Apple is jumping into the “buy now, pay later” market, adding another challenge to fintech companies such as Klarna and Affirm, which are already struggling with investor pressure, slower e-commerce growth and rising interest rates.
The iPhone maker announced the move as part of a series of product updates at Monday’s annual developer conference, along with a new version of its custom desktop processor, the M2, and more ambitious automotive integration that brings Apple’s software to the dashboard. and speedometer.
With Apple Pay Later, iPhone and Mac users in the United States can pay for purchases in four installments over six weeks without accruing interest or other charges. The system will work using the Mastercard network in any place that supports Apple Pay, online and in physical stores.
Apple’s entry into the market followed the acquisition of the UK-based startup Credit Kudos earlier this year. However, this also comes when the rapid growth of the market during the e-commerce boom of the coronavirus pandemic begins to decline.
Regulators in Europe and the United States are closely monitoring “buy now, pay later” companies to ensure that short-term loans are offered responsibly at a time of rising inflation. There are also concerns about how well consumers understand the debt they are taking on.
Analysts predict that rising defaults and lower non-discretionary costs will hit the profit margins of fintech professionals such as Affirm and Klarna, while rising interest rates may increase operating costs for some players.
Apple said its BNPL system was “designed with consumers in mind”, including a payment dashboard in the Wallet app. He noted that the bank issuing the card to the customer “may charge a fee” if their debit card account contains insufficient funds for payments.
Shares of Affirm fell 5.5% to $ 23.72 on Monday, extending the current 75% drop in fintech company’s stock price from early 2022. “Even when more vendors join the movement we started, the reward remains huge and we don’t think anyone can do what our team and our technology can do, “said an Affirm spokesman.
His European rival, Klarna, said last month that it would cut hundreds of jobs, or about 10 percent of its workforce, as it shifts the focus from growth to profitability. Some investors fear that Klarna’s $ 46 billion valuation will be lowered as it seeks more funding.
Apple’s payment service will be available to “qualified candidates” in the United States when the next version of the iPhone operating system, iOS 16, launches later this year.
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Other features of iOS announced at Apple’s annual global developer conference include redesigning the iPhone’s home screen to allow for greater customization, and updates to its text messaging app, iMessage, to allow users edit or delete messages after they have been sent.
Apple has announced a second generation of its own specialized silicon for Mac computers, M2, which will increase the power and energy efficiency of its predecessor and deepen its rivalry with traditional manufacturers of computer chips such as Intel and AMD. The M2 chip, which is again based on Arm’s custom architecture, was designed by Apple and will power a new range of MacBook Air and Pro laptops.
The Silicon Valley company has announced a plan to “replace passwords forever” with a biometric-based system called Passkeys to log in to apps and websites. The system will also work with applications and devices made by Google and Microsoft as part of an industry alliance designed to deal with phishing attacks and password leaks.
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