Apple at the end of March introduced Apple Pay Later in the U.S. Designed with users’ financial health in mind, Apple Pay Later allows users to split purchases into four payments, spread over six weeks with no interest and no fees.
Users can easily track, manage, and repay their Apple Pay Later loans in one convenient location in Apple Wallet. Users can apply for Apple Pay Later loans of $50 to $1,000, which can be used for online and in-app purchases made on iPhone and iPad with merchants that accept Apple Pay.
While it has only been a few short months since its release, a recent J.D. Power survey of 8,000 consumers in the U.S. shows how quickly Apple is making its presence in the market known.
According to J.D. Power survey respondents, Apple Pay Later has been used by more consumers than established brands such as Sezzle and Zip since its launch. Nearly one-fifth (19%) of BNPL customers used Apple Pay Later in its first three months. PayPal was still the most-used BNPL brand over the same period (39%), with Afterpay (33%) as the next-most used brand.
The average Apple Pay Later user tended to be more financially healthy than most other BNPL customers, potentially giving it a more sustainable user base than its competitors.
It should come as no surprise that Apple was able to gobble customers up from BNPL competitors almost immediately.
The company is known for consistently delivering quality technology products that customers love, as seen in other J.D. Power studies. Customers report relatively high satisfaction with new Apple products when compared to solutions from companies with decades of experience in the same industry.
With its BNPL solution, Apple continues strengthening its financial services catalog. But the company’s power doesn’t just come from its brand name. It also has a global network and vast resources to help it enter new markets seamlessly.
Apple has some sizable advantages over its BNPL competitors, who had to attract users and build merchant acceptance one at a time. Apple was able to instantly tap its army of Apple Pay users and existing global acceptance footprint to create instant scale.
The company immediately made Apple Pay Later available to millions of potential customers when it launched in March. That’s because Apple Pay Later can be used wherever Apple Pay is accepted, including over 85% of U.S. retailers, making it easy for consumers to access the service.
From a technological standpoint, Apple Pay Later can be directly managed within Apple Wallet, available to any customer with a compatible iPhone, iPad, Apple Watch, or Mac.
Of its competitors, PayPal and Zip users were likelier than users of other BNPL brands to try Apple Pay Later. Seventeen percent of survey respondents who paid with PayPal most often and 17% who paid with Zip most often during the period said they tried Apple Pay Later as well.
Apple’s ability to attract shoppers who skew healthier and more skeptical of BNPL options may be most problematic for PayPal, which has traditionally attracted similar users. Meanwhile, Zip has a higher proportion of young customers who may be more likely to move to Apple Pay Later because of their affinity for Apple-branded products.
Ultimately, no other BNPL company currently compares with Apple’s brand recognition, technological cachet, and network effects. Even PayPal, a traditional payments juggernaut with a large base of active BNPL users and a brand valued at $75 billion, has its work cut out to withstand Apple’s entry into this space.
MacDailyNews Take: As we wrote when Apple Pay Later launched:
With Apple Pay Later here, Affirm, Afterpay, Klarna, and the other BNPL outfits should be very worried.
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