Tap In

Image source: NEILRAS, Aleks Melnik - Shutterstock

What's going on?

Apple announced plans earlier this week to push into the buy-now-pay-later (BNPL) market.

What does this mean?

There have been mutterings that Apple is about to launch a BNPL product since March, when the company bought out credit check startup Credit Kudos. So cue the “I told you so” brigade: the tech giant has just announced that it’ll be launching Apple Pay Later – a service that’ll allow Apple Pay’s American users to buy things in four interest-free installments over six weeks (tweet this).

It’s arguably an odd time for Apple to enter the BNPL market, whose rapid growth has petered out as inflation has climbed and the ecommerce boom has tailed off. But Apple’s confident it’s made the right decision: the move could encourage more people to use Apple Pay to buy what they need, not to mention allow the company to make more inroads into financial services.

Why should I care?

For markets: Oh great. More competition.
BNPL mainstays Klarna and Affirm need Apple in the market like they need a hole in the head. Klarna is currently in the midst of offsetting its borrowing costs – which just hit a record high on the back of rising interest rates – by cutting 10% of its workforce, while Affirm’s stock has now plummeted 75% this year. And things are only going to get harder: analysts are anticipating that more and more cash-strapped customers will either wind down their spending or struggle to pay off their loans altogether.

The bigger picture: Won’t someone please think of the borrowers?
Plus, regulators are keeping an especially close eye on the BNPL industry, with speculation rampant that it’s only a matter of time before they roll out profit-damaging measures. Probably the honorable thing to do, mind you: they’re worried that the soaring cost of living could lead to irresponsible lending among BNPL companies, leaving consumers with insurmountable piles of debt.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Tried And Tested

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.