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Apple Inc. launched its “buy now, pay later” (BNPL) service in the US on Tuesday. This could shake up the fintech industry, which is dominated by the likes of Affirm Holdings and Swedish payments company Klarna.
The company said Apple Pay Later would allow people to pay for purchases in four installments over six weeks, without interest or fees. At first, only some users will be able to use it, but in the coming months, everyone will be able to use it.
The company says users can get loans of $50 to $1,000 for online and in-app purchases made on iPhones and iPads at stores that accept Apple Pay.
The company said that more than 85% of US stores accept Apple Pay.
“Apple Pay Later will beat some of the other players by a long shot. Apple is a very well known company, so other companies would have looked at what they said today. “This will reduce the market share of other players,” said Danni Hewson, head of financial analysis at AJ Bell. Shares of the company BNPL Affirm fell more than 7%, while shares of PayPal fell around 1%.
In 2020, lockdowns caused by a pandemic will force shoppers to use online payment platforms. This will increase the demand for BNPL services from fintech companies, especially among millennials and Gen Z customers.
Digital payments giants like PayPal and Block Inc. have bought their way into the industry, and Affirm has gone public with a multi-million dollar listing.
Since then, the industry’s fortunes have changed as rising interest rates and skyrocketing inflation have made people less able to buy things and forced them to cut back on spending.
Christopher Brendler, an analyst at DA Davidson, said: “We expect Apple to move slowly, especially in this macro environment.” He was talking about Apple’s decision not to use a partner and instead underwrite funds and collect the loans.
The company said Mastercard’s fee program made Apple Pay Later possible. Mastercard’s payment credential was issued by Goldman Sachs, the company said.
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