Is the ‘Apple Pay Later’ hype warranted? – Tearsheet

At this year’s Worldwide Developers Conference, Apple announced a major update called Apple Pay Later, scheduled for launch with iOS 16 this September, which will allow US users to split up their Apple Pay purchases into four equal installments spread over six weeks, without interest or late fees.

Apple Pay Later runs on the Mastercard network, and can be used anywhere Apple Pay is accepted online or in-app. However, the service will not be available for point-of-sale transactions.

This marks Apple’s long-awaited (some would say, long-feared) entry into the massive BNPL sector, and will see the tech giant take on comparable offerings from current leaders in the space like PayPal, Affirm, Afterpay, Klarna, and Sezzle.

As is the case with most announcements involving an Apple product or feature, the Apple Pay Later news has attracted a lot of hype in the media and across the tech world.

The news comes at an uncertain time for the BNPL industry, owing to slow economic growth, rising inflation, and higher interest rates. Klarna recently laid off 10% of its global workforce, citing the impending recession and the onset of war in Ukraine as primary reasons. The firm is reportedly discussing raising funds at a $15 billion valuation – substantially lower than its $46 billion valuation last June.

Last year, Klarna’s total losses doubled to reach $487 million. Other operators in the space have also been struggling to achieve profitability. Affirm reported net losses of around $430 million for the fiscal year ending in June 2021, while Afterpay’s annual losses jumped to $345 million last year. 


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