What happened

Shares of "buy now pay later" (BNPL) company Affirm (AFRM -2.08%) were trading down by almost 10% as of 2:56 p.m. ET Thursday as investors continued to digest the recent revelation from Apple that it is wading into the space.

So what

At its annual developers conference this week, Apple disclosed that after it releases the next iteration of its iOS in September, consumers will be able to use its new BNPL service when making purchases with Apple Wallet. The service will allow them to buy items with no money down, and pay for those purchases in installments with no fees and zero interest. The company will integrate its BNPL offering directly into Apple Wallet, which comes installed on every iPhone. BNPL has soared in popularity recently, thanks in large part to Affirm.

Interestingly, Apple plans to fund loans through this program via its own balance sheet and also make credit decisions through its own subsidiary, which arguably pushes the tech giant further into the financial services space than ever before. Many investors have been wondering how deep some of these large technology companies might go into financial services, considering how effective they are at customer acquisition.

Affirm CEO Max Levchin said earlier this week that he is not concerned about Apple's move, given that only 5% of U.S. purchases are currently made with the BNPL format. "I don't think there's much concern," Levchin said on Bloomberg Television Tuesday. "There's a lot of room for growth for all involved."

Affirm also offers a variety of BNPL options including ones with and without interest, and has signed key partnerships with Shopify, Amazon, and Walmart.

Now what

While I agree with Levchin that the BNPL space is still new and the market for these services is largely untapped, I think the integration of this offering onto Apple's iPhone could be a game-changer because it could remove friction from the process.

On the whole, however, I do have concerns about the BNPL space when it comes to credit because the U.S. economy could soon slide into a recession, and past BNPL credit trends have been concerning. As for Apple wading into the financial services space, that will be something that banks and fintech companies -- and their shareholders -- should watch carefully.