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Apple Inc. started its “buy now, pay later” (BNPL) service in the US on Tuesday. This could shake up the fintech industry, which is dominated by companies like Affirm Holdings and the Swedish payments company Klarna.
The company said Apple Pay Later would let people pay for purchases in four instalments over six weeks, with no interest or fees. At first, only some users will be able to use it, but in the coming months, everyone will be able to use it.
The company says that users can get loans from $50 to $1,000 for online and in-app purchases made on iPhones and iPads at stores that accept Apple Pay.
The company said that more than 85% of stores in the U.S. accept Apple Pay.
“Apple Pay Later will beat some of the other players by a long shot. Apple is a well-known company, so other companies would have looked at what they said today. “This will cut into other players’ market share,” said Danni Hewson, head of financial analysis at AJ Bell. Shares of BNPL company Affirm fell by more than 7%, while shares of PayPal fell by about 1%.
In 2020, lockdowns caused by a pandemic will force shoppers to use online payment platforms. This will increase demand for BNPL services from fintech companies, especially among millennials and Gen Z customers.
Digital payments giants like PayPal and Block Inc. have bought their way into the sector, and Affirm has gone public with a multi-billion dollar listing.
Since then, the sector’s luck has changed because rising interest rates and soaring inflation have made people less able to buy things and forced them to cut back on spending.
Christopher Brendler, an analyst at D.A. Davidson, said, “We expect Apple to move slowly, especially in this macro environment.” He was talking about Apple’s decision not to use a partner and instead underwrite funds and collect on the loans itself.
The company said that the Mastercard Installments program made Apple Pay Later possible. Goldman Sachs issued the Mastercard payment credential, the company said.
