What: Apple Pay introduces a new buy-now-pay-later option through Klarna, available in the US and UK with plans for expansion to other markets.

Why it is important: This move signifies Apple's strategic shift in financial services, partnering with established players to expand its offerings in the competitive buy-now-pay-later market.

Apple Pay is launching a new buy-now-pay-later (BNPL) option in collaboration with Klarna, initially available to eligible users in the US and UK. This feature, part of the iOS 18 update, allows for split payments both online and through the mobile app for amounts between USD 35 and USD 2,000. The service also offers long-term credit options via WebBank. This move comes just a year after Apple discontinued its own BNPL service , indicating a shift towards partnering with established fintech players. The introduction of this feature aligns with the broader trend of tech companies expanding into the BNPL market, which has seen increased adoption despite challenges and maturation . It also follows Apple's recent termination of its credit card partnership with Goldman Sachs , suggesting a strategic realignment of its financial services offerings. Apple's cautious approach to international rollout, starting with the US and UK before expanding to other markets like Canada, reflects a measured expansion strategy. However, this development occurs as the BNPL industry faces increased scrutiny and potential regulation, with concerns about rising problem borrowing and risks of default . This highlights the complex landscape Apple is navigating as it expands its financial service offerings, balancing user experience enhancement with regulatory compliance and risk management.

IADS Notes: Apple's partnership with Klarna for BNPL services represents a significant shift in its financial services strategy. This move comes after discontinuing its own BNPL service and ending its credit card partnership with Goldman Sachs , indicating a preference for collaborating with established fintech players over developing in-house solutions. The BNPL market, while growing, is facing challenges including concerns about encouraging unwise debt levels and potential regulatory scrutiny. Apple's measured approach to rolling out this service, starting in specific markets before wider expansion, suggests a cautious strategy in navigating these complex financial waters. This development is part of a broader trend of tech companies integrating more financial services into their ecosystems, reflecting the growing importance of flexible payment options in e-commerce.

Klarna teams up with Apple Pay for BNPL options