Evercore: With Pay Later, Apple gets stickier

From a note to clients by Amit Daryanani that landed on my desktop Wednesday:

ALL YOU NEED TO KNOW:.. We think the Apple Pay Later system will help drive Apple Pay adoption, meaning additional revenues for AAPL (the company receives a percentage of transactions made through Apple Pay), and importantly making the ecosystem more sticky for iOS users.

Worth noting, the new service is not expected to be tied to the Apple Card, enabling users to choose a different method of payment. We think the service will have several options, including 1) users will pay four interest-free payments, one every two weeks, or 2) users can make payments across several months with interest. However, the service is still under development, meaning plans could be changed or cancelled.

Net/net: We view the potential for an Apple Pay Later service as a positive for both driving adoption and growth within Apple Pay and the company’s larger services ecosystem.

Maintains Outperform rating and $175 target.

My take: I’m not sure Apple needs to be any stickier than it is. I can count on one hand the people I know who have abandoned the ecosystem.

9 Comments

  1. Fred Stein said:
    I think the goal is younger people, who currently default to venmo (In my limited random sampling).

    Venmo is kinda ‘spammy’. That may be how Venmo got to be so popular amongst younger people who are less worried about security and privacy.

    As people grow up and have more money, they’ll value Apple’s privacy and security.

    4
    July 14, 2021
  2. Dan Scropos said:
    Gregg Thurman has said this for awhile, and I think he’s mostly correct. However, rather than buying MasterCard, Apple will eventually compete in that segment on its own. Apple Bank, Apple Credit or Apple Card will become its own entity.

    3
    July 14, 2021
    • Gregg Thurman said:
      Dan, my thinking on MasterCard is simple. Apple is using MasterCards’ network as Apple Card’s facilitator. Buying MasterCard eliminates that expense and gives Apple immediate access to MasterCards’ user base and the revenue that comes with it. Provide that user base with the same Apple Card benefits when buying Apple products could cause an uptick in Apple revenue beyond finance.

      0
      July 15, 2021
  3. Mark Visnic said:
    “My take: I’m not sure Apple needs to be any stickier than it is. I can count on one hand the people I know who have abandoned the ecosystem.”

    Good point. I can count on zero hands.

    2
    July 14, 2021
  4. Jerry Doyle said:
    I am missing understanding fully the Apple Pay Later program vs. the current “interest-free” Apple installment program. The Apple card has an “installment” program. To participate, the individual must possess a certain credit score to qualify for the Apple card. Participating in the current Apple card program earns three points per dollar spent for all Apple products & services. I assume that in the Apple Pay Later installment program that the individual need not meet the credit score standards criteria for obtaining an Apple card. I also assume that the Apple Pay Later program is targeted to Apple products & services, only. Apple Pay Later could not be an installment program for routine credit purchases since that is inconsistent with an installment program. Does anyone wish to elucidate further if I am wrong?

    0
    July 14, 2021
  5. Dan Scropos said:
    Apple just released the MagSafe Battery Pack — a $99 accessory that snaps to the back of an iPhone 12 to extend its battery life. It joins the leagues of MagSafe accessories that have been available since last fall. And it’s up for order right now, with shipments starting next week.

    It’s purpose-built for the iPhone 12 Mini, 12, 12 Pro and 12 Pro Max. The MagSafe Battery Pack is only available in white and sticks with a silicone design that adds a hump to the back of the iPhone. From photos of the accessory, we can see that it features a 1,460mAh battery— it remains to be seen what that translates to with daily use of the product. For instance, the iPhone 12’s battery capacity is 2,815mAh, so this will provide about 50% of power to it.

    1
    July 15, 2021
    • Gregg Thurman said:
      For instance, the iPhone 12’s battery capacity is 2,815mAh, so this will provide about 50% of power to it.

      That’s way more than all day usage. I’ll be upgrading my 10S Max this October, and will definitely get one of these for no other reason than to be prepared. My 10S rarely uses more than 50% charge in a single day.

      0
      July 15, 2021
      • Gregg Thurman said:
        Knowing how Apple thinks out of the box, I’ll wager that when attached your iPhone drains the battery pack FIRST, then switches to the iPhone’s battery when the pack is drained. You can then recharge the battery pack while continuing to use your iPhone.

        We’re now talking about continuous use extending into days, not hours.

        1
        July 15, 2021
  6. Only folks I’ve seen go from iPhone to Android are teens who break their phones and have to activate the old Android in the drawer until they can afford another. Oh the howling you’ll hear about them being stuck in green message hell. They work harder than ever to get at least an older iPhone.

    1
    July 15, 2021

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