Apple Inc on Tuesday launched a “buy now, pay later” (BNPL) service in the United States, a move that threatens to disrupt the financial technology sector led by companies like Affirm Holdings and the dominant Swedish payments company Klarna.
The Apple Pay Later service will allow users to split purchases into four payments over six weeks with no interest or fees, the company said. It will be made available to some users initially, with plans for a full rollout in the coming months.
According to the company, users can get a loan of $50 to $1,000 for online and in-app purchases made on iPhones and iPad from merchants that accept Apple Pay.
More than 85% of retailers in the US accept Apple Pay, the company said. Danni Hewson said: “Apple Pay Later will definitely crush some of the other players. Other companies will look at Apple’s announcement today because it’s an all-too-popular name. It will reduce its market share. other players” head of financial analysis at AJ Bell.
In 2020, pandemic-related closures have shifted shoppers to online payment platforms, driving demand for fintech firms offering BNPL services, especially to customers in Generation Y and Gen Z.
Digital payments giants including PayPal and Block Inc have expanded into the field through acquisitions, while Affirm has gone public with a multibillion-dollar valuation. Since then, the sector’s fortunes have reversed as rising interest rates and accelerating inflation have weakened purchasing power and forced consumers to tighten their wallets.
D.A. analyst Christopher Brendler “We expect Apple to be cautious, especially in this macro environment,” Davidson said, referring to its decision not to use partners and directly underwrite, finance, and collect a debt.