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Why Apple wants you to ‘buy now, pay later’

Hello and welcome to Protocol | Fintech! This Friday: Apple Pay … later, Mastercard's India ban, and Revolut's mega-deal with Tiger and SoftBank.
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After the iPhone, services is Apple's next-largest business, accounting for almost a fifth of revenue in its most recent quarter. It's a catch-all category, including everything from iCloud storage to Apple TV+ subscriptions, but at $16.9 billion a quarter, it's tough to find businesses that can move the needle.
Payments are the logical next frontier. Apple makes a small fee from Apple Pay purchases — a transaction security fee it charges banks, not merchants or consumers. It's more or less free money, since the payment technology is already developed and baked into hundreds of millions of iPhones. But it's hard to generate a lot from such a tiny cut.
Apple's got the tech. It needs more fin. Apple is planning to launch a "buy now, pay later" product with Goldman Sachs, according to Bloomberg, moving into the newest and hottest area of consumer finance.
The "buy now, pay later" competition is heating up. Apple and Goldman will be entering a crowded market, with Affirm, Klarna, PayPal and others offering their own versions.
Stores are the next battlefield for "buy now, pay later." Ecommerce is where most of the payment-plan action is happening today, but it's coming to retail. That's where Apple Pay's reach could really give Apple an edge.
Of course, banks are figuring out how to make money on "buy now, pay later." Goldman wants to boost its consumer business, giving it a natural incentive to enter this market. Other banks see an opening, too.
Goldman and Apple's rollout of the Apple Card was far from seamless, but both companies are becoming more experienced in consumer credit. A lot depends on getting the details right. And if they don't? Well, they'll pay later.
— Tomio Geron
Let's take Europe's online retail sector as an example. Checkout.com recently surveyed over 550 senior executives at top ecommerce retail organizations and found that 59% aren't getting a transparent breakdown of the costs of payments. A further 67% are not receiving any fraud or chargeback analysis.
Robinhood's retail trading business is much more lucrative than its competitors'. We dive into the data that shows how Robinhood makes so much more per customer.
Square is diversifying. The goal of a new bitcoin-focused unit, which will be separate from Square's existing crypto efforts, is to build developer tools for crypto. Meanwhile, Square also bought Crew, a workforce messaging app startup.
What fintech trend are you most excited about?
Financial literacy, especially to teens and below 15 years old. Understanding money management, budgeting, investing, debt, etc. are all life skills that need to be taught earlier in life.
What's been your biggest professional blunder and how did it help you?
Leaving Facebook and starting a startup without a clear problem that we wanted to solve back in 2011. Experienced founders always say, "Never start a company to start a company." You should start a company that solves a big problem that either no one is solving already or is not doing a good job at it. When I started my first company, we wanted to be in the tech scene and starting a company is one of the hardest things to do. Eventually, we worked hard and got lucky a few times to make that company successful but it was one of the most stressful times in my life.
What fintech company — besides your own — have you been most impressed with this past year?
Definitely crypto and all the various DeFi plays. I'm always very impressed with the various ideas that are born in this space from interest-free loans to loans that self-repay over time. I'm excited to see what else comes from this space. Extra bonus points would be to bridge some of these ideas/solutions in the fiat world — that would be game-changing.
What fintech sector or company (besides your own) is most underrated right now?
Fraud/AML is very underrated in my opinion — especially since there is more fraud than ever now.
Let's take Europe's online retail sector as an example. Checkout.com recently surveyed over 550 senior executives at top ecommerce retail organizations and found that 59% aren't getting a transparent breakdown of the costs of payments. A further 67% are not receiving any fraud or chargeback analysis.
That's the amount of bitcoin seized by London's police in an international money-laundering investigation.
Thanks for reading — see you Tuesday!
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