Apple is jumping into the “buy now, pay later” market, adding another challenge to fintech companies like Klarna and Affirm that are already struggling with investor pressure, slower e-commerce growth and rising interest rates. interest.
The iPhone maker announced the move as part of a series of product updates at its annual developer conference on Monday, along with a new version of its custom desktop processor, M2, and a more ambitious car integration that brings Apple software to the dashboard and speedometer.
With Apple Pay Later, iPhone and Mac users in the U.S. can pay for purchases in four installments for six weeks without being charged interest or other fees. The system will work through the Mastercard network in any location supported by Apple Pay, online and in physical retail stores.
Apple’s entry into the market following the acquisition of the UK-based credit verification start-up Credit Kudos earlier this year. However, it also occurs when the rapid growth of the market during the e-commerce boom of the coronavirus pandemic begins to slow down.
European and U.S. regulators are closely monitoring companies offering “buy now, pay later” services to ensure that short-term credit is offered responsibly at a time of rising inflation. There are also concerns about how consumers understand the debt they are taking on.
Analysts predict that rising defaults and lower non-discretionary spending will affect the profit margins of fintech specialists such as Affirm and Klarna, while rising interest rates could increase the operating costs of some players.
Apple said its BNPL system was “designed with users’ financial health in mind,” including a dashboard to control payments on its Wallet app. He noted that the bank issuing a customer’s card “may charge a fee” if his debit card account did not contain sufficient funds for refunds.
Shares of Affirmar fell 5.5 percent to $ 23.72 on Monday, extending what is now a 75 percent drop in the price of fintech shares since early 2022. “Still that more vendors join the movement we started, the prize is still massive and we don’t believe anyone can do what our team and our technology can do, “said a spokesman for Affirmation.
Its European rival Klarna said last month that it would reduce hundreds of jobs, or about 10 percent of its workforce, as it shifts the focus from growth to profitability. Some investors fear that Klarna’s $ 46 billion valuation will be reduced as it seeks to raise more funding.
Apple’s refund service will be available to “qualified applicants” in the United States when the next version of the iPhone operating system, iOS 16, is released later this year.
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Other iOS features announced at Apple’s annual World Developers Conference include a redesign of the iPhone’s home screen to allow for more personalization and updates to its text messaging app, iMessage, to enable users edit or delete messages after sending them.
Apple has announced a second generation of its own specialized silicon for Mac computers, the M2, which will increase the power and energy efficiency of its predecessor and deepen its rivalry with traditional PC chip makers such as Intel and AMD. The M2 chip, which is again based on a custom Arm architecture, is designed at home by Apple and will power a new range of MacBook Air and Pro laptops.
The Silicon Valley-based company has stated its plan to “permanently replace passwords” with a biometrics-based system called Passkeys, to sign in to apps and websites. The system will also work with applications and devices made by Google and Microsoft as part of an industry alliance designed to deal with phishing attacks and password leaks.