Afterpay and Zip shares on watch amid Apple Pay Later speculation

Apple could be about to disrupt the BNPL market…

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The Afterpay Ltd (ASX: APT) share price and the Zip Co Ltd (ASX: Z1P) share price could come under pressure on Wednesday.

This follows speculation that tech behemoth Apple is planning to enter the buy now pay later (BNPL) market.

Apple Pay Later

According to Bloomberg, Apple is reportedly working on a new service that will let consumers pay for any Apple Pay purchase in instalments.

The new offering, which is known as Apple Pay Later internally at Apple, will use investment bank Goldman Sachs as the lender for the instalment loans.

The two companies currently work together on the Apple Card credit card. Though, the report highlights that this new offering will not be tied to the card and consumers do not require the use of one.

Why would Apple enter BNPL?

The report suggests that Apple is interested in entering the BNPL market to help drive Apple Pay adoption and convince more users to pay for items using their iPhone instead of traditional debit or credit cards.

This would be another boost for the tech giant's US$50 billion per year services business, with Apple receiving a percentage of transactions made with Apple Pay.

How will it work?

The new Apple Pay Later service is reportedly a mix of the Afterpay and Zip models, with two options for consumers to choose from. These are known internally as Apple Pay in 4 and Apple Pay Monthly Instalments.

Bloomberg understands that that when a user makes a purchase via Apple Pay on their Apple device in store or online, they will have the option to pay across four interest-free payments made every two weeks, or across several months with interest.

It also notes that users who want to use the Apple Pay Later service will need to be approved via an application submitted through the iPhone's Wallet app. This is also where users will manage their payments.

Apple has declined to comment on the speculation.

How will Afterpay and Zip shares react?

Unfortunately for shareholders, it looks set to be a tough day for the Afterpay share price and the Zip share price.

In response to this news, the US-listed Affirm share price crashed 10% during overnight trade. This doesn't bode particularly well for other BNPL shares today.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., Apple, and ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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