Apple announced its foray into the Buy Now, Pay Later (BNPL) space with launch of Apple Pay Later, a new update to Apple Pay. This offering will let users split the cost of a purchase made over Apple Pay into four equal payments over six weeks without any interest or late fees.
While the first phase of the launch will be in the US, both in apps and on the web, Indian industry experts believe offering such a product in India will have a scope but comes with challenges.
Apple Pay Later is powered by Mastercard network and will be available easily with no extra work needed from the developer or merchant side.
Purchasing power issue
“Purchasing power is always an issue. Apple is a cash rich company. For other durables companies, they need to tie-up with banks. Now every bank in the world would want to partner with Apple on such offerings, which expands the potential market for them. Apple believes in being able to create ecosystems. After devices, they got into content, services and now financing looks like the right move,” Faisal Kawoosa, Founder and Chief Analyst, techARC told BusinessLine.
Model too early for India
He added, “I have my doubts over them entering India with this product. Though we have a great mechanism with Aadhaar cards and other such things to trace users, but the sentiments going around sharing personal data. Especially the cohort buying Apple products in India are paranoid over sharing kind of data including Aadhaar. I think it’s too early for Apple to think this model in India.”
Besides, India already has a slew of similar BNPL products, including peers like Amazon offering BNPL. Moreover, in India, many financial institutions and banks are already offering zero interest EMI-based features on purchase of electronics and gadgets.
‘Plenty upsides’
Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research, differs adding , ”India provides a huge scope for Apple. It will also impact how device ecosystem and applications are structured. The upsides are plenty. Given the checks and balances required, regulators may want BNPL to be a separate entity at some point. In India, BNPL is actively under the purview of the regulator. RBI comes down heavily on financial services company. BNPL and the percentage of defaulters may be higher for the company in India. It will also depend on the risk appetite of Apple and its partners and India wouldn’t necessarily be a margin reach market,” he added.
“Since Apple doesn’t monetise via data through ads and personalisation, the other way for them to monetise is financial services and model. With strong partnerships like Mastercard, it will be able to easily underwrite some of the NPAs. The concern is whether Apple has the power to log you out of its product ecosystem, once there is repayment default,” Gogia said.
In another new feature update, the tech giant launched Apple Pay Order Tracking, that lets merchants deliver receipts and order tracking to the user’s wallets. Users too will get notified on upcoming payments through Apple Wallet on iOS.
During the announcement made at its annual Worldwide Developers Conference (WWDC), the company didn’t reveal the name of partnering financial services companies for these services. Last year, Bloomberg reported that Apple Pay Later would partner with Goldman Sachs to offer loans needed for such instalment-based products.
Published on
June 07, 2022
