Apple Launches “Buy Now, Pay Later” Service in US

Apple surprised consumers by launching its “Buy now, Pay later” (BNPL) service in the United States. The new service, called Apple Pay Later, allows users to split purchases into four payments spread over six weeks without incurring any interest or fees.

Initially, it will only be available to select users, but a full rollout is planned in the coming months. Users can get loans between $50 and $1,000 for online and in-app purchases made on iPhones and iPads with merchants that accept Apple Pay.

Apple Pay Later is a disruptor in the BNPL sector as it will undoubtedly take a bite out of the market share of other players, according to Danni Hewson, Head of Financial Analysis at AJ Bell. She added that consumers are looking for the easiest way to get what they want as inflation has stretched their wallets. This is particularly important given that pandemic-related lockdowns have turned shoppers to online payment platforms, bolstering demand for fintech companies offering BNPL services, especially to millennials and Gen Z customers.

Although BNPL firms have expanded into the sector through acquisitions, and Affirm went public in a multi-billion dollar listing, the sector’s fortunes have since turned amid rising interest rates and inflation, which have dampened purchasing power and forced consumers to tighten their purse strings. The launch of Apple Pay Later will undoubtedly affect some of the other players in the BNPL sector.

Apple Pay is already accepted by over 85% of U.S. retailers, making it an ideal platform for the launch of Apple Pay Later. This announcement caused a drop in shares of BNPL firm Affirm Holdings Inc, which fell more than 7%, while PayPal was down about 1.5% in midday trading. Apple Pay Later is enabled through the Mastercard Installments program, and Goldman Sachs is the issuer of the Mastercard payment credential.

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