It was a relatively uneventful day for Affirm Holdings – a leading US-based Buy Now Pay Later (BNPL) company – during the first couple of hours of trade on Tuesday.

The stock was flat, if not somewhat up on its intraday low before news broke that Apple – the $2.43 trillion tech behemoth, would be crashing the BNPL party with its own installments product.

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Affirm share price in focus

At 2:01 PM on Tuesday, Bloomberg ran a story titled Apple, Goldman Plan ‘Buy Now, Pay Later’ Service to Rival Affirm.

The stock crashed almost immediately: falling over 10% in about 30 minutes. As traders and investors skirmished to find a bottom, the market was digesting reports that tech giant apple would be entering the BNPL space itself.

Affirm closed out the session at $58.21 per share, down 10.45% for the session and well off its 52-week high of $146.90 per share. At those price levels, Affirm has an implied market capitalisation of just over USD$15.43 billion.

Citing inside sources, Bloomberg reported that Apple was developing a BNPL product – tentatively titled Apple Pay Later – which would allow consumers to make purchases and pay off such purchase across a number of instalments. Goldman Sachs would apparently act as ‘the lender’ for this installments product.

Importantly, no date was given on the potential rollout of such a product and Goldman Sachs or Apple representatives did not provide a comment when queried by Bloomberg.

Goldman stock finished out yesterday’s session lower, while Apple eked out a gain to close above $145 per share.

Expanding on how the service would work and citing sources close to the matter, Bloomberg reported that Apple’s BNPL product would be accessible to customers via Apple Pay on Apple devices. More specifically, the Apple Pay Later product looks to have two distinct ‘spin-offs’ for customers to take advantage of, with ‘Apple Pay in 4’ focused on short-term repayment terms. while a ‘Apple Pay Monthly Instalments’ product would focus on longer repayment terms.

‘At least some of the Apple Pay Later plans will also exclude late fees and processing fees, only costing users interest for longer-term plans,’ Bloomberg wrote.

This service is expected to be available for purchases made online and in physical stores, and will apparently not require credit checks.

Apple: a quiet payments play

While Apple itself doesn’t provide granular data on the performance of Apple Pay, in 2020 Bernstein analysts estimated that Apple Pay accounted for some 5% of global credit card transaction volumes.

‘There are indeed plenty of reasons to worry that Apple may attempt to disrupt the payments ecosystem,’ said Berstein analysts at the time. A statement, which in retrospect, appears highly prescient.

These events in the US flowed into Australian markets on Wednesday, with a number of ASX-listed BNPL companies witnessing steep declines at the open.

Shane Walton | Financial Writer, Australia
14 July 2021