Apple leaps into BNPL space as Affirm stock takes a hit

Apple (AAPL) today announced that it would join the Buy Now, Pay Later (BNPL) fray at its Worldwide Developers Conference 2022, or WWDC.

The service, called Apple Pay Later, will be available through Apple Pay, allowing consumers to pay for purchases in four equal payments over six weeks with no interest or fees.

The announcement not only marks an expansion of the Apple Wallet’s capabilities, but also a jump for Apple into a space that’s grown throughout the pandemic – and run into headwinds and controversies.

Apple shares rose less than half-percent in Monday afternoon trading, largely in line with the tech-heavy Nasdaq index.

BNPL is already a competitive sector, as illustrated by the 5% stock drop that BNPL giant Affirm (AFRM) clocked today on the news of Apple’s entrance into the space.

The timing of Apple’s announcement comes as BNPL’s struggles have been making headlines lately. The sector has been affected in part by more cautious consumer spending, while key BNPL player Klarna has struggled immensely, with the company’s valuation getting slashed and layoffs affecting a large section of its workforce.

One of the space’s leaders, Klarna, which is backed by SoftBank, has struggled to fundraise recently and has reportedly found itself at a lower valuation. The company, which was previously valued north of $40 billion, is now raising money at a $30 billion valuation, according to the reports.

For Klarna, the fallout grew exponentially. The company used a pre-recorded video message to communicate a layoff to its staff that affected 700 employees, then Klarna CEO Sebastian Siemiatkowski controversially shared a list of those recently laid-off employees.

Klarna serves as a microcosm of the uncertainties surrounding the BNPL space right now.

For example, BNPL has been on the receiving end of criticism from numerous state attorneys general, who fear that the practice isn’t being appropriately regulated.

“The Buy Now Pay Later industry has grown immensely in the past few years, but that growth has not been accompanied by appropriate protections,” North Carolina Attorney General Josh Stein told Yahoo Finance. “My biggest concern is that some lenders may be violating or evading consumer protection laws and ultimately causing serious financial harm to consumers in the long term.”

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Stein said that there’s a lot we still don’t know about BNPL and how it affects consumers, with a group of attorneys general calling on the Consumer Financial Protection Bureau to examine the practice. In January, the CFPB invited any interested parties to provide comments to the bureau on the industry as it gathers information on the size, scope, and business practices of the BNPL industry.

BNPL has become a nearly $100 billion industry, growth that — despite increasing scrutiny — could be attractive for Apple, which three years ago introduced its first credit card.

Apple did not immediately return Yahoo Finance’s request for comment.

Allie Garfinkle is a senior tech reporter at Yahoo Finance. Find her on twitter @agarfinks.

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