Apple Pay Later could raise concerns over BNPL regulation, expert says

Apple’s new BNPL product will become available in September

Apple Pay Later could raise concerns about the buy now, pay later (BNPL) market and its lack of regulations, an expert said.  (iStock)

Apple announced its new buy now, pay later (BNPL) product, Apple Pay Later, at its WWDC event in June. But the company's entrance to the market could raise new concerns over the lack of regulation in the sector, an expert said.

Apple Pay Later will allow users to split the cost of their purchases into four, interest-free payments anywhere Apply Pay is accepted. The new BNPL option will be available in the wallet app when Apple releases iOS 16 in September.

Apple’s venture into BNPL highlights "the growing opportunities offered by fintech," GlobalData Associate Analyst Beyza Karakoy said.

"Apple’s acquisition of British fintech Credit Kudos earlier this year signaled its desire to expand further into financial services and reap the benefits offered by fintech," Karakoy said. "However, the arrival of big tech will raise new concerns about the lack of regulatory oversight in the BNPL market. Apple’s move will represent a new challenge for fintech companies such as Klarna, Clearpay, and Affirm, which currently dominate the market."

If you are looking for another financing option outside of BNPL, you could consider using a personal loan. You can visit Credible to find your personalized interest rate without affecting your credit score.


Apple’s entrance could lead to acceptance of BNPL

BNPL has gained momentum as an alternate payment option, with its global transaction value having reached $120 billion in 2021, according to a new report from GlobalData.

And the sector is expected to continue growing. GlobalData projected that the BNPL market could reach $576 billion by 2026. Last year, BNPL made up 2.3% of the global eCommerce market, meaning that for every $100 that was spent, $2 was through a BNPL transaction. 

The entrance of Big Tech into the market could drive further growth in the sector, one expert said. 

"Generation Z has been a big driver of the growth of BNPL services as they are wary of credit card fees and prefer to spread their purchases over a longer period," GlobalData Associate Analyst Amrit Dhami said. "BNPL is convenient for consumers and lucrative for retailers as it reduces cart abandonment.

"The BNPL sector now has big tech’s stamp of approval," Dhami said. "This will be great for consumers as, even though Apple wasn’t first to market, its involvement should encourage more competitors to enter the space and spur more favorable contracts for consumers. Of course, there’s potential for Apple to stifle competition in the market but, with brands like Klarna and Affirm becoming household names, savvy consumers should not be blindsided by Apple’s offerings."

If you are comparing BNPL with other credit options for a large purchase, you could consider taking out a personal loan. Visit Credible to compare multiple lenders at once and choose the one with the best interest rate for you.


BNPL can lead to bad financial decisions, survey says

In general, the usage of digital payments is fairly modest, with just 2% of consumers using a mobile wallet and 1% using a BNPL service over the past three months, according to a survey from J.D. Power.

"While overall usage of digital payments is still relatively low, the technology is winning converts when it comes to customer satisfaction, particularly among younger customers," the survey stated. "In fact, overall customer satisfaction is highest for credit cards (4.4 on a 6-point scale) and BNPL."

But J.D. Power said that this rise in digital payments is making it easier for young consumers to make bad financial decisions.

"Younger consumers tend to have higher levels of satisfaction with most payment types, although they generally have less understanding about payment methods and are making poorer financial decisions when using these solutions," the survey stated. "For example, 38% of consumers ages 18 to 44 say they only partially understand the payment methods associated with these services and 5% say they do not understand them at all. As a result, more young customers tend to struggle with financial health."

If you need help paying off your BNPL debt, you could consider using a personal loan. Contact Credible to speak to a loan expert and see if this is the right option for you.

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