After Apple’s (GS) WWDC event, the company announced a buy now, pay later option. It will partner
with Goldman Sachs (GS) to run a wholly-owned subsidiary, Apple Financing LLC.
Apple is effectively acting as a bank without a charter. Users may split the cost of their Apple Pay
purchases into four equal payments, spread over six weeks. It will not pay any interest or fees. Should
users fail to pay the loan, Apple will not extend credit to them. In addition, they won’t report missed
payments, ruining their credit scores.
Apple’s offering is a brilliant addition to Apple Wallet. It will encourage iPhone users to pay digitally. It
will also tie them to the Apple ecosystem since people tight on money will need a BNPL option.
Sofi (SOFI), which recently obtained a bank charter, becomes less attractive. It may have a suite of
products with great rates and low fees. However, Apple’s BNPL is simple to use.
Affirm (AFRM) also faces pressure. Customers are less likely to use Affirm’s BNPL. Instead, they will just
use Apple Wallet. Similarly, PayPal (PYPL) will also risk heavy competition from Apple. PayPal’s revenue
growth is already slowing. This will accelerate the slowdown.
Investors should watch AAPL stock while avoiding disappointing fintech companies.
