It’s no secret that Apple has big ambitions in the payments market. From its first foray into the market with Apple Pay to more recent ventures such as Apple Card. The financial market is lucrative but for the most part, innovation has tended to be slow. Apple wants to continue to pull on that thread by building more of its own financial services. As it currently stands, Apple partners with other firms such as Goldman Sachs to aid it in delivering financial services.
According to a report from Bloomberg, Apple’s plans to bring financial services in house are extensive. The company is said to be building and designing its own credit scoring algorithm, fraud detection systems, lending products, disputes and transaction approval process and much more. This is likely to be a multi-year project and is not anticipated to launch as part of a meaningful new product in the near future.
Electronics demand slowing
In a report from Nikkei, the chairman of one of Apple’s production partners TSMC has stated that global demand for consumer electronics is stalling. This is thought to be in part due to external geopolitical factors such as the Ukraine war, rising global energy costs and increasing costs in the supply chain. Customers who are more price-sensitive are less likely to purchase consumer electronics during difficult economic times.
Most tech companies are forced to pass on these types of costs to their customers. Apple tends to absorb costs in the shorter term thanks to comfortable profit margins. It isn’t often that Apple raises prices during a products release cycle. If anything costs tend to go up with successive product generations rather than apply increases to an existing product generation. It’ll therefore be a while until we know if Apple has been impacted by increased costs. Rising prices of new iPhone and iPad models later this year will give us the answer.
New App Store rules
Apple has made a significant concession in its App Store rules. Apps that are considered to be ‘reader apps’, will now be able to provide a prominent link to an external website that allows users to purchase content directly from the developer. Examples of such apps include magazine subscription services, books, video streaming, music and newspapers. This will enable developers of these types of apps and services to charge consumers directly and in theory, should lead to lower prices for these services. Users that choose to make their purchase via external links enable the developer to avoid paying Apple a commission of 15-30%. Hence the lower pricing.
It’s worth noting that users who choose to subscribe or make purchases directly via the developer, will not be able to get help from Apple with billing or payments. Instead, their billing and payment information will be handled directly by the developer. For users who aren’t comfortable with that arrangement, they can instead opt to use Apple’s existing in-app purchase system. Developers can begin applying to use this new entitlement today.