If you frequently utilize “Buy Now, Pay Later” services to make purchases and own an iPhone or Apple device, you should be aware that Apple Pay Later is now available. Apple recently launched its installment payment program, initially inviting select users via email, but plans to make it accessible to all consumers with Apple Wallet in the near future.
Although you may not have access to Apple Pay Later at the moment, it’s essential to consider whether or not you should use this service or any other Buy Now, Pay Later program. To address your concerns, we have some answers for you.
In simple terms, Apple Pay Later is a part of the Buy Now, Pay Later universe. Like other BNPL programs, Apple Pay Later allows you to divide your payment for a purchase into four equal installments. If Apple determines you to be a reliable borrower, you’ll make the first payment upon checkout and then proceed to make subsequent payments every two weeks for the next six weeks. Essentially, you pay a portion upfront and receive a loan for the remaining balance.
Other BNPL programs in the market include various alternatives that sound like a cult or a garage band.
Unlike many Buy Now, Pay Later programs, Apple Pay Later does not charge interest. The primary allure of BNPL is the absence of interest charges. However, there may be fees associated with late or rescheduled payments that could be perceived as a form of interest. It’s worth mentioning that some credit cards offer BNPL features but come with monthly fees, which can be seen as interest. The advantage of a BNPL program is that you can typically avoid any interest charges or fees for six weeks.
The key difference between Apple Pay Later and other BNPL programs is its integration with Apple Wallet. Apple Pay Later will eventually be accessible through everyone’s Apple Wallet. Apple Pay is Apple’s mobile payment service, enabling you to make payments using your smartphone. On the other hand, Apple Wallet is the app on your iPhone that functions as a digital wallet, storing your credit or debit cards for use with Apple Pay. In addition to cards, you can also store digital rewards cards and concert tickets within Apple Wallet.
You can utilize Apple Pay Later for online shopping or in-app purchases on your iPhone or iPad at merchants that accept Apple Pay. Therefore, if you commonly use Apple Wallet for purchases and wish to use a BNPL plan, Apple Pay Later may be more convenient than other services. Moreover, if you’re an Apple enthusiast who appreciates Apple Wallet, the added convenience and aesthetics of Apple Pay Later may be a significant advantage.
Now, let’s talk about repayments. Unlike many BNPL competitors, Apple does not allow customers to make Apple Pay Later payments using a credit card. Apple considers this a method of repaying debt by accumulating more debt, which is not advisable. Although it’s possible to manipulate a BNPL program by using a credit card to extend the interest-free period, it rarely works out as intended. By restricting credit card payments, Apple is doing you a favor and discouraging further debt accumulation.
What happens if you miss a payment with Apple Pay Later? Since your Apple Wallet is linked to your debit card, you’re expected to make payments promptly. In the event of insufficient funds in your checking account, you may face overdraft fees imposed by your bank. It’s important to communicate with the bank in such cases. If you decide to make a purchase using Apple Pay Later and then proceed to close your bank account and flee, Apple likely has legal measures to address the situation.
Will using Apple Pay Later have a negative impact on your credit? In general, it shouldn’t, and it might even contribute positively in the long run. Apple Pay Later intends to report consumer payments to credit bureaus eventually. During the application process, a soft credit pull is conducted to assess your credit history, which does not impact your credit score.
While Apple Pay Later loans range from $50 to $1,000, it’s highly unlikely that you can purchase a car online for $1,000. Additionally, small items cannot be split into six-week payments given their minimal value. Therefore, the loans are primarily intended for smaller-scale transactions.
Is Apple Pay Later part of Apple’s attempt to dominate the world? According to John Talbott, director of the Center on Education and Research in Retail at Indiana University’s Kelley School of Business, with nearly 600 million Apple Pay users and its popularity among younger demographics, the introduction of the multi-payment option is bound to be well-received. Apple Pay Later is perceived as a competitor to the banking sector rather than prominent BNPL players.
Kimberlee Josephson, an associate professor of business administration at Lebanon Valley College, believes that Apple Pay Later offers numerous benefits, particularly for freelancers and small business owners. It provides a convenient option for those who typically receive delayed payments, allowing them to manage their finances efficiently.
Using BNPL programs can be financially prudent for small business owners or solopreneurs who expect incoming funds but desire a six-week grace period without incurring interest charges. However, for individuals who wish to purchase non-essential items, it’s a more questionable decision. While BNPL programs can serve as a cheaper alternative to high-interest credit cards, it’s essential to carefully consider the implications and make informed choices.
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