Apple Launches Buy Now, Pay Later Service For US

Apple on Tuesday has made a surprising fintech move, after it launched a ‘buy now, pay later” (BNPL) service in the United States.

The iPad maker announced that its ‘Apple Pay Later’ scheme allows Apple Pay users to “split purchases into four payments with zero interest and no fees.”

However the move will put Apple into direct competition with the likes of Affirm Holdings and Swedish payments company Klarna, and could lead to more antitrust issues for Apple.

Apple Pay Later

For example last July Apple was sued by a US payment card issuer (Affinity Credit Union), who alleged the tech giant was abusing its domination of the mobile device sector to thwart competition for its Apple Pay mobile wallet.

Apple had introduced Apple Pay to the world back in 2014, and it essentially digitises and replaces a credit or debit card chip and PIN transaction at a contactless-capable point-of-sale terminal, taking a payment immediately.

But now Apple has introduced its ‘Apple Pay Later’ in the US, which it said was “designed with users’ financial health in mind.”

Apple Pay Later allows users to split purchases into four payments, spread over six weeks with no interest and no fees.

Users can easily track, manage, and repay their Apple Pay Later loans in one central location in Apple Wallet.

Users can apply for Apple Pay Later loans of $50 to $1,000, which can be used for online and in-app purchases made on iPhone and iPad with merchants that accept Apple Pay. Apple said it will begin inviting select users to access a prerelease version of Apple Pay Later, with plans to offer it to all eligible users in the coming months.

“There’s no one-size-fits-all approach when it comes to how people manage their finances,” said said Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet. “Many people are looking for flexible payment options, which is why we’re excited to provide our users with Apple Pay Later.”

“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,” said Bailey.

Wallet loan

To get started with Apple Pay Later, users can apply for a loan within Wallet with apparently no impact to their credit ratings. They will then be prompted to enter the amount they would like to borrow and agree to the Apple Pay Later terms.

A soft credit pull will be done during the application process to help ensure the user is in a good financial position before taking on the loan, Apple said.

After a user is approved, they will see the Pay Later option when they select Apple Pay at checkout online and in apps on iPhone and iPad, and can use Apple Pay Later to make a purchase. Once Apple Pay Later is set up, users can also apply for a loan directly in the checkout flow when making a purchase.

The firm said Apple Pay Later was designed with privacy and security at its core. Purchases using Apple Pay Later are authenticated using Face ID, Touch ID, or passcode, and users’ transaction and loan history are never shared or sold to third parties for marketing or advertising.

Apple Pay Later is enabled through the Mastercard Installments program.

Apple Pay Later is available in the US for online and in-app purchases on iPhone and iPad. Apple Pay Later is available with iOS 16.4 and iPadOS 16.4.