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)
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Editing by Jeffrey Goldfarb and Sharon Lam
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