Apple has joined the Buy Now, Pay Later (BNPL) sector with the launch of its new ‘Pay Later’ feature, which will be added to the Apple Wallet to enable users to split payments into four instalments.
The instalment-based payment method will be spread over six weeks, with Apple confirming that no interest fees will be attached to such purchases made with Pay Later.
Apple users can apply for Pay Later purchases from $50 to $1,000 for transactions made on iPhones and iPads with merchants that accept Apple Pay. The tech giant will be inviting a select number of users to access a prerelease version and plans to roll out the feature to all eligible users in the coming months.
Talks around social responsibility within the BNPL sector have been the topic of conversation since the turn of the year. Apple Finance has stated that its Pay Later feature will use the loans used to direct back to US credit bureaus in the fall to better reflect a consumer’s financial profile and promote responsible lending.
Apple has also added a soft credit pull feature before the application process is complete, to ensure the user is in a strong financial position to take the loan. Users can access loans from Apple with no impact to their credit and are able to borrow and agree within the parameters of Apple Pay Later terms.
Once the user is approved, they will be able to view the Pay Later option when they select Apple Pay at online retail checkouts on their Apple device, as well as being able to apply for a loan directly in the checkout process.
“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 Vice President of Apple Pay and Apple Wallet.
“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.”
Before a payment is due, Apple Pay Later users will receive notifications via their digital wallet and email to stay alert and also be asked to link their debit card to be used to repay back the loan to prevent users taking on more debits. Apple confirmed credit cards will not be accepted for use.
Expert Analysis: The BNPL sector exploded into life during the pandemic, with many consumers reverting to an instalment based payment method to manage costs. However, post-pandemic has seen many of the major firms, such as Klarna, take huge hits on funding and valuations, however, this is not deterring major companies like Apple from the space, showing signs the sector is possibly here to stay.