Apple has begun the pre-release of its new Pay Later offering, which was first announced at the company’s developers’ conference in June 2022. Pay Later — which will let users split purchases into four payments spread over six weeks with no interest and no fees — is now available for some randomly selected Apple Wallet users in the U.S., and will roll out to all users in the coming months.
Apple’s plans to enter the buy now, pay later (BNPL) space were seen as a vote of confidence for the financial product, which saw huge consumer uptake during the pandemic but also raised concerns over consumers’ misunderstanding of loan terms and a lack of regulation in the space. For its part, Apple says it plans to report Apple Pay Later loans to the U.S. credit bureaus, a preemptive move in the face of impending regulation. Apple said having its Pay Later loans reflected on consumers’ financial profiles will “help promote responsible lending for both the lender and the borrower.”
Recently, BNPL has seen another boost as inflation drives up the cost of living. In 2022, the share of online purchases using BNPL grew by 14% YoY, with revenue from BNPL growing 27% YoY, according to Adobe Analytics. In the first two months of 2023, BNPL order share was up by 10% YoY, though revenue fell by 19% YoY, indicating that consumers are using this payment method for smaller purchases.
The BNPL space already is flooded with providers — ranging from payments juggernauts like PayPal and Mastercard to targeted BNPL solutions like Affirm and Afterpay — but Apple stands to differentiate itself in the space through integrations with its broader software and hardware ecosystem, namely iPhones and iPads as well as the Apple Wallet app.
“There’s no one-size-fits-all approach when it comes to how people manage their finances,” said Jennifer Bailey, VP of Apple Pay and Apple Wallet in a statement. “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.”
Users will be able to access, track, manage and repay their Apple Pay Later loans all within the Apple Wallet. Wallet users will see the total amount due for all of their existing loans, as well as the total amount due in the next 30 days, and can also choose to see all upcoming payments on a calendar view in Wallet to help them track and plan their payments. Before a payment is due, users also will receive notifications via Wallet and email.
To get started with Apple Pay Later, users can apply for a loan within Wallet with no impact to their credit. They will then be prompted to enter the amount, ranging from $50 to $1,000, that 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.
After a user is approved, they will see Pay Later as a payment option when they select Apple Pay at checkout online and in apps on their iPhone and iPad. Once Apple Pay Later is set up, users also can apply for a loan directly in the checkout flow when making a purchase. Users will be asked to link a debit card from Wallet as their loan repayment method and to help prevent users from taking on more debt to pay back loans, credit cards will not be accepted.
Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc. The offering is enabled through the Mastercard Installments program, so merchants that accept Apple Pay do not need to do anything to implement Apple Pay Later for their customers. Goldman Sachs is the issuer of the Mastercard payment credential used to complete Apple Pay Later purchases.