half, 6 weeks. And in the financial world, this is a very short time, if we compare it with other credit institutions. If with each transaction with Apple Pay Later, Apple earns a 0.15% commission through the financial institution, we add the reduced return time and we add that hundreds of thousands of people already make payments with Apple Pay, we have the formula.
The 9to5Mac portal echoes the statements of Rajat Roy, professor and economist, who explains how Apple has managed to create this “snowball” effect. “As Apple customers increasingly use the Pay Later service, it will benefit from merchant entity fees .”
Far beyond paying in installments
This formula is not the only one, since Apple Pay Later has an underlying intention. “Apple will also gain valuable insight into consumer buying behaviors, allowing the company to predict future user behavior and spending ,” Roy explains in The Conversation.
“Buy now, pay later. I know you now, and you will buy me later.” This sentence can summarize how Apple not only creates that “snowball” effect in terms of revenue in a specific service. Rather, it is focused on the fact that Apple users themselves are encouraged to buy more of the company’s products , and thus increase their income. A loop effect that, on a huge scale, makes Apple position itself as one of the most powerful companies in terms of purchasing power.
His foray into the world of finance makes all the sense in the world. A company with liquid capital from Apple is lucky to be able to lend certain amounts of money in advance, without having to worry about the “holes” that these credits can cause. It is, in short, a long-term strategy and with much more depth than offering more convenience in card payments.