Apple’s latest fintech move buys now, later pushes the industry over the edge

Amsterdam – An apple The move into the crowded “buy now, pay later” space increased risks for the fintech companies that pioneered this trend.

iPhone maker Announce plans to launch “Pay Later” loans on Monday, expanding a suite of financial services products that already include mobile phone payments and credit cards. The service, called Apple Pay Later, will allow you to pay for things in four equal installments, paid monthly without interest.

This puts BNPL players like PayPalAnd the Confirms And Klarna is in an awkward place. The fear is that Apple, which is $2 trillion and the world’s second-largest smartphone maker, could lure customers away from such services. Confirmed shares are down 17% so far this week in the news.

The BNPL market was already showing signs of turmoil. Last month, Klarna 10% layoff of its global workforce, blaming the war in Ukraine and fears of recession.

Triple Strike high inflationAnd the Higher interest rates And the slowing economic growth They put the future of the industry in doubt. Climb her borrowing costs Debt has already made more expensive For some BNPL companies.

“It’s going to end in trouble because credit always has to break up and get the money back,” Charles McManus, chief executive of UK fintech firm Clearbank, told CNBC at the Money 20/20 Europe fintech conference in Amsterdam.

“When interest rates start to go up and inflation starts to go up, all the chickens will come home to live in.”

McManus said the sector is pushing people into debt they can’t pay, and so it should be regulated. The UK is seeking to move forward with BNPL regulation, while US regulators have opened an investigation into the sector.

“Do I pay my gas bill or do I pay off the armchair I bought three years ago with interest-free credit that is due?” “Excesses always come back,” McManus warned.

Apple said it will handle lending and credit checks for Apple Pay later Through an internal subsidiary, by taking Goldman Sachs — who previously worked with the company using her credit card — out of the equation. This move is an important step that will give Apple a much larger role in financial services than it currently plays.

Sebastian Simyatkowski, CEO of Klarna, said the subsequent launch of Apple Pay represented a “remarkable win for consumers around the world.”

“Plagiarism is also the highest form of flattery,” he wrote on Twitter earlier this week.

Ken Serdons, chief commercial officer of Dutch payments firm Mollie, said Apple’s BNPL feature “raises the bar” for fintech companies operating in the market. Mollie offers installment loans through a partnership with an associate fintech in3.

“The BNPL space is crowded with a lot of new players who are still entering the market,” he said.

“It will be difficult for players with a substandard proposition to compete effectively against the best players out there.”

However, James Allum, senior vice president for Europe at payments firm Payoneer, said there is enough room in the market for different different companies to compete.

“Companies should look for opportunities to cooperate rather than competition and threats,” he said.