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Apple introduces ‘buy now, pay later’ service

Apple launched its “buy now, pay later” (BNPL) service in the United States on Tuesday, threatening to disrupt the fintech sector dominated by companies such as Affirm Holdings and Swedish payments firm Klarna.

According to the company, Apple Pay Later will allow users to split purchases into four payments spread out over six weeks with no interest or fees. It will initially be available to a select group of users, with a full rollout planned in the coming months.

According to the company, users can get loans ranging from $50 to $1,000 for online and in-app purchases made on iPhones and iPads with merchants who accept Apple Pay.

According to the company, Apple Pay is accepted by more than 85% of US retailers.

“Apple Pay Later will absolutely destroy some of the other competitors.” Other companies would have looked at Apple’s announcement today because the company is well-known. “This will eat into the market share of other players,” said Danni Hewson, AJ Bell’s head of financial analysis.

Affirm, a BNPL company, lost more than 7% of its value, while PayPal lost about 1%.

Pandemic-related lockdowns drove shoppers to online payment platforms in 2020, increasing demand for fintech companies that provide BNPL services, particularly to millennials and Gen Z customers.

PayPal and Block, both digital payments behemoths, have expanded into the sector through acquisitions, while affirm went public in a multibillion-dollar IPO.

Rising interest rates and high inflation have dampened purchasing power and forced consumers to tighten their purse strings, so the sector’s fortunes have since turned.

“We expect Apple to tread cautiously, especially in this macro environment,” said Christopher Brendler, analyst at D.A. Davidson, referring to the company’s decision to underwrite, fund, and collect on the loans directly rather than through a partner.

According to the company, Apple Pay Later is enabled through the Mastercard Installments program, with Goldman Sachs issuing the Mastercard payment credential.

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