Apple pay later new feature on the track. Apple is developing a new pay later service that will let customers pay for Apple Pay purchases in installments over time.
Apple Inc. is working on a new service that will let consumers pay for any Apple Pay purchase in installments over time, rivaling the “buy now, pay later” offerings popularized by services from Affirm Holdings Inc. and PayPal Holdings Inc.
The service is similar to Paypal’s Buy Now, Pay Later feature, and internally, it’s being called “Apple Pay Later.”
Apple Pay Later: Buy now, pay later.
Apple is planning to partner with Goldman Sachs on the Apple Pay installments plan, with Goldman Sachs serving as the lender for the loans needed for the monthly installment plans. Apple currently works with Goldman Sachs on the Apple Card, but the new installment plan option is not limited to the Apple Card and will not require users to have an Apple Card to use the feature.
According to Bloomberg, when a user makes a purchase using Apple Pay, they will be able to pay for it across four interest-free payments made every two weeks or across several months with interest.
The four payment play is called “Apple Pay in 4” internally, while the longer-term payment plans are dubbed “Apple Pay Monthly Installments.” Users will choose any credit card to make their payments over time with the Apple Pay Later plan, and it is not yet clear what interest rates will be.
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As with the Apple Card, Apple Pay Later users will need to be approved through an application submitted through the Wallet app on the iPhone, which is also where payments will be managed. The service will not require a running credit check. Some of the Apple Pay Later plans will exclude late fees and processing fees, costing users only interest for the longer-term plans.
Apple is hoping the buy now, pay later system will increase Apple Pay adoption and persuade iPhone users to use their iPhone to pay for items instead of standard credit cards. However, according to Bloomberg, the service is still in development, and features could be changed or canceled before it launches.
What does Apple pay later mean for you?
The service, which relies on Goldman Sachs as the lender for installment loans, will:
- Give Apple Pay users an option to spread payments for their purchase across four interest-free payments made every two weeks or across several months with interest.
- Enable Apple Pay users to choose any credit card to make their payments over time.
- Include payments plans that exclude late fees and processing fees, requiring users to only pay interest for longer-term plans.
In the scheme of things, Apple Pay Later is no Affirm or Klarna killer.
Do the math: iPhone users represent roughly half the smartphone owner population, half of them have Apple Pay on their phone, and about 40% of them are frequent Apple Pay users—which brings us down to just 25 million consumers or 10% of all US adults.
“Users who want to use the Apple Pay Later service will need to be approved via an application submitted through the iPhone’s Wallet app, where they will also be able to manage their payments. In addition, users will need to submit a copy of their local ID card to apply for the program. Apple will also offer customers the ability to exit payment plans to pay off the remainder of their purchase balance.”
The Bottom Line
You know how many online checkout counters across the web tempt you to pay with Affirm or Klarna or PayPal’s Pay In 4 instead of coughing up the full purchase price at the start, and then they charge you in installments.
Instead? It sounds like this Apple service will be a direct competitor — with the important distinction that this will be baked into hundreds of millions of Apple devices that many people are already using to pay at gobs of physical stores, too.
You’ll pay in four interest-free installments over two weeks if you pick “Apple Pay in 4” or pay interest over several months if you pick “Apple Pay Monthly Installments,” writes Bloomberg. It adds that there’s no credit check required, and some plans won’t have late fees.
However, the publication doesn’t say when Apple might launch the service or how much interest it might charge.