An iPhone using Apple Pay
Photo: CardMapr/Unsplash

Apple’s ‘buy now, pay later’ strategy isn’t what you think

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Friday: Apple’s “buy now, pay later” strategy, Lummis-Gillibrand on GitHub and Brad Garlinghouse on dogecoin.

Off the chain

Sam Bankman-Fried is doing his best to bail out the rest of the crypto industry. The FTX CEO has said he feels a “responsibility to seriously consider stepping in” to prevent market contagion as rivals stumble. Hence FTX’s extension of a line of credit to BlockFi and Bankman-Fried’s loans to and investment in Voyager Digital. It’s not clear that it’s enough: Voyager has limited daily withdrawals after its exposure to Three Arrows Capital became clear. Bankman-Fried may look generous in backstopping these firms, but it also positions him to emerge in a more powerful position post-crypto crisis.

— Owen Thomas (email | twitter)


Chips are the backbone of our digital economy. We must rebuild the American chip industry or suffer the consequences

Some of the most astounding tech-enabled advances of the next decade, from cutting-edge medical research to urban traffic control and factory floor optimization, will be enabled by a device often smaller than a thumbnail: the memory chip.

Click here to read more from Micron

The real payoff from Apple Pay Later

Apple’s entry into the “buy now, pay later” market was one of its worst-kept secrets: Analysts had been predicting the company’s rollout of a pay-later service as early as 2020. The most common read on the move was predictable: Apple was here to smash the competition. The company has a track record of jumping into new sectors late and still managing to come out on top — the iPod came out when there were tons of MP3 players on the market.

But some analysts have a starkly different view. When you look at it under the hood, Apple Pay Later emerges as a distinctly different product than what Klarna and Affirm offer, they say — and one that isn’t much of a market predator.

Apple Pay Later is courting different customers in different places. Most “buy now, pay later” services court ecommerce marketplaces like Shopify and Amazon or large retailers to get their logos integrated at checkout.

  • Apple Pay Later lives in Apple’s digital wallet, an iPhone feature the company has been trying to build up. Users will be prompted to check out using Apple Pay Later any time they use Apple Pay or can configure loans directly in the wallet.
  • The pay-later companies, meanwhile, are trying to extend their reach through financial super apps, which allow customers to apply for payment plans even when there’s not a deal in place with a retailer, though that takes more steps than pressing a button at checkout. Other tools are the virtual and physical cards that allow customers to pay online or in-store, like Affirm’s Debit+ card or the Klarna Card.
  • Either way, a tight integration at the moment of checkout is key. Eliminating or reducing “friction” is “a huge factor” in getting consumers to take the deal, said Harry Kohl, a director at Fitch Ratings.

Apple’s advantage is that it’s already in your pocket. The wide reach of iPhones among consumers and Apple Pay among merchants — particularly at retail, where the pay-later companies are trying to use cards to boost usage — is key to Pay Later’s success.

  • “This is an opportunity to greatly expand ‘buy now, pay later’ services to people who haven’t used them in the past,” said Ian Rasmussen, who co-leads the North American asset-backed securities ratings group at Fitch Ratings.
  • The typical Apple customer differs from the kind of customer “buy now, pay later” companies have talked about serving — typically a younger customer turned off by credit cards. Third-party surveys consistently show that Apple customers have higher incomes and spend more than Android users.
  • About three-quarters of pay-later users in the U.S. are Gen Z or millennial, according to a report from eMarketer. Adults who make between $50,000 and $100,000 are most likely to use “buy now, pay later.” Research from the Ascent also shows that 45% of those customers are using “buy now, pay later” to afford something that didn’t already fit into their budgets.

What matters to Apple is keeping customers attached to those iPhones. Apple doesn’t need to woo existing “buy now, pay later” customers away from the services they use.

  • Mike Taiano, a senior director at Fitch’s North American Banks Group, sees it simply. “This is another tentacle for them to get into customers’ everyday life,” he said.

And “buy now, pay later” may be just one product among many that Apple has in mind. The company is making a big fintech play with the goal of taking more of its financial infrastructure in-house. The long-term goal may not be letting customers pay later; it could well be letting them pay any way they want to.

A version of this story first appeared on Read it here.

— Veronica Irwin (email | twitter)

On the money

On Protocol: After introducing the Lummis-Gillibrand bill a few weeks ago, Sen. Cynthia Lummis sat down with Protocol’s Ben Pimentel to talk about her biggest crypto industry worries and what she hopes to accomplish with the bill.

Lummis also posted the bill on GitHub to get community feedback. People behaved about as badly as you’d imagine.

Binance signed Cristiano Ronaldo for an exclusive NFT partnership. Ronaldo, the most-followed individual on Instagram, will work with Binance on a series of NFT collections to be sold on Binance NFT.

Coinbase is discontinuing its Coinbase Pro service. The Pro service, a more technical service with lower fees, will be replaced by Advanced Trade, which will live within the Coinbase app and site instead of existing independently. Some Pro fans were displeased.

Solana is launching a Web3 mobile phone. The Saga smartphone will come equipped with the Solana Mobile Stack software development kit, which includes Seed Vault, a custody protocol for keeping private keys and facilitating transactions designed for mobile use.

The Reserve Bank of India is piloting a blockchain-based trade finance project. The pilot project will use blockchain technology to store transaction data and better trace money flows.


After the UST-luna collapse, Do Kwon and Terraform Labs launched a new Terra blockchain on which a new luna coin would trade. But the response to it has been underwhelming. “I don’t understand why anybody in their right mind would want to invest in Luna 2 after watching Luna 1 blow up so dramatically,” Quantum Economics Founder and CEO Mati Greenspansaid.

Binance CEO Changpeng Zhao shifted strategy after trying fruitlessly to convince regulators that having a giant unregulated crypto exchange would work out fine. “It’s easier for us to change than for them to change,” he told Bloomberg Businessweek.

Ripple CEO Brad Garlinghouse doesn’t think memecoins like dogecoin are going to stick around, because they were “never designed for utility.”“It moves based on the tweets of Elon Musk. This is purely speculative. I don't think that's healthy for the crypto market," he said.


Chips are the backbone of our digital economy. We must rebuild the American chip industry or suffer the consequences

In January 2021, Congress passed the Chips for America Act. This bipartisan legislation authorized a series of programs to promote the research, development and fabrication of semiconductors within the United States. Together, the Fabs and Chip Acts are meant to renew American competitiveness in chip manufacturing, processing, packaging and design.

Click here to read more from Micron

Thanks for reading — see you Monday!

Recent Issues