How Apple's rumored 'Apple Pay Later' could prove lucrative
Apple's rumored extension to Apple Pay is seen as a potentially lucrative move because of who this type of buy now, pay later facility appeals to.
"Apple Pay Later" would be an extension to Apple Pay, and Apple Pay Cash
Apple has not announced that it will team up with Goldman Sachs to launch "Apple Pay Later," yet the very rumor has caused shares in rival firms to drop. As yet there are only a few players in the buy now, pay later (BNPL) market, but it's becoming increasingly profitable as worldwide spending habits change.
BNPL lets buyers spread the cost of purchases out over time, initially without accruing the kind of interest fees that most credit card companies charge.
According to the UK's Financial Times, BNPL is best for expensive purchases. The publication cites the Affirm BNPL company's partnership with Pelotron to spread the cost of it $1,900 bike as an example, Apple is also clearly in the business of selling costly devices.
Apple does already have the iPhone Upgrade Program which does this, but as yet there isn't an equivalent for all of its devices. Depending on how Apple decides to implement "Apple Pay Later" -- if it does -- then this could be a way to add that option to everything from Macs to AirPods.
Only, if BNPL is a way to make large-ticket items easier to buy, that's unfortunately not what people appear to be using it for. The Financial Times also says that users are taking advantage of the low initial cost to buy not one expensive item, but very many cheap ones.
So reportedly, while a fifth of the UK population has used BNPL in the year to March 2021, 90% of transactions have been for fashion and footwear.
Apple may be seeing "Apple Pay Later" as way to sell more of its own devices. But BNPL becomes profitable when the initial charge-free period ends.
For example, according to the Financial Times, the Klarna BNPL service currently offers credit at up to 18.9% APR when a user defers payments between 6 and 36 months. Similarly, Affirm can charge between 10% and 30% APR.
Apple Card was launched with the promise of making repayment easy, and also clear. "Apple Pay Later" would presumably do the same thing, but the prospect for credit misuse is such that the UK's Financial Conduct Authority wants to introduce regulations.
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.
Read on AppleInsider
"Apple Pay Later" would be an extension to Apple Pay, and Apple Pay Cash
Apple has not announced that it will team up with Goldman Sachs to launch "Apple Pay Later," yet the very rumor has caused shares in rival firms to drop. As yet there are only a few players in the buy now, pay later (BNPL) market, but it's becoming increasingly profitable as worldwide spending habits change.
BNPL lets buyers spread the cost of purchases out over time, initially without accruing the kind of interest fees that most credit card companies charge.
According to the UK's Financial Times, BNPL is best for expensive purchases. The publication cites the Affirm BNPL company's partnership with Pelotron to spread the cost of it $1,900 bike as an example, Apple is also clearly in the business of selling costly devices.
Apple does already have the iPhone Upgrade Program which does this, but as yet there isn't an equivalent for all of its devices. Depending on how Apple decides to implement "Apple Pay Later" -- if it does -- then this could be a way to add that option to everything from Macs to AirPods.
Only, if BNPL is a way to make large-ticket items easier to buy, that's unfortunately not what people appear to be using it for. The Financial Times also says that users are taking advantage of the low initial cost to buy not one expensive item, but very many cheap ones.
So reportedly, while a fifth of the UK population has used BNPL in the year to March 2021, 90% of transactions have been for fashion and footwear.
Apple may be seeing "Apple Pay Later" as way to sell more of its own devices. But BNPL becomes profitable when the initial charge-free period ends.
For example, according to the Financial Times, the Klarna BNPL service currently offers credit at up to 18.9% APR when a user defers payments between 6 and 36 months. Similarly, Affirm can charge between 10% and 30% APR.
Apple Card was launched with the promise of making repayment easy, and also clear. "Apple Pay Later" would presumably do the same thing, but the prospect for credit misuse is such that the UK's Financial Conduct Authority wants to introduce regulations.
Keep up with everything Apple in the weekly AppleInsider Podcast -- and get a fast news update from AppleInsider Daily. Just say, "Hey, Siri," to your HomePod mini and ask for these podcasts, and our latest HomeKit Insider episode too.If you want an ad-free main AppleInsider Podcast experience, you can support the AppleInsider podcast by subscribing for $5 per month through Apple's Podcasts app, or via Patreon if you prefer any other podcast player.
Read on AppleInsider
Comments
A few years ago, Macy's reported that 40% of their revenue came from their financing side. Again, people who couldn't afford Macy's products were jacking up Macy's.
It used to be that 10% of the US economy was the financing sector. Today, it's 50%. It's just money exchanges without building anything.
No wonder BitCoin exists.
https://global-macro-monitor.com/2019/06/05/americas-path-to-a-fire-economy/
The entire FIRE sector (Finance, Insurance, Real Estate) is around 20%.
Oh yeah. Since before money existed.
"DoubleLine Capital CEO Jeffrey Gundlach offered a dire long-term assessment on the U.S. dollar Thursday, telling CNBC in an interview he thinks the greenback is “doomed.”
“Ultimately, the size of our deficits — both trade deficit, which has exploded post-pandemic, and the budget deficit, which is, obviously, completely off the charts — suggest that in the intermediate term — I don’t really think this year, exactly, but in the intermediate term — the dollar is going to fall pretty substantially,” Gundlach said on “Halftime Report.”
“It’s a question of what your horizon is,” Gundlach said. “In the short term, the dynamics have been and will continue to be in place for the dollar to be marginally or moderately stronger.”
“In the longer term, I think the dollar ... [is] doomed,” he added."
The dollar was backed by gold. Then, under Nixon, it went to the "Full Faith & Credit of the United States" -- backed by the world's mightiest industrial empire. But the industry moved out.
This is the real problem - BNPL programs encourage irresponsible purchasing of items people don’t really need and can’t afford, then saddle people with fees they can’t afford. They are actually little more than a new twist on payday lending. The quoted ‘interest rate’ may be legal, but by using ‘fees,’ the true cost increase exponentially. They may not be illegal, but I would definitely call them socially irresponsible.
https://www.gold-traders.co.uk/gold-information/is-the-us-dollar-backed-by-gold.asp
Remember silver certificates? Also an interesting history behind those dollars.
https://www.investopedia.com/articles/markets-economy/090116/what-silver-certificate-dollar-bill-worth-today.asp
All that does is spend money and hurry the process.
Had a finance company try to change me that interest even when I'd paid it off before the term. When I called them about it, the conversation went something like this:
Me: "I paid this off before the term, why are you charging me interest?"
Finance Company: "Our records show that we didn't receive the payment until after the term expiration date, so we charged you the agreed upon interest, just as the credit contract specifies."
Me: "My bank shows the check having been cashed the week before the due date."
FC: "I'm sorry, but our records show..."
Me: "My lawyer seems to think this constitutes something called 'credit fraud', and that there are additional penalties involved over and above simply cancelling the interest charge."
FC: "..."
FC: "Oh, I see where the mistake happened. I'll take care of that right now."
Me: "Thanks."