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What's going on?

Apple announced plans earlier this week to push into the buy-now-pay-later (BNPL) market.

What does this mean?

There have been mutterings that Apple is about to launch a BNPL product since March, when the company bought out credit check startup Credit Kudos. So cue the I told you so brigade: the tech giant has just announced that itll be launching Apple Pay Later a service thatll allow Apple Pays American users to buy things in four interest-free installments over six weeks (tweet this).

Its arguably an odd time for Apple to enter the BNPL market, whose rapid growth has petered out as inflation has climbed and the ecommerce boom has tailed off. But Apples confident its made the right decision: the move could encourage more people to use Apple Pay to buy what they need, not to mention allow the company to make more inroads into financial services.

Why should I care?

For markets: Oh great. More competition.
BNPL mainstays Klarna and Affirm need Apple in the market like they need a hole in the head. Klarna is currently in the midst of offsetting its borrowing costs which just hit a record high on the back of rising interest rates by cutting 10% of its workforce, while Affirms stock has now plummeted 75% this year. And things are only going to get harder: analysts are anticipating that more and more cash-strapped customers will either wind down their spending or struggle to pay off their loans altogether.

The bigger picture: Wont someone please think of the borrowers?
Plus, regulators are keeping an especially close eye on the BNPL industry, with speculation rampant that its only a matter of time before they roll out profit-damaging measures. Probably the honorable thing to do, mind you: theyre worried that the soaring cost of living could lead to irresponsible lending among BNPL companies, leaving consumers with insurmountable piles of debt.

Originally posted as part of the Finimize daily email.

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