Apple awkwardly pushes into buy-now-pay-later
The author is a Reuters Breakingviews columnist. The opinions expressed are their own.
NEW YORK, March 29 (Reuters Breakingviews) -Apple AAPL.O is late to the buy-now-pay-later party. When boss Tim Cook unveiled plans last June to offer American shoppers a version of the popular four-payment system for buying merchandise, the market was in a somewhat healthier state. If anyone can help validate the product, it’s Apple, but times are considerably tougher.
Pay-later providers have taken a beating. Affirm’s AFRM.O shares are down nearly 60% since June, and those of PayPal PYPL.O and Block SQ.N, which bought industry pioneer AfterPay for $29 billion in February 2022, have slumped, too. Customers flocked to the small and short-term loans through the pandemic, attracted by interest-free debt and promises that their borrowing wouldn’t be reported to credit agencies unless they miss payments or fail to pay the money back.
There are plenty of pitfalls, however. The U.S. Consumer Financial Protection Bureau reported findings earlier this month that pay-later consumers, on average, are more likely to be highly indebted and default than the typical credit card user. Apple will be well-versed in these risks, but a bigger crackdown is probably coming. What’s more, shifting consumer sentiment and a cooling economy could hurt demand and increase the risk of bad loans. The $2.5 trillion iPhone maker wouldn’t be the first corporate titan to answer the siren call of financing. (By Anita Ramaswamy)
Follow @Breakingviews on Twitter
Capital Calls - More concise insights on global finance:
Adidas adds risk by tripping over its sneakers nL4N36126Z
Syngenta IPO delay rekindles past China fears nL4N3603LO
Starbucks pours weak tea on virtual union talks nL4N3603G0
BP, ADNOC’s Mediterranean debut ticks three boxes nL4N36030I
Easy Diageo succession belies new CEO’s hard job nL4N3602HU
Editing by Jeffrey Goldfarb and Sharon Lam
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
