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Monday, May 29, 2023

Apple’s new Pay Later Policy: A New Challenge for Fintech Firms

Apple Inc. has announced its new service, Apple Pay Later, in the US market, which could pose a threat to the fintech sector led by companies like Affirm Holdings and Swedish payments firm Klarna.

The service, Apple Pay Later, will enable users to divide their purchases into four installments over six weeks without any interest or fees, the company said.

It will initially be available to some users, with plans to expand it in the coming months. Users can get loans between $50 and $1,000 for online and in-app purchases made on iPhones and iPads with merchants that accept Apple Pay, according to the company. More than 85 percent of US retailers accept Apple Pay, the company said. “Apple Pay Later will definitely shake up some of the other players.

Other companies would’ve taken notice of Apple’s announcement today because they are a ubiquitous name. This will take a chunk out of the market share of other players,” said Danni Hewson, head of financial analysis at AJ Bell.


Affirm’s shares dropped more than 7 percent, while PayPal closed about 1 percent lower. In 2020, pandemic-related lockdowns turned shoppers to online payment platforms, boosting demand for fintech companies offering BNPL services, especially to millennials and Gen Z customers.

Digital payments giants including PayPal and Block Inc. have entered into the sector through acquisitions, while Affirm went public in a multi-billion dollar listing. The sector’s fortunes have since changed as rising interest rates and red-hot inflation reduced purchasing power and forced consumers to tighten their budgets.

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