Apple Unveils Apple Pay Later

From Apple Newsroom:

Apple today introduced Apple Pay Later in the U.S. 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 convenient 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.

I confess a deep distrust in the entire concept of “Buy Now, Pay Later” services, likely instilled by my grandfather, who informed me as an impressionable pre-teen that I should only ever use a credit card as a convenience, not as a loan for money I didn’t have. It’s reasonable for someone to use BNPL to spread out payments for items they can afford, but troubling if it encourages irresponsible spending.

If you haven’t paid attention to such services in the past, read the Federal Reserve Bank of Kansas City’s explanation of how BNPL works for consumers and merchants. Apparently, merchants pay a much higher transaction fee of 1.5–7%, compared to 1–3% for credit cards.

Nevertheless, it sounds like Apple designed Apple Pay Later to avoid most consumer problems. It doesn’t charge users interest or fees, it does soft credit checks to limit abuse, and it requires a debit card for repayment to prevent users from taking on credit card debt to repay loans.

Apple is soft-launching Apple Pay Later now, with plans to offer it to all eligible US users in the coming months. We’ll see how many merchants adopt it for their online and in-app purchases.

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