With Apple Pay Later, users can pay in four installments.
Jakub Porzycki | Nurphoto | Getty Images
Amsterdam- Apple Moving to the crowded “buy now, pay later” space has increased the stakes of the fintech companies that pioneered the trend.
iPhone maker Announced plan Launching its own “deferred payment” loan on Monday, it will already expand its range of financial services products, including mobile payments and credit cards. The service, called Apple Pay Later, allows users to pay monthly in four installments, interest-free.
It’s a BNPL player PayPal, Affirm And Klarna are in a messy place. There is concern that Apple, a $ 2 trillion company and the world’s second-largest smartphone maker, could pull clients away from such services. In this week’s news, Affirm’s share price has fallen 17% so far.
The BNPL market was already showing signs of problems. Last month, Klarna 10% layoff Condemning the fear of war and recession in Ukraine, of its global workforce.
Triple Warmy Rising inflation, Higher interest rates When Slow economic growth It casts doubt on the future of the industry.For rising borrowing costs Already made debt more expensive For some BNPL companies.
Charles McManus, CEO of British fintech company ClearBank, told CNBC at the Money 20/20 Europe fintech conference in Amsterdam:
“When interest rates start to rise and inflation begins to rise, all chickens will return to the roost.”
McManus said the sector should be regulated as it is pushing people into debt that they can’t afford to repay. The UK is trying to promote BNPL regulation, but US regulatory agencies have begun investigating this sector.
“Are you paying for gas, or are you paying for armchairs you bought three years ago with interest-free credit?” McManus warned, “The excess will always come back.”
Apple said it will handle Apple PayLater loans and credit checks Through an internal subsidiary, Removed Goldman Sachs, who previously worked with the company on credit cards, from the equation. This move is an important step in giving financial services a far greater role than Apple is currently playing.
Sebastian Siemiatkowski, CEO of Klarna, said the launch of Apple Pay Later is “a big win for consumers around the world.”
“Plagiarism is also the best form of flattery,” he tweeted earlier this week.
Ken Serdons, chief commercial officer of Dutch payment startup Mollie, said Apple’s BNPL capabilities “raise the bar” for FinTech, which is active in the market. Mollie offers installment loans through a partnership with fintech company in3.
“The BNPL space is still crowded with many new players entering the market,” he said.
“It will be difficult for players with substandard suggestions to effectively compete with the best players out there.”
However, James Allum, senior vice president of Europe for payment firm Payoneer, said the market has plenty of room for companies to compete.
“Companies need to look at collaboration opportunities, not competition or threats,” he said.