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Apple partners with Goldman Sachs for BNPL services

Apple partners with Goldman Sachs for BNPL services
By Nikhil Batra
  • Apple and Goldman Sachs’ partnership will provide BNPL services to Apple Pay users
  • Apple’s new move challenges BNPL service providers like PayPal and Affirm
  • The new partnership will boost Goldman’s consumer push.

Apple Inc. will provide customers the ability to pay for any Apple purchase in installments and tap into the thriving buy now pay later (BNPL) market through its partnership with Goldman Sachs

Apple’s new move challenges BNPL service providers like PayPal and Affirm

The new feature, known as Apple Pay Later will use the services of Goldman Sachs, which is an existing partner for the Apple Card credit card since 2019, according to Bloomberg. This feature will compete with the current service providers, Affirm and PayPal, which recently have become popular.

In the United States, Australia, and Europe, BNPL is marketed as an alternative to credit cards. The service has soared in popularity during the pandemic, as consumers seek other options to make purchases that are easier on their wallets.

The new partnership will boost Goldman’s consumer push

Stephen Scherr, chief financial officer at Goldman said he believes there are “more opportunities to be had with Apple”. He said the alliance with companies like Apple is aimed at finding a place in the world of consumer banking.

"We believe the concerns over the competitive impact of added BNPL offering by Apple are overblown," Moshe Katri, an analyst at Wedbush Securities said.

He added, "All these centre companies, including PayPal and Affirm, have already built an ecosystem offering products and services around the merchants they serve. BNPL is just another product or service offered to merchants as a natural extension of Apple's ecosystem".

When a user makes a purchase via Apple Pay on their Apple device, they will be provided with two options- either the customer can pay it through four interest-free payments every two weeks or pay across several months with interest. The services are known as “Apple Pay in 4” and “Apple Pay monthly instalments”.

The new BNPL system can help Apple to drive more customers into using their iPhones to make payments for items instead of standard credit cards. Apple receives a percentage of transactions that are made through Apple Pay which is already driving more than $50 billion in additional revenues to the company.

When users make payments through the Apple Pay Later plan, they can utilise any credit card to make payments over time. The service is planned to be available for purchases that are made either at retail or online stores. Apple is already offering monthly instalments via the Apple card for the purchases of its products but the new service will expand that technology to any Apple Pay transaction.

Users who plan to utilise the Apple Pay Later service will be required to have an approved application form submitted through the iPhone’s Wallet app. They also need to submit a copy of their local ID card to apply for the program.

The interest rate that Apple plans to charge for the monthly instalment feature was not yet disclosed. Affirm is currently charging as much as a 30% annual percentage rate (APR).

Apple’s iPhone-based payment service is accepted by almost 85% of all US retailers,  the company said. It would mark as one of the largest additions to the services since 2014, following various other features such as peer-to-peer payments.