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Report: BNPL Vendor Shares Fall as Apple Prepares to Enter the Space

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Apple will reportedly team up with Goldman Sachs to launch its own buy now, pay later (BNPL) platform that lets shoppers make Apple Pay payments in installments, according to Bloomberg News. The move sent share prices for other BNPL providers downward as the market reacted to the news .

The service — which is known internally as Apple Pay Later — will use Goldman as the lender for the loans, according to people familiar with the matter. This builds on Apple and Goldman’s existing partnership on the Apple Card credit card, which has been backed by the investment bank since 2019. The new offering is separate and doesn’t require shoppers to use the Apple Card.

The service will integrate directly with Apple Pay, will let users opt to complete a transaction in four installments paid every two weeks interest-free, dubbed Apple Pay in 4, or spread the purchase out over several months with interest, called Apple Pay Monthly Installments. Apple plans to make Apple Pay Later available both in-store and online, a nod to the growing cross-channel popularity of BNPL services.

Users of either Apple Pay Later service will need to be approved through their Apple device’s Wallet app. They also can use the app to manage their payments, including the option to exit any payment plan by paying off the remainder of their balance. Additionally, Apple is testing a feature that will let users create temporary digital Apple Pay Later credit cards for individual purchases.

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The new service is still in development and its features could change or be canceled, according to people familiar with the matter.

The impact of the announcement is already being felt by other players in the BNPL space. As of July 14, Affirm’s 5-day average share price fell 15% in the wake of the news and Afterpay’s 5-day average fell 13.7%. PayPal stumbled as well on July 13, but the company rallied back to just a 0.6% daily loss as of July 14 and was up 3.13% over the 5-day average.

Investors’ fears are not unfounded. Apple is a giant in the payments market, with Apple Pay growing to be accepted at 85% of U.S. retailers since its launch in late 2014. This isn’t even Apple’s first BNPL offering — the retailer already offers a similar installment plan for shoppers who use an Apple Card to purchase Apple products.

The combination of retailer and BNPL provider is a relatively new one, but not unheard of. For instance, Afterpay launched a site call The DROPSHOP, letting its BNPL customers gain access to exclusive offers from major brands. High-profile drops have included Nike Air Max 90 Exclusive Colorway shoes and the e.l.f. Cosmetics Electric Mood Collection, which was created in partnership with international music artists Tove Lo, Tiana Major9 and Pitizion.

Apple is hopping into the arena at a good time: BNPL usage jumped nearly 78% in 2020 to account for 1.6% of total ecommerce spend, according to the FIS Global Payments Report 2021. While the share is still small, the offering is becoming normalized and having another established payment provider like Apple in the space could be the nudge BNPL needs to hit the mainstream.

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