Apple Shakes Up the ‘Buy Now, Pay Later’ Industry

By: Keith Wagstaff · April 26, 2024 · Reading Time: 3 minutes

The Rise of “Buy Now, Pay Later”

If you’ve bought anything on the internet lately, you’ve probably noticed a button offering to spread your purchase over several payments.

This is called “buy now, pay later,” or BNPL. Companies including Affirm, Klarna, and Afterpay let you buy a product home immediately while you pay for it over time. These loans result in a soft credit check, which doesn’t affect your credit score, making them appealing to people who are working to build up their credit.

In a report from the Consumer Financial Protection Bureau, 17% of survey respondents said they’d used a BNPL service in the last 12 months.

Apple (AAPL) made waves in February by announcing it would report its BNPL loans to Experian, one of the three major credit bureaus in the United States. Equifax, Experian, and TransUnion were hoping Apple’s competitors would follow suit, but so far, they have not.

The worry: Consumers could be taking on massive debt that’s invisible to banks and other lenders

The Divide

If scored in the traditional way, BNPL loans could hurt consumers’ credit scores, according to Affirm, Klarna, and Afterpay, who don’t want to report their loans to credit bureaus.

The credit bureaus, however, say that if they could account for BNPL loans, consumers could build their credit over time by making their payments on time, and lenders would have a more accurate picture of how much debt people are actually holding as BNPL basically means buying something on credit.

Credit bureaus and BNPL firms are discussing how the credit reporting system could be revised. Meanwhile, a former Klarna exec founded Qlarifi, an alternative to the major credit bureaus that would collect data in real-time and may be more appealing to BNPL firms.

As the two sides hash out their differences, the “buy now, pay later” industry keeps growing. On Tuesday, Walmart announced it’s launching its own BNPL service and Reuters reported that Affirm has started offering BNPL loans for elective medical procedures.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

TLS 1.2 Encrypted
Equal Housing Lender