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> Apple Pay users can split purchases into four payments with zero interest and no fees What's the business model for all these BNPL companies if they have zer

> Apple Pay users can split purchases into four payments with zero interest and no fees What's the business model for all these BNPL companies if they have zero fees and zero APR? Are they counting on some % of users requiring extensions? Are they getting a % of transaction value as fees?

pb7 4y ago
Increasing sales by reducing the obstacle of not having all of the money now.
jstanley 4y ago
> Are they getting a % of transaction value as fees? Yes, this. And it's worth it for the merchant because they make more sales. patio11 has a good article about it: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
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okdood64 4y ago
Affirm charges merchants a fee for sales.
jankassens 4y ago
I understand this is instead of the 2% cash back that Apple Card pays on full payments. I assume the merchant fees are the same either way.
- rootusrootus 4y ago
  > I understand this is instead of the 2% cash back that Apple Card pays on full payments. That would reduce the appeal a little. And that's different than their own-store policy on their card -- if you buy from Apple with an Apple Card on the installment plan, you get the 0% for 12 months or whatever, and you get the 3% cash back too. Thanks for the 2% comment, by the way. Made me go look, since I only recall it being 1% (for most things). Turns out it's 2% whenever I use my Apple Watch to do the transaction. Works for me!
boplicity 4y ago
Transaction fees charged to merchants for these types of payments can be as high as 10%. That's pretty substantial.
- lotsofpulp 4y ago
  I do not think Apple negotiated with every merchant that accepts Apple Pay for a higher fee for Apple BNPL payment. The fact that any Apple Pay transaction qualifies makes me think the regular payment processing fee for a credit card is what Goldman Sachs/Apple get.
dualboot 4y ago
Lots of answers here but for the merchant it's an alternative to a "sale price" to drive a transaction.
GeneralAntilles 4y ago
The merchant pays at least double the rate compared to a normal credit card transaction fees. Merchant pays more for the payment processing and gets better conversion. https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/
- lotsofpulp 4y ago
  But Apple BNPL applies to all merchants that accept Apple Pay. I cannot imagine that Target/Albertsons/Trader Joes/Costco/etc agreed to pay an extra 3% in payment processing fees if their customer chooses to use Apple BNPL.
  - coolspot 4y ago
    Apple is taking the fee from cash back % (2% on everything). Amazon does the same - you can buy a thing with 0% APR in 6 monthly payments, but you lose your Amazon card 5% cash back.
    - lotsofpulp 4y ago
      I am referring to this line in the bitsaboutmoney.com article: >BNPLs pitch themselves to businesses as more marketing efforts and less simple payments rails. They’re more expensive than cards by about 300 bps. I assume this is all the same as Goldman Sachs’ Apple credit card. The same payment fees from merchant to Goldman Sachs, and then Apple might get a little too. Since Goldman is taking all the underwriting risk, I would be surprised if Apple is getting the lions’ share. Apple’s reward is their devices becoming more popular among people who cannot get credit cards and might find utility in Apple BNPL.
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djhworld 4y ago
retailer likes it because it increases prospect of sale + it incentivises people to add more things to their basket
skybrian 4y ago
It's both a form of credit and marketing. Some people don't like credit cards for whatever reason. It's not a lot of credit since you have to pay it back pretty quick, but it does have a similar benefit to paying with a credit card and then paying the monthly statement.
rswail 4y ago
If it works like here in Australia, the merchant pays a very high fee, but in return, there are no chargebacks and the BNPL financer pays straight away. So in return for a high rate (merchant fee for AfterPay here in Australia is 4+%) the merchant gets guaranteed payment and no chargeback risk. The BNPL service makes money on the merchant fees and on the fact that this lending appeals to young people and those with low credit scores. It's an extension of what used to be called "lay-by" here, but in that case, the merchant wouldn't release the item until it was paid in full.

pb7 4y ago

Increasing sales by reducing the obstacle of not having all of the money now.

jstanley 4y ago

> Are they getting a % of transaction value as fees? Yes, this. And it's worth it for the merchant because they make more sales. patio11 has a good article about it: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/

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okdood64 4y ago

Affirm charges merchants a fee for sales.

jankassens 4y ago

I understand this is instead of the 2% cash back that Apple Card pays on full payments. I assume the merchant fees are the same either way.

rootusrootus 4y ago
> I understand this is instead of the 2% cash back that Apple Card pays on full payments. That would reduce the appeal a little. And that's different than their own-store policy on their card -- if you buy from Apple with an Apple Card on the installment plan, you get the 0% for 12 months or whatever, and you get the 3% cash back too. Thanks for the 2% comment, by the way. Made me go look, since I only recall it being 1% (for most things). Turns out it's 2% whenever I use my Apple Watch to do the transaction. Works for me!

boplicity 4y ago

Transaction fees charged to merchants for these types of payments can be as high as 10%. That's pretty substantial.

lotsofpulp 4y ago
I do not think Apple negotiated with every merchant that accepts Apple Pay for a higher fee for Apple BNPL payment. The fact that any Apple Pay transaction qualifies makes me think the regular payment processing fee for a credit card is what Goldman Sachs/Apple get.

dualboot 4y ago

Lots of answers here but for the merchant it's an alternative to a "sale price" to drive a transaction.

GeneralAntilles 4y ago

The merchant pays at least double the rate compared to a normal credit card transaction fees. Merchant pays more for the payment processing and gets better conversion. https://www.bitsaboutmoney.com/archive/buy-now-pay-later/ https://www.bitsaboutmoney.com/archive/buy-now-pay-later/

lotsofpulp 4y ago
But Apple BNPL applies to all merchants that accept Apple Pay. I cannot imagine that Target/Albertsons/Trader Joes/Costco/etc agreed to pay an extra 3% in payment processing fees if their customer chooses to use Apple BNPL.
- coolspot 4y ago
  Apple is taking the fee from cash back % (2% on everything). Amazon does the same - you can buy a thing with 0% APR in 6 monthly payments, but you lose your Amazon card 5% cash back.
  - lotsofpulp 4y ago
    I am referring to this line in the bitsaboutmoney.com article: >BNPLs pitch themselves to businesses as more marketing efforts and less simple payments rails. They’re more expensive than cards by about 300 bps. I assume this is all the same as Goldman Sachs’ Apple credit card. The same payment fees from merchant to Goldman Sachs, and then Apple might get a little too. Since Goldman is taking all the underwriting risk, I would be surprised if Apple is getting the lions’ share. Apple’s reward is their devices becoming more popular among people who cannot get credit cards and might find utility in Apple BNPL.

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djhworld 4y ago

retailer likes it because it increases prospect of sale + it incentivises people to add more things to their basket

skybrian 4y ago

It's both a form of credit and marketing. Some people don't like credit cards for whatever reason. It's not a lot of credit since you have to pay it back pretty quick, but it does have a similar benefit to paying with a credit card and then paying the monthly statement.

rswail 4y ago

If it works like here in Australia, the merchant pays a very high fee, but in return, there are no chargebacks and the BNPL financer pays straight away. So in return for a high rate (merchant fee for AfterPay here in Australia is 4+%) the merchant gets guaranteed payment and no chargeback risk. The BNPL service makes money on the merchant fees and on the fact that this lending appeals to young people and those with low credit scores. It's an extension of what used to be called "lay-by" here, but in that case, the merchant wouldn't release the item until it was paid in full.