3 BNPL Lessons from the Apple Pay Later Launch

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Global giant Apple is looking to explore a new frontier – Buy Now, Pay Later (BNPL) – with its new Apple Pay Later product.

Given that the company is already able to attract the masses to its products and has enormous brand power, banks, lenders and other BNPL participants may feel intimidated. Take Affirm, a US-based BNPL provider: Following the news, the company’s shares fell by 17%.

Apple Pay Later isn’t the company’s first move into the financial sector. In 2019, the company partnered with Goldman Sachs to create Apple Card, which offered loans for device purchases. So it’s no surprise that Apple jumped on the bandwagon to offer BNPL.

This time, however, Apple took a different approach: instead of relying entirely on lending services or banking partners, it created Apple Financing LLC. Apple Pay and Wallet users can request Apple Pay Later during checkout and request a debit card to make payments. Once approved, they can start using Apple Pay Later at any merchant that accepts Apple Pay.


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Corporate and technology decision makers may see this as just another split payment method. But digging deeper into the launch of Apple Pay Later could reveal some valuable insights into the BNPL industry.

Even during turbulent times, the BNPL industry continues to grow

While BNPL solutions have captured the attention of millions of customers, particularly in the US, Europe and Australia, some providers have fallen on hard times. Rising inflation, slowing economic growth and rising borrowing costs have put BNPL companies in a difficult position. Swedish company BNPL Klarna, for example, laid off 10% of its global workforce.

However, Apple is making a big move during turbulent times simply because there is still a high demand for BNPL. In fact, 60% of shoppers say inflation is driving them to use BNPL products, according to a survey by Credit Karma.

The US consumer’s watchdog is on the case

BNPL is a rich source of consumer data: by cutting out third-party providers, Apple will be able to maintain full control over its customers and better understand their behavior. The valuable information coming from Apple Pay Later will allow the company to predict future consumption patterns and design better marketing strategies. But you know what they say: “With great power comes great responsibility”.

As Consumer Financial Protection Bureau (CFPB) director Rohit Chopra put it: “Any tech giant that has a lot of control over a mobile operating system will have unique advantages to exploit data and e-commerce more broadly.”

This clearly indicates that America’s top consumer watchdog has its eyes on Apple. In fact, the CFPB has raised data privacy and antitrust concerns for Apple Pay Later. More than ever, the company will need to steer a tight ship when it comes to protecting consumer data.

Furthermore, the CFPB opened an inquiry into five BNPL providers late last year – Affirm, Afterpay, Klarna, PayPal and Zip – with the aim of protecting consumers from accumulating debt. They recently released a BNPL report based on this investigation.

As the US Consumer Entity plans to regulate BNPL, companies offering different BNPL options to consumers must be on top of regulatory investigations, making sure they follow transparent, fair and accountable lending practices. This will also lead to customer retention.

That’s why Apple made it clear in its press release that the company designed Apple Pay Later with users’ financial health in mind. Customers can also easily view, track, and refund payments in Wallet.

Apple’s entry into BNPL will attract more financial institutions and merchants

There have been numerous discussions about whether Apple Pay Later is a threat to major BNPL providers. The truth is, this payment solution isn’t going to shake up the industry as much as other providers might fear. This is because it is limited to Apple Pay users.

Make no mistake, the arrival of Apple Pay Later is an important development and could create an industry chain reaction as it is proof that BNPL has taken root in the market. Therefore, we can anticipate that more banks, lenders and merchants will enter the space looking to stand out from the competition.

When larger financial institutions enter the BNPL space, traders will also benefit. To illustrate this, direct-to-consumer BNPL transaction fees can cost as much as 3-6% of the purchase amount (this is how installment payment providers make their money). Banks can offer merchants more competitive transaction fees of 1-3%.

The bottom line is that exploring why and how big tech entered the BNPL space can provide important industry lessons. And companies working in industries like e-commerce can use this information to navigate the BNPL and start their own journey.

Yaacov Martin is CEO and co-founder of Jifiti.


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