Apple’s take into the Buy now, pay later option raised parameters for the fintech enterprises. First, Apple announced plans to launch its pay later loans.
It expanded the number of economic assistance products which includes transferable expenses. It got called Apple Pay Later. The service allows users to pay for things in four equal installments. These got supposed to be paid monthly without interest. Affirm, and Klarna is in a tight condition.
Apple is a $2 trillion industry and the world’s second-largest manufacturer. As a result, it has the potential to draw clients away from their services.
Hence, becoming a potential hurdle for the BNPL players. The Stakes of Affirm sunk by 17% so far just because of the news. The BNPL market is already showing signs and symptoms of trouble.
Klarna even spread 10% of its international crew. Klarna blamed the war in Ukraine. It also pointed out the fears of recession. Charles McManus is the CEO of U.K. fintech firm ClearBank. McManus said that it is going to end up in difficulties are through credit and has to get it back.
McManus also added that the sector is pushing people into debt. They can’t afford it. Hence, regulation is a must. Apple, on the other hand, said that it would handle the lending and credit checks. It will do this through an internal subsidiary. The step is a significant step that will help Apple get a greater role in financial services.
Klarna CEO Sebastian Siemiatkowski said that Apple Pay later is a great thing for the consumers. He even defended his company’s business model.
Siemiatkowski added, “This is a better model for consumers than the traditional one of credit cards; Klarna is a more agile lender compared to banks and “actually extremely recession-proof.” Ken Serdons is the chief commercial officer of Dutch payments start-up Mollie. Serdons said that Apple’s BNPL feature set a standard bar for fintech in the market.
However, James Allum, senior vice president of Europe at a payments firm, said that there is enough space for companies to compete.