Apple has announced that it will launch its own Buy Now, Pay Later (BNPL) option. The iPhone maker’s Apple Pay Later service will allow users in the US to pay for purchases in four instalments over six weeks without being charged interest or other fees.
The service will be available anywhere that accepts Apple Pay – both online and in stores.
Commenting on the launch Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown said “Apple’s move into Buy Now Pay Later could fuel another boom in the market, putting more shoppers at risk of overspending. Since the start of the year, the phenomenal pace of growth of BNPL has slowed significantly, as people cut back on non-essential spending. However, if Apple chooses to expand its BNPL service into the UK, the arrival of a massive global lifestyle brand in the market could reignite our enthusiasm for borrowing.”
“It would bring the power of its brand to the market. Already we know that people don’t tend to think of BNPL as borrowing – they consider it to be a budgeting solution. The arrival of a brand that’s far less associated with financial services risks reinforcing the misapprehension that BNPL isn’t a debt product, which could mean even more people are tempted to use it without really thinking it through.”
“The fact it will be available through the same network as Apple Pay in the US means that if it adopted the same approach in the UK, it would be available in an enormous number of retailers – both online and offline. BNPL companies have been gradually pushing into stores, and this would mean a step change in the process overnight. It means we may be tempted to use it for even more of our shopping.”
“At a time of rising prices, there’s the risk that the arrival of Apple would mean more people using BNPL to make ends meet. Our research shows that already one in ten (11%) people have used it to buy essential clothes – like a winter coat, while more than one in twenty people have used it to buy groceries (6%), and one in ten (9%) have used it for other essentials.”
“Borrowing to pay for essentials feels like a solution in the short term, but by spreading the cost, it means pushing up your expenses for months, making it even harder to keep on top of your finances. In the short term it feels like a solution, but in the end it just adds to the problem.”
Separately, Zopa has also announced that it all also launch BNPL options for its customers in the UK. The digital bank has pledged to prioritise ‘transparency and customer protection’ amid concerns from regulators and consumer groups that such services risk increasing debt problems.
Zopa said the UK market is worth about £6 billion and that it would offer a ‘simple and fair option’ for spreading the cost of purchases worth between £250 and £30,000.