Apple to offer ‘buy now, pay later’ credit to challenge Klarna and Affirm

Apple is jumping into the ‘buy now, pay later’ market, adding another challenge to fintech companies such as Klarna and Affirm, which are already grappling with pressure from investors, slowing e-commerce growth and rising interest rates.

The iPhone maker announced the move as part of a series of product updates at its annual developer conference on Monday, alongside a new version of its custom desktop processor, M2, and a more ambitious automotive integration that brings Apple’s software to the dashboard and speedometer.

With Apple Pay Later, iPhone and Mac users in the US can pay for their purchases in four installments over six weeks with no interest charges or other fees. The system will work using Mastercard’s network at any location that supports Apple Pay, online and in physical retail stores.

Apple’s entry into the market follows its acquisition of UK-based start-up Credit Kudos earlier this year. However, it also comes as the market’s rapid growth during the coronavirus pandemic’s e-commerce boom begins to wane.

Regulators in Europe and the United States are closely watching companies offering “buy now, pay later” services to ensure that short-term credit is offered responsibly in an era of runaway inflation. There are also concerns about the extent to which consumers understand the debt they are incurring.

Analysts predict that rising defaults and falling non-discretionary spending will hurt profit margins for fintechs such as Affirm and Klarna, while rising interest rates could drive up operating costs of some actors.

Apple said its BNPL system was “designed with the financial health of users in mind”, including a dashboard to monitor payments in its Wallet app. He noted that a customer’s card-issuing bank “may charge a fee” if their debit card account does not have sufficient funds for refunds.

Shares of Affirm fell 5.5% to $23.72 on Monday, extending what is now a 75% decline in the fintech company’s share price since the start of 2022. as more vendors join the bandwagon we’ve started, the price remains huge, and we believe no one can do what our team and technology can do,” an Affirm spokesperson said.

European rival Klarna said last month it would cut hundreds of jobs, around 10% of its workforce, as it shifted its focus from growth to profitability. Some investors fear Klarna’s $46 billion valuation could be reduced as it seeks to raise more funding.

Apple’s refund service will be available to “eligible applicants” in the United States when the next version of the iPhone operating system, iOS 16, is released later this year.

Other iOS features announced at Apple’s annual Worldwide Developers Conference include a redesign of the iPhone’s home screen to allow for greater customization and updates to its texting app, iMessage. , to allow users to edit or delete messages after they have been sent.

Apple has announced a second generation of its own specialty silicon for Mac computers, the M2, which will boost the power and power efficiency of its predecessor and deepen its rivalry with traditional PC chipmakers such as Intel and AMD. The M2 chip, again based on a custom Arm architecture, is designed in-house by Apple and will power a new line of MacBook Air and Pro laptops.

The Silicon Valley-based company has announced plans to “permanently replace passwords” with a biometrics-based system called Passkeys, for logging into apps and websites. The system will also work with apps and devices made by Google and Microsoft as part of an industry alliance designed to combat phishing attacks and password leaks.

Leave a Comment

Your email address will not be published.

Scroll to Top