Apple to Join Crowded Buy Now, Pay Later Market with Apple Pay Later
In an economic downturn, buy now, pay later (BNPL) is a popular way for mostly younger consumers to make purchases without having to worry about paying the full amount or any interest or fees on the repayments.
Many banks and fintech offer BNPL and while they don’t charge the consumer interest or fees, they do collect fees from retailers when their BNPL service is used for purchases. This works great for retailers, too, as it leads to bigger basket sizes and fewer abandoned baskets from consumers.
The popularity of BNPL, driven by low barriers to entry and influencers pushing BNPL through social media platforms like TikTok, has led to a volatile and saturated market that while growing, is showing signs of slowing.
Apple Enters the Volatile Market
Apple has made its way into BNPL with Apple Pay Later, during June’s Worldwide Developers Conference.
Apple Pay Later will use the Mastercard network to allow users to spread payments across six weeks without any fees or interest across four equal payments.
Apple’s foray into BNPL comes as several BNPLs are starting to slow down with the saturation of the market.
Despite layoffs, reduced hiring, and startups pivoting, companies like Affirm and Klarna reacted quite positively to another entrant to the industry, despite the obvious threats from Apple, higher interest rates, and slowed economic growth.
That said, Affirm is still growing along with its operating losses, which means despite positivity from the firm’s CEO, it’s hard to ignore the presence of the world’s biggest tech company in a space that was already looking like it was on shaky ground.
Many financial institutions are offering instalment payments in some form and Apple’s offering, though not particularly original, can’t be ignored as Apple already has a huge customer base and Apple Pay, which the BNPL service will be offered through.
This isn’t a nail in the coffin for BNPL by any means, but the arrival of Apple, though downplayed by many, will shake up the space and give a lot of the market leaders a few headaches.