A new white paper from Boston Consulting Group outlines the significant strides Apple has made in the payments industry, including its decision to discontinue Apple Pay Later and focus on new instalment payments in Apple Wallet.
The paper, Apple in Payments – Winning by Influencing, also explores Apple’s collaboration with major banks and buy-now-pay-later (BNPL) players, such as Synchrony and Citi.
And its response to regulatory pressures to open its NFC and secure element APIs to third-party developers in select countries following regulatory pressures, such as the EU’s Digital Markets Act..
These moves solidify Apple’s role in modern payments by leveraging its strong iOS ecosystem to drive future adoption and maintain its competitive edge.
The companies recent moves in the payments landscape are shifting dynamics across the industry.
The report further discusses how these changes will impact various markets and players, particularly in regions with high iPhone penetration, such as the US, UK, Australia, and Canada, where its Wallet dominates.
BNPL providers stand to benefit most from Apple’s broad merchant acceptance, but they will face challenges in maintaining flexible transaction economics.
Key insights:
Opportunities for third-party wallets like PayPal and Cash App in response to Apple’s move to open NFC, but challenges lie in matching Apple’s superior user experience.
Banks’ opportunities may be limited to consortium-based solutions or adding NFC payments to their mobile apps to drive proprietary card use.
BNPL players like Affirm have found a big win by embedding in Apple Wallet but may face tougher economics in managing transaction flexibility.
Merchants are expected to launch their own digital wallets for better customer engagement and loyalty-building features, with some already investing in NFC functionality.
These strategic changes reflect Apple’s focus on enhancing its iOS ecosystem, leveraging partnerships, and further embedding its influence in payments.
Opening NFC capabilities offers new opportunities for third-party digital wallets, but they face the challenge of competing against its strong user experience.
Apple’s ecosystem offers features such as seamless integration for loyalty rewards, personalised offers, and pay-by-points, which set a high bar for new entrants.
BNPL
The introduction of instalment payment options also creates opportunities for Buy-Now-Pay-Later (BNPL) players like Affirm, positioning them to benefit from greater merchant acceptance.
This change marks a foundational shift, giving BNPL providers the potential for ubiquitous acceptance but with reduced flexibility in managing transaction economics.
However, it also raises challenges around scaling consumer credit and merchant pricing control for players like PayPal and other third-party wallets.
As Apple aims to bring more functionality to its Wallet, banks and BNPL providers have opportunities to tap into Apple’s expanded payment infrastructure.
With third-party digital wallets, banks could explore consortium-based solutions or integrate NFC-based payments into their mobile apps.
Merchants, on the other hand, will likely build NFC functionality into their proprietary apps, focusing on consumer loyalty and personalised experiences.
Payment networks, including Visa and Mastercard, remain well-positioned amid Apple’s NFC changes.
The introduction of instalments through Apple Wallet strengthens their positions, particularly in mature card markets such as the US, UK, and Australia.
Increasing Competition
Despite increasing competition, Apple’s recent moves may ultimately entrench the dominance of traditional card networks over time.
Apple’s strategic decisions in the payments space, particularly around NFC, instalment payments, and partnerships, suggest that its primary goal remains strengthening the iOS ecosystem.
As the competitive landscape evolves, third-party wallets and merchants must offer compelling value propositions to match Apple Wallet’s dominance in key markets like the US, UK, and Australia.
The full implications of these changes will continue to unfold, but Apple is clearly positioning itself as a central player in the future of payments.
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