Apple recently launched Apple Pay Later and a lot of critics are already giving hot takes, saying Buy Now Pay Later Startups should be scared.
But what if this isn’t exactly true?
Maybe Apple’s Pay Later might even help deepen the BNPL market.
What is Apple Pay Later?
Apple Pay later lets consumers who have Apple Pay split a purchase into four equal payments over 6 weeks without late fees. However, this service is currently only available in the US and will be rolled out to other regions with time.
Buy Now Pay Later in Africa
Buy Now Pay Later (BNPL) is sweeping across the world and Africa isn’t left out.
In 2021, the Buy Now Pay Later (BNPL) market reached a global value of $125bn, according to Precedence Research.
Banks and fintechs in Africa all want a piece of the BNPL pie.
Buy Now Pay Later services target merchants (retailers), as it helps them increase sales and order value.
BPNL are point-of-sale loans which is a type of short-term financing that allows customers to purchase physical items (like phones, electronics, cars and laptops) and pay for them later in the future in instalments.
BNPL providers charge merchants a commission fee when they suggest items for shoppers to buy and in return, the BNPL service assumes all transactional activities and risks including defaults and liabilities arising from fraud and transaction errors.
Buy Now Pay Later is on the rise in Africa and rightly so as e-commerce continues to grow on the continent and digital wallets becoming the norm.
A lot of consumers using BNPL services in Africa are young people. Since they made up most of the population in the continent.
Then the high unemployment rates in Africa are contributing to the young demographic embracing Buy Now Pay later services in Africa.
When you also take into account the low access to loans, it becomes evident why there’s a BNPL boom on the continent.
The credit market in Africa is very nascent, so alternative credit models like BNPL present an opportunity for businesses with more risk appetites to offer collateralised loans to Africans.
Apple Pay Later vs Buy Now Pay Later Players in Africa
The Buy Now Pay Later Space isn’t a well-developed one, not just in Africa but globally.
This is why Apple’s Pay Later service is seen as threat to BNPL Services. But a closer look will show that this isn’t exactly true.
Apple’s Pay Later and Buy Now Pay Later are not the same things.
Apple’s Pay Later is about the convenience of Apple users. Here the customer is the consumer.
While Buy Now Palter is about bringing more shoppers to merchants to increase sales and order value. Here, the customer is the merchant and the consumer is the product.
Apple’s ways of doing things have always revolved around a closed network. It isn’t a merchant/retailer driven company.
While this could change as a result of Apple’s acquisition of Mobeewave to drive its payment acceptance for merchants.
However, this could take a while as Apple would need to collect more data about those merchants.
Then there’s the recent launch of Apple’s Lending subsidiary (Apple Financing LLC), which allows Apple to underwrite and extend credit to consumers for its Pay Later product.
Albeit only in states in the US.
To operate in other countries, Apple would have to get a license in each country. A direction they with different turns.
For Apple to become a lender and play in the BNPL space, it will need to have “know your customer” (KYC) processes, which are based on physical documents. Apple is already working to put driver’s licences (US) in the Apple wallet. Again to have it will need to do this in all the countries it wants to lend in
In essence, Apple Pay Later isn’t a BNPL Killer. Because this feature is all about increasing the sales of Apple products. Yes, Apple can play in the Buy Now Pay Later space but it still has some ways to go.
Like most of its launches and new products, the main reason for Apple’s pay Later service is to feed the Apple ecosystem. This isn’t to say the “pay later” experience could grow as they start to collect more data.
So while Buy Now Pay Later Sevices in Africa and even other markets should have some concerns, they still have time to eat more market share because Apple is definitely coming for their BNPL and lending market share.
We don’t just know how long Apple will take.