Book a trip, order groceries, pay your bills, shop online or in‑store. Use Zip pretty much everywhere Visa is accepted.
Apple Pay Later: How Apple will make money from 0% interest
While no interest or fees are charged, a report today says that Apple will still make money from the service.How Apple makes money
With 0% interest and zero fees, it might seem that Apple won’t make any money from the financing scheme, but business school associate professor Rajat Roy says that this isn’t the case, as he explains in The Conversation.
Apple is trying to consolidate its foothold in the world of consumer finance, and increase its profitability […]
As Apple’s customers increasingly start to use the Pay Later service, it will gain from merchant fees. These are fees which retailers pay Apple in exchange for being able to offer customers Apple Pay.
While the fees are relatively small, they exceed the financing cost of offering credit for such a short period. Roy says that Apple and its financing partner Goldman Sachs will also gain valuable spending data.
Affirm ‘not worried’
Popular “pay later” credit provider Affirm’s CEO Max Levchin claimed on Bloomberg TV that he’s “not worried” by Apple’s announcement, even though the company’s stock dropped 5.5% on the announcement. Indeed, Business Times notes that he argues the company may even benefit.
“I don’t think there’s much concern,” Levchin said Tuesday (Jun 7) in an interview on Bloomberg Television. “There’s a lot of room for growth for all involved.” Buy now, pay later is used for fewer than 5 per cent of US transactions, he said.
Affirm offers lending plans from 6 weeks to 60 months, compared with Apple’s plan to split up Apple Pay purchases over 4 payments across 6 weeks, Levchin said. The Apple service “creates a really nice tailwind for us” by informin
“I don’t think there’s much concern,” Levchin said Tuesday (Jun 7) in an interview on Bloomberg Television. “There’s a lot of room for growth for all involved.” Buy now, pay later is used for fewer than 5 per cent of US transactions, he said.
Affirm offers lending plans from 6 weeks to 60 months, compared with Apple’s plan to split up Apple Pay purchases over 4 payments across 6 weeks, Levchin said. The Apple service “creates a really nice tailwind for us” by informing more people about buy now, pay later services, he said.
9to5mac.com/2022/06/08/apple-pay-later-caution/
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So Apple are cashed up and will make tiny amounts on merchant fees wherever Applepay is available (90% of US retailers). I think whoever benefits most from these tiny merchant fees will not want Apple cutting into their profits and if they can acquire Zip for under $1B with a cheeky offer, Zip will be in play sometime soon.
For the same reasons Apple want to get in on this, another big dog with huge cash hoards will want in on this and can get in on Zip's network and quality US customers. Even a large company who is not already involved in these merchant fees but has a large cash hoard like Apple has may want to get in on this and take out Zip.
Apple are doing this soley for that small merchant cut so why can't we expect someone else with heaps of cash to just buy Zip and also get in this? It's a lot easier to just buy Zip than spend years trying to set up BNPL themselves. Zip has the quality customers already and is accepted everywhere Visa is.
If you have the cash already to lend, you will make a killing out of BNPL merchant fees. I see why Apple want in on this. This is why other big players with large amounts of cash should not let them take too much market share too easily and take out Zip and Sezzle and then offer their company's cash hoards to fund BNPL purchases like Apple will do.
Is that the long-term future of BNPL? You will have to have large cash amounts already and not have to borrow funds to lend out? If Zip are making it work now while still having to borrow, imagine if an acquirer with heaps of cash can just buy them and fund themselves like Apple are. Zip has got to be a takeover target now with all this attention on Apple Pay Later and Zip turning CFP this year. The market cap is a tiny $263M lol so much money can be made from someone cashed up to just buy this thing.
Things are looking UP from here
