Apple's Buy-Now-Pay-Later Appears To Be Making Rapid Progress

MApple Inc. may have entered the buy-now-pay-later (BNPL) market later than its competitors, but it has quickly gained traction and is now challenging incumbent players.

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According to a recent survey, nearly 20% of users who purchased with a BNPL service in the first three months of Apple Pay Later's existence opted for Apple's offering. While Apple's adoption rate didn't match that of PayPal Holdings Inc. or Square Inc.'s Afterpay, it surpassed the usage of Sezzle Inc. and Zip Co. Ltd., two established players in the BNPL space.

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Apple's widespread presence and strong brand reputation seem to be key factors in its success. Unlike other brands, Apple can leverage its extensive availability on merchant sites, making it more convenient for users to access its BNPL solution.

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The survey also revealed that consumers expressed more skepticism about BNPL services in general, but their confidence increased when using Apple Pay Later because of Apple's brand trust. The study showed that users of PayPal, who tended to be older and more financially healthy, were particularly likely to try Apple Pay Later, demonstrating the influence of brand trust and ease of use in Apple's favor. Younger and financially healthy Zip users also showed a notable willingness to try Apple Pay Later.

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Additionally, the BNPL market currently exhibits low user loyalty, indicating that customers are open to switching between services, which works in Apple's favor as a newer entrant with a wide customer base.

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Apple introduced Apple Pay Later in late March, enabling consumers to split purchases into installments and pay over time. This move aligns with Apple's broader strategy to expand its presence in the financial services sector, which includes offering a credit card in collaboration with Goldman Sachs and introducing a savings account for cardholders.

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As Apple continues to leverage its strong brand recognition and vast footprint, it is likely to further solidify its position in the BNPL market, competing effectively against well-established players.

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