Apple Inc launched its “Buy Now, Pay Later” (BNPL) service in the United States on Tuesday, a move to disrupt the fintech sector dominated by firms such as Affirm Holdings and Swedish payments company Klarna. There is danger.
The service, later Apple Pay, will allow customers to split purchases into four payments over six weeks with no interest or fees, the company said. It will initially be offered to select customers with plans for a full rollout in the coming months.
According to the company, consumers can get between $50 and $1,000 in credit for online and in-app purchases made on iPhones and iPads at merchants that accept Apple Pay.
More than 85 percent of U.S. retailers accept Apple Pay, the company said.
“Apple Pay will outright kill some of the other players later on,” said Danny Hewson, head of financial analysis at AJ Bell.
Shares of BNPL firm Affirm fell more than 7%, while PayPal closed around 1% lower.
In 2020, pandemic-related lockdowns drove shoppers to online payment platforms, increasing demand for fintech companies offering BNPL services, especially for millennial and Gen Z consumers.
Digital payments, including PayPal and Block Inc., have expanded into the sector through acquisitions, while Affirm has gone public in a multibillion-dollar listing.
The sector’s fortunes have since changed as rising interest rates and inflation have eroded purchasing power and forced consumers to tighten their purse strings.
“We expect Apple to proceed cautiously, especially in this macro environment,” said Christopher Brandler, an analyst at DA. and refers to his decision to collect.
Apple Pay is later enabled through the MasterCard installment program, the company said, adding that Goldman Sachs was the issuer of the MasterCard payment certificate.
