The Dark Side of Apple Pay Later

Apple is getting into the money-lending business, which might sound ugly.

Pay later with Apple Pay is Apple’s new Buy Now Pay Later (BNPL) program that will join Apple Pay this fall. Like Klarna and other BNPL services, it lets you split your purchase into four installs, paid over six weeks. The implementation is typical Apple – easy to operate and protects your privacy. But the downside is that Apple is getting its hands dirty rather than handing it over to third-party suppliers.

“I think Apple Pay Later is a natural extension of Apple. They are slowly building a financial services ecosystem between Apple Pay, Apple Card, their peer-to-peer payment infrastructure and now Apple Pay Later. I think personal loans can division Ted Rothman Tell Lifewire via email.

Pay with ease

When Apple Pay Later goes live in iOS 16 and macOS Ventura later this year, you’ll have the option to split your Apple Pay payments. You can pay in full now as you do now, or you can choose to pay later. Payment is made at the time of purchase for the first installation and three payments every two weeks thereafter.

The vendor doesn’t know you used Apple Pay later – that part is between you and Apple, and the seller just gets the money as usual. The entire setup is interest-free, so if you keep paying, you won’t have to pay anything extra.

Because it’s interest-free, Apple doesn’t make money directly from its BNPL.Instead, it has been making money from its merchant fees† according to conversational Rajat Roy, BNPL is hot, with more than a quarter of online shoppers in Australia using it. The idea seems to be that Pay Later will increase the use of Apple Pay in general.

For customers, the advantage is the privacy and security of Apple Pay, and the ease of integrating these services into the payment methods you already use. But this ease of use could be the problem.

quick debt

A quick and easy loan means a quick and easy debt. Cancelling the payment itself is not a bad idea. It’s a great way to buy clothes online, for example, you can order clothes in multiple sizes without spending money, knowing that you’ll be returning some of these items before future payments are due.

However, if you let BNPL purchases increase, they are as bad as any other type of debt and will have the same effect on your credit rating if you default. Psychologically, BNPL is attractive. Who wouldn’t be tempted if today’s payment was only a quarter of the full ticket price?

“Buy now, pay later doesn’t bode well for all users. Younger generations (like Gen Z and millennials) and low-income households may be more vulnerable to the risks associated with using these services, creating more debt ,” Stella Scott, co-founder of the UK payday loan company, told Lifewire via email. Buy now, pay later plans may encourage them to buy the latest gadgets and luxuries, allowing consumers to make purchases without financial planning. As a result, they may end up with huge loans and financial burdens. ”

Apple Bank

According to Bloomberg’s Mark GurmanApple’s Apple Card partner Goldman Sachs will still offer the MasterCard payment mechanism, but Apple will take care of its own lending, credit assessment and risk management through a subsidiary called Apple Financing LLC.

Apple has no problem financing loans. It has a massive cash pile of about $200 billion. One does wonder how it will compare its famous customer-friendly reputation with late payment requirements and late fees. It’s like Mickey Mouse showing up at your house with a baseball bat and a piece of paper with your name on it.

To some extent, this makes sense as Apple pushes more and more deeply into various services to drive revenue growth. However, fans of Apple’s computers and apps may worry that this new focus could hasten the decline of Apple’s core business. On the other hand, if you’re going to BNPL, Apple would at least be the best way.