Apple is jumping on the “buy now pay later” bandwagon. The company officially announced details about their Apple Pay Later in the U.S. Apple’s version of BNPL lets users split purchases into four payments over six weeks with no interest or fees. Users must be approved to use Apple Pay Later and it will be available on iOS 16.4 and iPadOS 16.4. It is currently only available in the U.S., and it may not be available in all states. Not all merchants will be eligible to offer Apple Pay Later as a payment option.
Apple Pay Later, offered through subsidiary Apple Financing LLC, users can apply for, track and manage their purchases and payments in their Apple Wallet. Users can see the total amount due for all their loans or just for the next 30 days. The Apple Wallet also offers a calendar view for Apple Pay Later purchases. Customers will be notified via the Apple Wallet and email that a payment is due, and they will need to link a debit card as their repayment method. Apple Pay Later may not be paid using a credit card. Apple Pay Later purchases will report loans to U.S. credit bureaus, starting in the fall.
“There’s no one-size-fits-all approach when it comes to how people manage their finances. Many people are looking for flexible payment options, which is why we’re excited to provide our users with Apple Pay Later,” said Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet, in a March 28, 2023 news release.
“Apple Pay Later was designed with our users’ financial health in mind, so it has no fees and no interest, and can be used and managed within Wallet, making it easier for consumers to make informed and responsible borrowing decisions,” Bailey said.
On Tuesday, Apple began inviting users at random to test a prelease version of Apple Pay Later. It will be more widely available in the coming months. To qualify, users apply for Apple Pay Later loans of $50 to $1,000 in the Apple Wallet for in-app purchases made with iPhone and iPad merchants that accept Apple Pay. Apple will do a soft credit inquiry, so applying for Apple Pay Later will not impact a user’s credit. Once a user has set up Apple Pay Later, they can apply for loans directly in the checkout process.
Apple touts security as a key component of Apple Pay Later. Purchases made using Apple Pay Later are authenticated using Face ID, Touch ID or a passcode. Apple also said that transaction and loan history is not shared or sold to third parties for marketing or advertising purposes.
Digital Commerce 360 reports that 53.9% of their top 1,000 retailers offer a BNPL option at checkout with 39.8% of those retailers offering Apple Pay. Other popular BNPL options include PayPal Credit (18.4%), Affirm (14.8%), Klarna (13.3%), Afterpay (11.7%) and PayPal Pay in 4 (11.8%). According to Oberlo, an estimated 48.7 million Americans will use Apple Pay this year, compared to 45.4 million last year.
Insider Take
Over the last several years, BNPL options have increased in popularity, and Apple wants its piece of the pie. With millions of Americans already using Apple Pay, this financing option is a no-brainer for Apple. They have a built in audience and, with Apple Pay Later, they are making their products and services even stickier, making Apple harder to leave. This was a smart move on their part. This is another way for the tech giant to diversify its revenue sources.
