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Apple’s latest fintech move has buy now, pay later industry on edge


Apple Pay Later allows users to pay in four equal installments.

Jakub Porzycki | Nurphoto | Getty Images

AMSTERDAM — Apple’sThe fintech firms that have pioneered this trend are now in the “buy now, Pay later” market.

iPhone manufacturer announced plansApple will launch “pay later” loans Monday. This expands the range of financial products that already include mobile payments, credit cards and other payment options. Apple Pay Later is a service that allows users to make payments in four equal installments and pay no interest each month.

This makes BNPL players look like PayPal, AffirmKlarna and Klarna are in an awkward position. It is possible that Apple (a $2 trillion-dollar company and second largest smartphone maker in the world) could attract clients away from these services. Affirm shares have fallen 17% this week due to the news.

The BNPL Market had been in trouble for some time. Last month, Klarna laid off 10%its global workforce blames the war in Ukraine as well as fears about a recession.

It’s a triple win! rising inflation, higher interest ratesAnd slowing economic growthIndustry’s future has been in question. Rising borrowing costs are a problem already made debt more expensive for some BNPL firms.

ClearBank CEO Charles McManus told CNBC that it would end in trouble as credit must always be unwinded and paid back. This was his opinion at the Money 20/20 Europe fintech conference, Amsterdam.

All the chickens will roost when interest rates rise and inflation begins to climb.”

McManus claimed that this sector encourages people to get into debt they are unable to repay and needs regulation. While the U.K. seeks to regulate BNPL, U.S regulators opened an investigation into the sector.

What do you think? Do I pay my gas bill now or the armchair I paid three years back on interest-free financing that’s due in a few months? McManus warned that excesses always return.

Apple stated that it would handle credit and lending for Apple Pay Later through an internal subsidiary, taking Goldman Sachs — which has previously worked with the firm on its credit card — out of the equation. This is an important step and will allow Apple to play a greater role in financial services than the one it plays currently.

Sebastian Siemiatkowski (CEO of Klarna) said the Apple Pay Later launch was a “great victory for consumers around the world.”

He wrote earlier this week, “Plagiarism Is Also the Highest Form of Flattery,” in a tweet.

Chief commercial officer at Dutch payments startup Mollie is Ken Serdons. He said that Apple’s BNPL feature sets a new standard for other fintechs in the marketplace. Mollie can offer installment loans in a partnership arrangement with another fintech firm.

“The BNPL marketplace is becoming crowded,” he stated.

It will be difficult for subpar players to compete against the top players.

James Allum from Payoneer’s senior vice president Europe said however that the market is large enough for different businesses to enter.

He stated that businesses should look at collaboration opportunities rather than threats and competition.