Apple has increased its reach into the ecommerce fintech space with the launch of its own buy now, pay later (BNPL) service on its Apple Pay payment platform.
Apple Pay Later will be rolled out in the next version of iOS later this summer in the US and likely by Christmas in the UK and will allow Apple Pay users to split an Apple Pay payment into four equal payments over six weeks without interest or late fees. The user manages their payments through the Apple Pay wallet app.
The move sees Apple join the ranks of Klarna, PayPal, Clearpay and Zilch in offering these deferred payments – a sector that is growing rapidly worldwide as consumer embrace ecommerce for larger purchases.
Leading US bank Goldman Sachs will provide the lending for the service, which joins Apple’s other fintech products including its Apple Card credit card and Apple Cash digital prepaid card. The tech company has also announced plans to roll out Tap to Pay on iPhone, which lets merchants accept Apple Pay payments on their iPhones without any additional hardware.
Data from analysts Insider Intelligence, suggests that in the US alone there are set to be 79 million BNPL users in 2022, up from 50.6 million last year and that BNPL is set to account for 37% of online purchases this year, rising to 40% in 2023.
Commenting on the launch, David Morris, principal analyst at Insider Intelligence says: “With Apple Pay Later, Apple takes a huge step forward in realising its consumer financial services ambitions. The product—which allows users to split Apple Pay purchases into four interest-free payments or longer-term instalments—will help drive Apple Pay adoption and engagement. This will further pressure BNPL fintechs, which are already facing regulatory, competitive, and investor tailwinds. Apple Pay Later joins the just-launched Tap to Pay on iPhone, which lets merchants accept Apple Pay payments on their iPhones without any additional hardware, and its Apple Card credit card and Apple Cash digital prepaid card, strengthening the overall appeal of these offerings.”
However, data from the Citizens Advice Bureau in the UK suggests that two in five BNPL users are now having to take out loans to cover their repayments, often turning to credit cards and overdrafts to pay of BNPL expenditure. Younger shoppers were the most likely to borrow to pay off BNPL purchases. The charity found that 51% of 18- to 34-year-olds borrowed money to pay off BNPL debts.