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Now you can ‘buy now, pay later’ with Apple Wallet

These loans are small and interest free, but they still come with risks

The move by Apple marks another foray into financial services for the consumer tech giant.
4 min

Apple wants to help you buy stuff — namely, stuff you can’t currently afford.

The company said Tuesday it’s rolling out a “buy now, pay later” (BNPL) feature first announced last year where iPhone and iPad users in the United States can ask for a loan inside the Wallet app. If approved, you’d repay the amount in four installments over six weeks with no interest or fees, Apple said. The loans range from $50 to $1,000, according to a company blog posted today.

Users can ask for the BNPL option by applying within the Wallet app. Once approved, the option will appear during checkout for online retailers that accept Apple Pay. The remaining payment must be made from a linked debit card in Apple Wallet.

You may not see this option on your iPhone for a while, though: Apple says it’s randomly inviting “select users” to try out a prerelease version of the feature starting today. All other eligible users will have to wait for Apple Pay Later to launch more widely, a process the company says it expects will happen in the next few months.

Payment installment options have grown more common around the world since the start of the pandemic. Paypal, Klarna, Affirm and Zip already offer the option to pay in smaller chunks for U.S. shoppers struggling to pay for high-priced goods amid inflation and financial pressures.

American consumers are also increasingly using BNPL for essentials including groceries. In January and February this year, the share of BNPL orders used for groceries grew 40 percent, according to data from Adobe Analytics.

Companies in Asia and Southeast Asia have leaned into the feature to boost sales, and a surge in popularity in Australia have prompted critics to call for tighter regulation. Five percent of global e-commerce transactions came from BNPL in 2022, according to a 2023 report from financial tech company FIS, and that number is projected to rise to 6 percent by 2026.

Apple is a little late to the party. In recent years, it has grown to rely on its services, including Apple Music, Apple TV+, iCloud storage, and financial products like the Apple Card, to drive revenue growth in a world awash in iPhones. But by building a BNPL feature directly into its devices, the company runs the risk of enticing customers who may be likely to overextend themselves financially or struggle to pay off their purchases. Like buying on credit, BNPL comes with risks for both shoppers and the companies lending to them. Some consumers have struggled to get refunds or been hit with unexpected fees, according to complaints published by the Consumer Financial Protection Bureau (CFPB).

The move marks another foray into financial services for the consumer tech giant, which already offers a cashless peer-to-peer payment option and a credit card. Customer payment data — including Apple Cash transactions, App Store spending and device purchases — could help Apple decide which BNPL requests to approve.

But users beware. Apple says your Apple Pay loan and payment history can impact your credit score. That means if you fail to repay on time, Apple may report that to credit bureaus. The company also performs a “soft credit pull” during the approval process to check whether you’re in a “good financial position.” Soft inquiries don’t impact your score.

“BNPL borrowers were, on average, much more likely to be highly indebted, revolve on their credit cards, have delinquencies in traditional credit products and use high-interest financial services such as payday, pawn, and overdraft compared to non-BNPL borrowers,” reads a recent report from the CFPB.

The Washington Post financial columnist Michelle Singletary has advised against BNPL for the same reason it can be risky to buy things on credit: If you don’t have the money now, the purchase may be unwise. But in some scenarios, splitting up payments could be beneficial, as long as you’re confident you won’t miss a payment.

“I would utilize it for things like concert tickets, weekend trips, and a great pair of shoes!” said Janay Grant, a 32-year-old from Texas, in a Twitter direct message. She added that while she thinks the option will be popular, it “could be dangerous” for average Americans because the chance to defer payments will be “right at their fingertips.”

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