US Giant’s Entry Upsets BNPL Apple Cart

By Glenn Dyer | More Articles by Glenn Dyer

Did reality catch up with Australia’s burgeoning buy-now-pay-later sector yesterday with the news that Apple is about to enter the sector – just as PayPal kicked off its assault in Australia as well?

The major players in the sector lost billions of dollars in value yesterday – leader Afterpay shed the most at close to $10 billion on the news of Apple’s interest.

While Apple’s rumoured model isn’t the same as local groups, it looks like being a variation on a theme, which some of the locals took as good news and a validation of their businesses from the biggest company in the world.

But despite that attempt at optimism, investors were still nervy and shares in Afterpay, Zip Co, Sezzle, Humm Group, Splitit, and Openpay took a hit on the ASX after Apple announced it was entering the space that also contains Paypal and Affirm in the US and the Swedish giant, Klarna.

Afterpay dropped 9.6% to $107, back where it was a month ago, and Zip Co fell 11.4% to $7.32.

Sezzle – which is focused on the US – lost 8% to $7.96. Humm Group fell 3.9%, Splitit lost 4.5% and Openpay was 4.9% lower.

The upcoming service, known for the moment as Apple Pay Later, will use Goldman Sachs as the lender for the loans needed for the instalment offerings.

Media reports suggest the mooted Apple plan will work as follows:

When a user makes a purchase via Apple Pay on their Apple device, they will have the option to pay for it either across four interest-free payments made every two weeks, or across several months with interest, one of the people said.

The plan with four payments is called “Apple Pay in 4” internally, while the longer-term payment plans are dubbed “Apple Pay Monthly Instalments.”

Users who want to use the Apple Pay Later service would need to be approved via an application submitted through the iPhone’s Wallet app, where they will also be able to manage their payments.

On Wednesday, PayPal also entered the buy now chase and said it would waive late fees, while Commonwealth Bank’s upcoming BNPL product will also be much cheaper for retailers. The CBA is a shareholder in Klarna.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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