After Apple Bows Out, How Do the Remaining BNPL Players Shake Out?

Apple opted to end Apple Pay Later but to maintain a presence in BNPL by allowing third parties on Apple Pay. Where does this leave the rest of the dedicated buy now, pay later industry?

If you like change, the buy now, pay later business will make you happy.

“This industry is such a moving target. What you publish today won’t match tomorrow,” says Bryce Deeney, CEO, at Equipifi, a firm that helps banks and credit unions create BNPL programs.

Case in point: The one-two punch Apple threw in June.

First, it unveiled two ways to access buy now, pay later services through its Apple Pay digital wallet. One was to provide direct access to payment plans from Affirm. The second was to enable participating debit and credit card issuers whose customers have uploaded their cards to Apple Pay to obtain BNPL credit from those card issuers.

Then Apple discontinued its own Apple Pay Later program, executed through its Apple Card but financed by Apple itself.

How big a hole does Apple’s departure leave?

Deeney points out that there are dozens of general and industry-specific buy now, pay later and installment finance offerings in the U.S. alone, and more worldwide. He doesn’t think the demise of Apple Pay Later will leave a lasting gap, but that Apple will instead continue to influence the business through Apple Pay. He points out that Google had already invited both Affirm and Zip onto Google Pay earlier this year.

It’s important to separate the steps Apple has taken, says Yaacov Martin, CEO of The Jifiti Group, which helps financial institutions set up embedded payment programs, including BNPL. Martin points out that Apple Pay is a method of payment, whereas Apple Pay Later was a financial product. Apple has clearly decided to concentrate on running the toll booth and has chosen not to compete with the players who will be using Apple Pay as their conduit.

With Apple Pay Later, Martin suggests, “Apple was testing the waters and establishing standards.”

“I wouldn’t be surprised if this was their plan all along,” says Deeney.

Another factor to consider, says Martin, is that Apple Pay Later was “agnostic” when it came to the merchant. The consumer applied for the BNPL credit prior to making the purchase and went to the merchant having received approval. For many of the fintech BNPL programs, deep involvement with merchants has long been a key aspect of their programs. Often, they market themselves as a sales tool for merchants to solve the abandoned cart problem, closing more sales.

Meanwhile, efforts by large banks, for example, to provide buy now, pay later and installment financing options are growing. As one buy now, pay later advocate recently noted, traditional institutions initially treated the concept with disdain, but its persistence has drawn their interest.

A key number to consider: Earlier this year, Adobe Analytics reported that ecommerce financed by BNPL in the U.S. came to $25.9 billion between January and April 2024, up 11.8% from the year earlier. Adobe projects that the total for 2024 could hit $84.8 billion, a 13% increase.

Here’s a rundown on what the buy now, pay later specialists are up to.

Affirm

Last fall Max Levchin, founder and CEO of Affirm, who has long bad mouthed traditional credit card offerings, threw down a gauntlet with the declaration that Affirm wanted to be a payments company — a big one.

“Five years from now,” he predicted at a company investor forum, “we have no intention of being the leader in BNPL. We intend to be the leader in payments — making payment more honest, accessible and better for everyone involved.” Nowadays the company describes itself as “the payment network that empowers consumers and helps merchants drive growth.”

The deals with Apple and Google, outlined earlier, give testimony to the company’s ambitions. In a June fireside chat with Barclays analyst Ramsey El-Assal, Michael Linford, Affirm CFO, said that the sheer size of the Apple Pay user base was one advantage of Affirm’s deal. But there is another twist here.

“It’s also a really cool chance for us to continue to distribute our product direct to consumers,” said Linford. “The more we’re in wallets, in addition to being integrated on merchant sites, the more consumers will have a chance to see us.”

But Affirm is also expanding on multiple fronts in BNPL and installment payment programs. At the beginning of June, for example, it introduced two new options, a “pay in two” [weeks] plan and a “pay in 30” [days] plan, both of which are interest-free. In the announcement the company said it is offering these options in tests increased merchant sales. Broader usage is expected as the company brings the options to more of its merchant base, for consumer usage.

In the company’s third quarter 2024 shareholder letter, , Levchin disclosed that the Affirm Card, launched in early 2021, had recently passed the one million active cardholder mark. Notably, Levchin said that 20% of the spending on the card came from categories that have not been Affirm’s turf. This includes categories like restaurants, home improvement, groceries and fuel. The card is being used more frequently for smaller everyday transactions, coming to 10% of gross merchandise volume in the quarter — doubling the share seen in the first fiscal quarter.

Read more: CFPB’s Foray into BNPL Regulation Stirs Ire and Interest

Afterpay

Afterpay, which originated in Australia, one of the hotbeds of BNPL development, is part of Block, which is also the parent of Square. The company offers the Cash App mobile payment app. It’s notable in the BNPL context because consumers can also obtain the Cash App Card, a debit card tied to Cash App accounts, to which Block has recently been adding access to Afterpay’s services.

During the company’s first quarter earning briefing in May, Jack Dorsey, “Block Head” — co-founder, chairman, president and CEO — admitted that after acquiring Afterpay “we forced an integration way too quickly.” He said numerous issues have been fixed.

“Afterpay on the Cash App Card is super exciting,” said Dorsey. ” As with any product, we’re looking at how people are using it, and we’ll be making decisions on what it ultimately looks like when we roll it out 100% over time based on how people perceive it, how they use it, how they find it valuable or not valuable. But we think it’s really exciting.”

