The shares of Affirm Holdings Inc. and the US listed shares of Afterpay Ltd. slipped Tuesday after Bloomberg News reported that Apple Inc. was planning a feature that would allow people to make purchases in installments, which would put the smartphone giant in direct competition with the Buy Now, Pay Later.
works with Goldman Sachs Group Inc. GS,
on a function that would allow purchases to be split either into four interest-free installments, payable every two weeks, or over a longer period with interest, according to the report. Apple is already working with Goldman Sachs on its credit card, but the payout feature would be available even for Apple users who don’t have the company card.
Affirm AFRM actions,
fell more than 10% in Tuesday’s trading, while US-listed shares of Afterpay AFTPY,
which is based in Australia, were down more than 7%. Both companies are established providers of Buy Now and Pay Later (BNPL) offers that allow people to pay for goods and services over time.
Mizuho analyst Dan Dolev called the knee-jerk reaction of the Affirm actions exaggerated in the wake of the report.
Concerns about new entrants harming the payments ecosystem have grown in the past, but ended up having less impact than initially thought, he wrote in a note to clients. When Apple announced its online payment button, there were concerns that this competition could hurt PayPal Holdings Inc. PYPL,
but PayPal has only prospered since then, he continued.
The BNPL trend is more popular in markets like Europe and Australia, but it is gaining ground in the United States as younger users seek an alternative to traditional credit. BNPL providers generally claim that their products offer more transparent terms than credit card companies. Their services can include offers without interest and those with simple interest.
The Wave Buy Now, Pay Later: Klarna, Affirm, and Their Rivals Hope to Storm the United States
Affirm is expected to have generated revenue of $ 829 million for its fiscal year that ended in June, according to FactSet, while Afterpay is expected to have made $ 691 million.
Another major BNPL service provider is privately held Klarna, and PayPal offers a four-way payment product among its various payment options. Shares of PayPal lost as much as 1.4% in Tuesday’s trading, but ended the day down 0.6%.
The Bloomberg story, which cited multiple anonymous sources, noted that Apple’s plans are still in development and may change. Apple did not immediately respond to MarketWatchs’ request for comment. A Goldman Sachs spokesperson also did not respond immediately.
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