Apple has introduced their own version of the buy now pay later (BNPL) structure. They plan to launch the service to select customers this spring and then report loans to credit bureaus in the autumn. Since the pandemic began, the BNPL option has become significantly popular, especially among young and low-income consumers who usually do not have easy access to traditional credit.
In the world of consumerism, buy now pay later is a type of short-term financing which allows customers to make purchases and pay for them in equally divided installments at a future date with absolutely no interest.
Financial tech companies such as Affirm, Afterpay, Klarna, Sunbit and PayPal already provide BNPL services, with options to either use credit cards of bank accounts for installment payments, and it can also involve late fees for missed payments.
Meanwhile, Apple Pay Later, which is integrated with Apple Pay and facilitated by Mastercard, shall require customers to use a bank account and debit card for payments. Instead of being charged flat or percentage-based fees late fees, missed payments will result to ultimately losing access to this pay later option.
With Apple Pay Later, buyers can enjoy zero interest and no fees, and they can split their purchases into four equal payments, spread over six weeks.
Additionally, Apple’s BNPL service will provide fraud and consumer protection via Mastercard’s already existing pay-by-installment structure, and according to a Mastercard spokesperson, sellers will be charged fees that are “competitive to other installment products in the market.”
What’s great about the Apple Pay Later is that it will not involve late fees, only the reporting of missed payments to credit bureaus and the possible loss of access to access such loans. For those who want to defer payments or set up a different payment plan, they can contact Apple support for assistance.