Apple has officially entered the buy-now pay-later space, announcing ‘Apple Pay Later’ at its developer conference this evening.
The new feature will allow Apple customers to pay for items in four equal payments over six weeks with no additional interest or fees, marking the tech giant’s entrance into the highly competitive BNPL space.
Apple Pay Later is available everywhere Apple Pay is available, both in apps and online, with payments being managed through the Apple Wallet app using the Mastercard network. Purchase pages will detail how much exact payments are, as well as the due dates.
The new feature requires no extra work from the developer or the merchants involved, but undoubtedly puts the Silicon Valley firm at odds with popular services like PayPal and Klarna.
While PayPal’s stock remains relatively unfazed by the announcement, US lender Affirm’s shares dropped by as much as six cent following the news.
Reacting to the announcement, Chief Analyst at CCS Insight Ben Wood said Apple’s new update looks a lot like Klarna’s service, but added: “Apple’s challenge will be to ensure it does not generate negative optics if users get into extra debt by using the service.”
Indeed, as the cost of living crisis crunch sinks in, the Big Tech firm will need to balance promoting its new offering alongside the harsh reality of shrinking household budgets.
Head of TMT Research at Mirabaud Neil Campling told City A.M. that the idea behind the launch was the “the age-old Apple mantra of ‘ease of use'”, as well as enticing users to use Apple based service offerings.
“The bigger picture, for Apple, is to drive more and more service-based revenues that has become meaningful (over $50bn annually) and high margin”, Campling said.
“It’s all part of the ever growing Apple ecosystem: bring technology, semiconductors, services, infrastructure, advertising, hardware and software inside this gigantic ‘technology walled garden'”, he said.
Apple also took the opportunity to announce a number of other interesting features for users, including editing texts that have already been sent and further personalisation of the iPhone home screen.