Apple to take on Klarna with ‘buy now, pay later’ app
APPLE has entered the booming “buy now, pay later” market, allowing iphone owners to delay payments in a major challenge to Klarna and Revolut.
The tech giant’s Apple Pay Later service will let users spread purchases over four installments and six weeks.
The feature will only be available in the US at first in a forthcoming software update and will not involve interest payments or late fees.
Spending with “buy now, pay later” apps such as Klarna has exploded in recent years alongside a surge in online shopping, although the industry is attracting attention from regulators.
The Treasury is considering new rules for providers amid concerns they are encouraging unsustainable spending and are subject to less strict checks than credit cards. However, this has failed to discourage new entrants, with British fintech apps Revolut and Monzo launching pay later services.
Shares in Affirm, a US “buy now, pay later” company, fell by 5pc as Apple announced the feature. Klarna, which was valued at $46bn (£37bn) last year, is reportedly seeking to raise funds at a much reduced $30bn valuation. “Apple’s challenge will be to ensure it does not generate negative optics if users get into extra debt by using the service,” said Ben Wood, an analyst at CCS Insight.
Unlike apps such as Klarna, which require support from retailers, Apple Pay Later will be available where Apple Pay is accepted, which includes online retailers, apps and physical stores.
It is unclear if the service will come to the UK. Apple Pay contactless payments launched in Britain in 2015, a year after the US, but other services such as money transfer service Apple Cash and the company’s credit card remain Usonly.
Last month, the European Commission accused Apple of restricting competition in mobile payments by limiting access to the iphone’s contactless technology.
Apple announced the feature at its annual Worldwide Developers Conference, where it previews updates.
It said the new version of its iphone, due to launch in the autumn, would let users unsend and edit text messages. It will also allow apps to verify users’ ages by linking to digital driving licences stored in phones. Updates to the Apple Watch will allow users to track sleep and remind them to take medication.