Apple has launched its Buy Now, Pay Later service that it announced more than eight months ago, becoming the latest big name to jump on the trend that allows customers to pay for online purchases in installment.
The Cupertino giant plans to execute the feature known as Apple Pay Later by allowing customers to split payments for purchases into four installments that will span over six weeks, after making the first installment at the time of purchase.
The feature also allows users to apply for a loan within the Wallet app, ranging from $50 to $1000, with no interest or fees, to make online or in-app purchases.
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“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 said it will roll out the payment option to select users in the United States now, with plans to offer it to all eligible customers over the next several months.
Apple Pay Later, which is fully integrated into Apple’s digital wallet and attracts zero interest and no late fees, was announced in June last year. Apple said users can apply for a loan within the Apple Wallet app without it affecting their credit score. Once they select the amount they would like to withdraw, a soft credit pull will be conducted to make sure they are in “a good financial position” to take on a loan, the company said in a release.
The launch now sets Apple up to compete with the likes of Affirm, Klarna, and Afterpay in the buy now, pay later space.
Buy now, pay later saw an increase in adoption as inflation forced consumers to tighten their spending in the past few years. Other companies that offer BNPL service had sought partnership for expansion. Affirm partners with Amazon and Stripe.
Affirm shares dropped 7% on the news of Apple’s launch of BNPL.
Apple users will be able to track and manage upcoming loan payments in the Wallet app. Any loan application can also be done in the app with no impact on credit, according to the company.
Apple’s Pay Later option 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, the company said.
Approved users will see a “Pay Later” option while using Apple Pay to check out online and in apps on iPhones and iPads. They will also be able to apply for a loan right at checkout. Apple said purchases using the software will be authenticated using Face ID, Touch ID or a passcode.
“Once Apple Pay Later is set up, users can also apply for a loan directly in the checkout flow when making a purchase,” Apple said.
The company said users can see the amount due for their existing loans, as well as the total amount due in the next 30 days, in Apple Wallet. Users will be asked to link a debit card as their loan repayment method. Credit cards won’t be accepted.
Apple has debuted its “buy now, pay later” (BNPL) service in the U.S., the tech giant’s latest push into financial services and a major challenge to BNPL stalwarts Affirm and Klarna. The service, called Apple Pay Later, will split purchases into four equal payments spread over six weeks. The zero-interest, no-fee loans of $50 to $1,000 will be made through a subsidiary, Apple Financing. Apple said the service, which will live in the Wallet app, will initially be available to “randomly selected” users before being rolled out to “eligible” customers in the coming months.