Apple’s late-stage entrance to new markets does not always send tremors through incumbents. But its reported foray into buy now, pay later has sent the shares of specialists reeling. Afterpay and Zip of Australia and US-listed Affirm all lost about a tenth of their equity value.

It would be no surprise if BNPL piqued Apple’s interest. A touted total addressable market size of $30tn, including global retail, is bunkum. But alluring growth projections are on a sounder footing. Worldpay sees usage doubling, from 2.1 per cent of online payments last year to 4.2 per cent by 2024. Ecommerce group Zalando has even launched its own try first, pay later service.

Size and loyal customers are key advantages. Apple has both. An estimated 500m iPhone users have enabled Apple Pay. That dwarfs the total for Australian rivals. If a fifth of those customers become active BNPL customers, it would put Apple in the same ballpark as Klarna. The privately held Swedish fintech claims 90m active customers, not all of whom use its BNPL services.

Klarna’s competitors have sought to extend their footprints via acquisitions. Zip bought Quadpay, Twisto and Spotii in the past year or so, giving it access to the US, Europe and the Middle East respectively. That increases reach but means juggling different software platforms. Others, particularly in south-east Asia, have grown by bolting BNPL products on to existing superapps or, in the case of India’s Pine Labs, merchant services.


Klarna’s blitz of ads, influencers and reach across 250,000-plus merchants have helped it build a loyal consumer base. But Apple’s broader ecosystem makes its users stickier. A customer with Apple Pay might find it easier to make instalment payments.

Klarna is lossmaking, while Apple’s bumper profits and multiple revenue streams give it flexibility to drive down fees and grab market share. PayPal, which on Wednesday waived late fees on BNPL payments in Australia, has already shown the way.

If Apple went ahead, it would be a blow to an overvalued sector already facing regulatory threats. But it would be far from a death knell. Instead, expect tamping down of valuations and a lot more consolidation.

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