Apple’s buy now, pay later service couldn’t have come at a worse time


At Apple’s WWDC 2022, the company announced it would introduce a buy now, pay later (BNPL) service that allows Apple Pay users to split purchases into separate payments over six weeks with no interest or fees. delay. The service, which comes with iOS 16, won’t require a separate app or any kind of deep registration. Instead, it will be integrated with Apple Pay and Wallet. You will pay the first payment in advance and the other three every two weeks. Payments are handled in the Wallet app and you can prepay them if you wish.

Apple also announced Apple Pay Order Tracking, a tool for merchants to provide receiving and shipping information through Apple Wallet.

“It looks dangerous; I can not wait” — This marks Apple’s foray into the explosive buy-it-pay-later industry, where companies like Affirm, Klarna, Sezzle and more have exploded. As we wrote last month, Stockholm-based Klarna is valued at $45.6 billion; Afterpay was acquired by mobile payment company Block, formerly known as Square, to $29 billion in January; PayPal bought the company Paid for $2.7 billion.

Not so fast – The BNPL space has exploded into offering small loans on a purchase-by-purchase basis – suggesting the grim idea that many people cannot afford everyday purchases like groceries without splitting the bill into installments. For all the convenience of frictionless madness, there is a dark side. Last month, SF door published an absolutely heartbreaking article on how BNPL services lack the consumer protections of genuine credit lenders and can lower the credit scores of vulnerable users. The article cited an investigation by the Piplsay Polling Station suggesting that 43% of Gen Z BNPL users have missed at least one payment.

Afterpay has faced federal class action lawsuits in both California and Maine alleging that the company failed to properly pass the charges behind its service. BNPL is a loan and should be regulated as such. In July 2021, the Consumer Financial Protection Bureau warned consumers to be careful with BNPL services, citing a Credit Karma survey that found 42% of Americans had used BNPL services at least once, 38% had missed a payment, and 73% of missed their payments. credit score drop. The existing cottage industry of BNPL providers could be hit hard by competition from Apple, and they are already struggling amid the economic downturn. Klarna recently fired 10% of its workforce, and Affirm stock is down 80% in the past six months, down more than 5% today alone.

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