Apple’s move into the buy now pay later (BNPL) space has the attention of Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB), who is now examining the larger implications of big tech companies becoming lenders.
The CFPB is taking a close look at the “implications of Big Tech entering this space” and is considering a number of issues, including whether Apple Pay Later could “reduce competition and innovation in the market,” Chopra said, Financial Times (FT) reported on Wednesday (July 27).
See also: Is Apple Pay Later Really a Threat to Affirm and Other BNPL Providers?
Apple Pay Later is one of about 80 BNPL products on the app shelf, including PayPal, Affirm, Afterpay and Klarna, PYMNTS reported in June. The number of BNPL products worldwide escalated since 2020, including several EU FinTechs offering installment billing in the U.S.
The CFPB boss told FT that while his agency has concerns over tech entering the BNPL space, there is also unease over how Apple is using information collected in its buy later transactions and whether it’s being combined with browsing, geolocation, and health data.
“Big Tech’s ambitions when it comes to ‘buy now, pay later’ are inextricably linked to the desire to dominate the digital wallet,” Chopra told FT.
“Any tech giant that has a lot of control over a mobile operating system is going to have unique advantages to exploit data and eCommerce more broadly,” he said.
Read more: Apple Says Now Is the Time for Pay Later
The demand for BNPL took off during the pandemic and has not shown signs of abating. Apple’s product allows for four installment payments over six weeks, with no interest or fees, PYMNTS reported last month. Everything is processed through the digital wallet and the Mastercard network.
Unlike other BNPL services that partner with financial institutions to underwrite the short-term loans, Apple is serving as the underwriter for its pay later product and funding the loans itself.
“We’re glad to offer customers a choice which prioritizes their financial health and privacy with Apple Pay Later, and we look forward to working with the CFPB to answer any questions they may have,” an Apple spokesperson told FT.
Related: Australia’s BNPL Space Crushed by Rising Inflation, Interest
The CFPB will publish a report in the fall based on feedback requested of Afterpay, Affirm, Klarna, PayPal and Zip regarding transaction trends, fees, underwriting policies, and credit reporting, FT reported.
The report will also include the CFPB’s “potential next steps from a regulatory perspective,” Chopra told FT.
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