iPhone maker Apple has introduced ‘Buy Now, Pay Later’ service in the US, rivaling the BNPL offerings popularized by PayPal Holdings Inc and Affirm Holdings Inc.
The tech giant said the so-called ‘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 convenient location in Apple Wallet, the company announced on its website on Tuesday.
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.
Starting today (Tuesday), Apple 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. 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. “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.”
Apple’s launch of BNPL service came at a time when some see the hype around BNPL is fading. During or even before the pandemic, BNPL has seen strong growth in Europe, United States, Australia and Southeast Asia, although it is starting to stir concerns among regulators that it could cause youngsters, who are often seen as financially naive, to overspend and be lured into debt traps.
The global BNPL market is on a rapid uptrend and is projected to surge 400 percent to $352 billion by 2025 from $89 billion in 2020.
The BNPL sector is estimated to process $680 billion worth of transactions in 2025, translating to a compound annual growth rate of 13.23 percent, according to research data analyzed and published by online trading portal Comprar Acciones in February.
Earlier this month, it was reported that Square Inc, the US payments firm of Twitter Inc co-founder Jack Dorsey, will purchase BNPL pioneer Afterpay Ltd for $29 billion.
Visa, the credit card giant, has rolled out pilot BNPL services in the US, Canada, Russia, and Malaysia. It has set up a BNPL website for credit card issuers in 2021.
Apple Pay Later is built right into Wallet, so users can seamlessly view, track, and manage all of their loans in one place the company said. With Apple Pay Later in Wallet, users can easily see the total amount due for all of their existing loans, as well as the total amount due in the next 30 days. They 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 will also receive notifications via Wallet and email so they can plan accordingly.
Users will be asked to link a debit card from Wallet as their loan repayment method; 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., which is responsible for credit assessment and lending. Apple Financing plans to report Apple Pay Later loans to U.S. credit bureaus starting this fall,5 so they are reflected in users’ overall financial profiles and can help promote responsible lending for both the lender and the borrower.
Apple Pay Later 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. When a merchant accepts Apple Pay, Apple Pay Later will be an option for their customers during checkout online and in apps on iPhone and iPad.
Goldman Sachs is the issuer of the Mastercard payment credential used to complete Apple Pay Later purchases, the company added.
Keyword: Apple launches 'Buy Now, Pay Later' service in US