Apple Launches Interest-Free ‘Pay Later’ Service for In-App and Online Purchases

What Is Apple Pay Later?

Apple has recently introduced a new service called Apple Pay Later, which allows users to finance their in-app and online purchases with no interest or fees. Unlike traditional buy now, pay later services, Apple operates this service instead of relying on banks or finance companies.

How Does Apple Pay Later Work?

To use the service, users need to apply within the Wallet app and undergo a soft credit check. They can then choose Apple Pay as their payment option at checkout and split their purchase into four equal installments every two weeks. The remaining 75% of the cost must be paid off within six weeks.

The maximum amount that can be financed is $1,000, with loans ranging from $50 to $1,000. Users can track their loan balance and future payments on a calendar within the Wallet app. They must link a debit card as the repayment method since credit cards are not accepted.

Why is Apple Offering This Service?

Apple has been diversifying its services beyond hardware sales and branching into financial products, streaming entertainment, cloud backups, and fitness. The launch of Apple Pay Later is part of this effort to expand into the financial industry.

Who Is Affected by This New Service?

This new service will primarily benefit users who prefer to finance their purchases without incurring interest charges or fees. It may also be a positive option for those who tend to overspend with credit cards or carry a balance.

Affirm, a similar buy now, pay later service that offers interest-free loans but charges late fees for missed payments saw a 7% drop in stock price following the announcement of Apple Pay Later.

How Will This Affect the Financial Industry?

The introduction of Apple Pay Later could represent a shift in consumer behavior towards more transparent and flexible payment options that could potentially displace credit cards. The service benefits consumers by not charging any interest or fees and using a soft credit pull to ensure financial stability before offering loans.

Apple Pay Later is enabled through the Mastercard Installments program and is issued by Goldman Sachs. Apple has formed a subsidiary to finance Apple Pay Later loans, which will start reporting loans to US credit bureaus this fall.

Conclusion

In conclusion, Apple has launched a new interest-free ‘Pay Later’ service for in-app and online purchases called Apple Pay Later, providing another financial option for users who may prefer it over traditional credit or charge cards. While the financial industry watches closely with the emergence of the new buy now, pay later service, it is clear that Apple is continuing its expansion into various industries beyond hardware sales.

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