Apple Pay Later means Klarna & rivals will need better deals, say analysts

Apple Pay Later
Apple Pay Later (Image credit: Apple)

What you need to know

  • Apple Pay Later will allow people to spread the cost of payments across multiple weeks.
  • Analysts believe Apple's entry into the market could mean increased scrutiny.
  • Apple could drive competition in the fintech market, according to some.

With the arrival of iOS 16 later this year Apple will begin to allow people to make Apple Pay payments on a buy now, pay later scheme. Payments will be stretched across six weeks, with Apple handling all financing itself. Now, analysts for GlobalData believe that Apple's entrance into the market could have its positives and negatives.

In a research note seen by iMore, Amrit Dhami, Associate Analyst at GlobalData notes that Apple's "involvement should encourage more competitors to enter the space and spur more favorable contracts for consumers." The theory is that Apple's entry could mean that the likes of Klarna and Clearpay are forced to improve their own products and deals to compete. The potential for Apple to use its influence to "stifle competition in the market" shouldn't be ignored, they go on to say — something the company is perpetually accused of doing in other areas of its business including the App Store.

It isn't all positive, though. Associate Analyst Beyza Karakoy believes that Apple's entry into the buy now, pay later (BNPL) market could see calls for more regulatory oversight, something that it has so far been able to avoid. While Apple is far from the first company to allow buyers to spread the cost of purchases, it's a big fish that will be impossible to ignore for all concerned.

Apple's acquisition of British fintech Credit Kudos earlier this year signaled its desire to expand further into financial services and reap the benefits offered by fintech. However, the arrival of big tech will raise new concerns about the lack of regulatory oversight in the BNPL market. Apple's move will represent a new challenge for fintech companies such as Klarna, Clearpay, and Affirm, which currently dominate the market.

That purchase of Credit Kudos is a key part of the equation for Apple following the news that it will handle all of the credit itself, rather than offload it to a third party.

For users, Apple Pay Later will not only give them a way to spread payments but also put everything into the Wallet app for easier management than some competing companies and systems.

In Apple's words:

Apple Pay Later provides users in the US with a seamless and secure way to split the cost of an Apple Pay purchase into four equal payments spread over six weeks, with zero interest and no fees of any kind. Built into Apple Wallet and designed with users' financial health in mind, Apple Pay Later makes it easy to view, track, and repay Apple Pay Later payments within Wallet. Users can apply for Apple Pay Later when they are checking out with Apple Pay, or in Wallet. Apple Pay Later is available everywhere Apple Pay is accepted online or in-app, using the Mastercard network.

Apple announced its Apple Pay Later feature as part of the iOS 16 update on Monday. The WWDC22 opening keynote also saw the arrival of a raft of software updates including iPadOS 16 and watchOS 9. None of those updates, or indeed Apple Pay Later, will be available until this fall.

Oliver Haslam

Oliver Haslam has written about Apple and the wider technology business for more than a decade with bylines on How-To Geek, PC Mag, iDownloadBlog, and many more. He has also been published in print for Macworld, including cover stories. At iMore, Oliver is involved in daily news coverage and, not being short of opinions, has been known to 'explain' those thoughts in more detail, too.

Having grown up using PCs and spending far too much money on graphics card and flashy RAM, Oliver switched to the Mac with a G5 iMac and hasn't looked back. Since then he's seen the growth of the smartphone world, backed by iPhone, and new product categories come and go. Current expertise includes iOS, macOS, streaming services, and pretty much anything that has a battery or plugs into a wall. Oliver also covers mobile gaming for iMore, with Apple Arcade a particular focus. He's been gaming since the Atari 2600 days and still struggles to comprehend the fact he can play console quality titles on his pocket computer.