Part of what makes it exciting, according to Amrita Ahuja, COO & CFO, is the 24 million monthly active users of Cash App who have spent over $100 billion in total over the past year. Adding Afterpay to Cash App Card “helps merchant partners who have access now to a much bigger network of customers across the Cash App ecosystem,” said Ahuja.

“Of course, we’re going to start small and, as with any lending product, ramp based on the signals that we see, where eligible actives will be able to easily convert certain purchases into an Afterpay transaction,” said Ahuja.

Klarna

The perennial question about Klarna, which brought BNPL and more from Sweden, is when it will launch its initial public offering in the U.S.

In a July 10 edition of Fortune’s “Leadership Next” podcast, the closing question concerned Klarna’s IPO status. Here’s how Sebastian Siemiatkowski, co-founder and CEO, answered, coyly:

Siemiatkowski : The prerequisites of the IPO were always that we wanted to build a global business. Global business means success in the U.S. Success in the U.S. always came down to brand awareness, but also a sustainable business model.

And so first we managed to sign up almost half of the top 100 U.S. retailers who are live now. There’s over 40 million consumers using Klarna in the U.S. And we’re now, since five quarters, a profitable business in the U.S. You know, we’re going to do over a billion dollars of revenue in this market. And so we’ve kind of achieved those targets that we set for ourselves.

And since that, like everything is in place to do the IPO, we’re doing preparatory work and working on it, but we haven’t set a deadline and it’s not like an official thing yet, but it’s fairly likely to happen within the first…

Host: I was reading early next year. [2025] That’s not the case?

Siemiatkowski: That’s what people say. Yeah, I’ve heard that as well.

That was the end of the discussion, which appeared to again punt the IPO forward to an uncertain date.

(A week later, the Financial Times reported that sources say the IPO will happen in the first half of next year, hinging on market conditions.)

Meanwhile, Klarna continues to build out its product line. It offers pay in four, pay in 30, and pay now services, as well as financing for higher-ticket items. The latter may or may not carry interest, depending on the retailer.

In recent months, Klarna has been rolling out a Klarna credit card, with the waitlist opening in April. The card is intended to allow charges that can be paid in installments and the company says this variation has been in high demand. The card is issued in conjunction with WebBank.

Read more: Why Offering BNPL Makes Sense for Banks and Credit Unions

One Finance, majority owned by Walmart

Affirm had been Walmart’s visible buy now, pay later partner, but April reports indicated that One, acquired and augmented by Walmart and Ribbit Capital, was beginning to be available as well. Neither Walmart nor One issued any press release about the service, and while there’s lots of features discussed on One’s own website, it’s silent on BNPL.

However, in the quarterly highlights portion of the investor presentation from Coastal Community Bank, there’s the closest thing to an official statement. (Coastal is One’s banking as a service provider.) The bank said it had worked with One to launch a new lending product — “point of sale installment loans” at Walmart — in the first quarter: “These loans, which can be offered with customer friendly pricing and payment features similar to so-called ‘Buy Now Pay Later’ products, are fully disclosed and offered as standard credit products, avoiding concerns raised with respect to more typical Buy Now Pay Later offerings.”

The report didn’t include any numbers on the launch.

PayPal

PayPal offers “pay in four” interest-free plans as well as longer- term pay monthly plans running six, 12 or 24 months. An interesting evolution in strategy in the wake of leadership change came up during an analyst fireside chat in June.

In the wake of the appointment of Alex Chriss as president and CEO last September, PayPal began a reorganization and brought in new players for some key positions. (He replaced longtime CEO Dan Schulman, who spoke at the 2024 Financial Brand Forum.) RBC Capital Markets’ Daniel Perlin, financial technology analyst, noted that 2024 was a transition year for PayPal. Jamie Miller, the new CFO, agreed and noted that PayPal has been focusing on specific merchant categories, including major retailers and small retail businesses.

Among what she called “mega merchants,” she said that “they all have different needs in terms of what they want out of their checkout processes. She said that some specially want to move more purchasing volume into buy now, pay later products from other channels.

Sezzle

Sezzle offers a range of payment approaches, including pay in full, pay in two, pay in four and longer-term plans.

The U.S.-based company specifically positions itself as an option for consumers who have difficulty qualifying for traditional credit products. The firm offers pay in four customers the option of having their transactions reported to credit bureaus — this can help customers improve their credit standing.

Read more: Shocker: Amex, Chase and Citi Top BNPL Satisfaction Rankings

Zip

Zip, which also originated in Australia and then engaged in overseas expansion, has decided to concentrate on that market and the U.S. The company became one of the BNPL options available on Google Pay in January. (Affirm is the other one.) Of the pilot effort, in April the company’s earnings update said that the collaboration with Google had “experienced positive momentum continuing to scale.”

Zip has generally focused on pay in four plans, but has been experimenting with a pay in eight plan.

In 2023, Zip made changes to its strategic approach to improve its product and the customer experience in the U.S., according to its annual report. More recently, in July a new U.S. CEO was scheduled to take over from Zip co-founder Larry Diamond, who had relocated from Australia to establish the U.S. operation. The incoming CEO, Joe Heck, is a consumer lending veteran. He comes to Zip from a fintech called Happy Money, and before that worked in multiple positions at CUNA Mutual Group.

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