Apple Inc.'s expansion into buy-now pay-later financing could be just the beginning of an attempt to shake up the traditional payments system.
Apple Inc.’s expansion into buy-now pay-later financing could be just the beginning of an attempt to shake up the traditional payments system.
“It could be very much a tipping point in consumer lending,” said Tom Noyes, the managing partner of the Starpoint LLP advisory business and a Citibank veteran. By enabling consumers to more easily afford devices, Apple could boost its sales, expand its ecosystem, and offer a type of financing in BNPL that is gaining steam, especially among younger consumers, despite some concerns that it may cause shoppers to spend beyond their means.
“The reason banks exist is as someone to vouch for you and take on risk in transactions,” Noyes said. “Today Apple, Google, and Amazon know you better than any bank does, and they’re all looking for ways to improve how the financial services that you need are delivered.” “It takes a fairly big organization to pull this off,” Noyes said. He highlighted that Target Corp. TGT has seen strong adoption of its RedCard, though he sees that happening more so on the debit side.
Some banks, for their part, have tried to get ahead of the BNPL threat by offering some variation on the trend themselves. Citi, Chase, and American Express Co. AXP have options for consumers looking to break certain purchases into installments. While Affirm, privately held Klarna, Block Inc.’s SQ Afterpay, and PayPal are among the big names in the industry, there are a host of smaller players as well. For Block and PayPal, BNPL is just one part of the overall business, and Affirm and Klarna have expanded into adjacent areas like content discovery and bank-like products featuring debit cards.
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