Apple Inc is newest entrant in the buy-now-pay-later market, but unlike its competitor AfterPay, it already possess large amounts of data about customers’ expenditure. On June 6, chief executive Tim Cook made the announcement of the new Apple Pay Later service being available on Apple Wallets in the US.
In just a day, ‘the buy now, pay later’ emerged from a simple fintech idea to a product easily accessible to any iPhone user. Essentially, this features allows users to spread out their payments for vast purchases over many periods. Clearly, Apple is fully expanding to fintech with its service on the Wallet app, along with introducing credit checks on new users and loan decisions in-house with its Apple Financing Inc.
Moreover, the CEO of buy-now-pay-later startup Affirm, Apple’s new rival, admired the step in a tweet, just following the news that buy now, pay later was emerging as “the new norm.” This system is also beneficial to retailers as when customers see prices being able to be broken to smaller payments, they could be more willing to buy them.
However, this could prove to be rather bad news for consumers, as Nadine Chabrier, a senior counsel at the Centre for Responsible Lending specifies. Apparently, Apple has the power to make use huge amounts of data it possesses, from where one shops to their heart rates.
Apple’s possession of data and who is at risk?
Chabrier expressed concerns over Apple’s tendency to take part in ‘surveillance marketing,’ i.e. use of data to pull consumers to products. Specifically, these are similar to ones they purchase before and could be potentially attracted to, taking their data profile into account. Finally, it looks like regulators have initiated their investigation into buy-now-pay-later risks.
“Apple has a tremendous amount of data on every person who has an iPhone, and they could leverage that to increase spending through Buy Now, Pay Later. And we found through the research that people aren’t really aware of that, and it can be a really insidious way of increasing spending,” Chabrier said.
Typically, buy-now-pay-later apps are used for purchases of expensive products such as a new laptop or concert tickets. However, several Americans living paycheque to paycheque use the services for essential expenditures. With its growing popularity, reports indicate how it could make up about 14% of all e-commerce purchases.
Particularly, Gen-Z consumers have been visibly racking up debt through these services which, a SFGATE report suggest could allow reckless spending above their capacity. Expectantly, buy-now-pay-later startups’ strategies would often copy a Silicon Valley startup’s glossy minimalism.