Hottest Fintech news today - FinFan - Apple Pay will enter the market Buy Now Pay Later
Every Saturday morning, FinFan will bring you the hottest fintech news. And the news that we choose today is “Apple Pay will enter the market Buy Now Pay Later”
What is Apple Pay Later?
*Apple Pay Later has been launched initially in the US, with select users invited to access a pre-release version. Those users can track, manage, and repay their four-payment, six-week loans through the Apple Wallet. While only select American users currently have access to this pre-release, the company has plans to offer Pay Later to all eligible users around the world in the coming months.
Despite the similarities of their BNPL offerings, Apple and PayPal have both chosen to fight for individual users within their offerings. This puts under the microscope why a particular buyer might choose one payment method over the other. Our research has shown that now new BNPL regulations have been introduced to better protect consumers in the UK – with more on the way – 37% are more encouraged to use the payment option. So, the question is, who will win the most consumer loyalty in 2023?
The scoring systems of each company, including their complexity and accessibility for the average consumer, will play an important role in user acquisition over the coming years. According to Statista, Apple Pay is set to generate $4bn in revenue in 2023, a vast increase from the less-than-$1bn it produced in 2019, and we can expect the rollout of the Pay Later offering to account for a chunk of this spending. For comparison's sake, PayPal – which has its own Pay in 4 and Pay in 3 options – registered total sales of $27.5bn last year. However, the same Statista source noted that the number of Apple Pay users is twice that of PayPal (68% vs 34%).
As Apple’s initial loan limit is also similar to PayPal’s, they’ll be in direct competition targeting a similar segment of the market, leaving the biggest purchases (up to $25,000) to the likes of Affirm. However, PayPal doesn’t seem to mind, favouring user choice by adding Apple Pay Later to its checkout options, alongside its own BNPL credit offering.
Additionally, unlike Klarna, which introduced late payment fees for the first time this year, this BNPL launch from Apple includes a 0% interest rate, which means it may begin to take some of the fintech giant’s market share when it launches across Europe in the coming months.*
How does FinFan feel about this new service from Apple?
To open this new service, Apple will step one foot into the already fierce battle in this market. However, Apple still has its own 3 advantages to have a chance to even take up most of the market.
- First is the advantage of Apple's customers. Apple has more than 500 stores around the world and is always at the top of the smartphone market. Therefore, it has many customers and that is a good chance for this smartphone brand to own the majority of the market share.
- Second is the closed service circle of Apple. When you want to use Apple, you need to buy all phone accessories of this brand such as Air Pod, lightning charging cable, etc. That creates a substantial market for this service.
- Third is the information privacy policy of Apple. With lots of customers of this brand, Apple can even order Facebook, Google and TikTok, etc. to protect the privacy of their customers and they did it many times in the past. That builds customer confidence in the security features of Apple's new service.
For those advantages, Apple can be easier to compete with market giants like Klarma, PayPal, etc. Maybe this is the good preparation to this biggest smartphone brand to have many new services or products in the fintech market like own coin or Apple’s Bank, etc.