With Square's industry-shifting acquisition of Australian BNPL (buy now, pay later) behemoth Afterpay, the banking backbone of fintech feels more transparent than ever. Traditional institutions will have to keep up, and Goldman Sachs (NYSE:GS) is already working on it.
When will the BNPL platform underwritten by Goldman Sachs launch? Will it be too late to compete with the most prominent industry leaders on the market right now?
Goldman Sachs is partnering with Apple for its BNPL platform.
In July, Goldman Sachs and Apple (NASDAQ:AAPL) announced that they're partnering to develop a BNPL platform of their own.
The fintech product will function under the Apple Pay umbrella and be called Apple Pay Later. Goldman Sachs's role is basically to underwrite the short-term lending service. The service won't charge interest for payments made in four weekly consecutive increments. However, longer payment plans charge interest. Late fees and processing fees will also help the businesses generate revenue.
Will Goldman Sachs roll out buy-now-pay-later services through Apple in time to compete with Afterpay?
Afterpay is still in its post-merger afterglow, and who could blame the company after its $29 billion all-stock deal? But with the BNPL industry on the up and up, competition is increasing and it's more than just Affirm and Klarna these days.
Apple Pay Later is poised to be a leading competitor, but the companies at the helm of the service will want to get it to market before existing industry leaders secure loyalty.
Right now, Goldman Sachs-Apple BNPL platform Apple Pay Later is still in the works. The companies haven't released more information yet about interest rates and other details crucial to the service. The service is expected to be available for all products, not just Apple ones. It will serve as a way to increase Apple Pay adoption from iPhone users.
Until the launch date, Afterpay and other industry leaders will continue raking in revenue.
Goldman Sachs hopes to distract customers from controversy in more ways than one.
While its BNPL platform is still in beta, Goldman Sachs is working on other ways to distract customers from the recent controversy. The banking giant was in the news for its archaic treatment of employees. It required people to work an average of 95 hours per week. First-year analysts said that they wouldn't stay past six months if things didn't change.
In response, Goldman Sachs imposed a rule that no one would work on Saturdays. Also, the company increased base salaries by as much as 30 percent. First-year analysts now start at $110,000, which is a sizable bump from the previous $85,000 starting salary. Second-year analysts are going from $95,000 to $125,000. First-year associates are jumping from $125,000 to $150,000.
The revenue from novel services like BNPL will help ease this transition, but for now, Apple Pay Later is still just an investment for Goldman Sachs. Some experts suggest that the service, once it launches, will be more competitive for card issuers than BNPL lenders. Once Apple and Goldman Sachs release more information, we'll have a better idea of which way the tides will turn.