You are currently viewing Apple joins buy now, pay later craze with Apple Pay Later – Bankrate.com

Apple joins buy now, pay later craze with Apple Pay Later – Bankrate.com

We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
Buying a home
Refinancing your existing loan
Finding the right lender
Additional Resources
Looking for the perfect credit card?
Narrow your search with CardMatch™
Compare accounts
Use calculators
Get advice
Bank reviews
Looking for the perfect credit card?
Narrow your search with CardMatch™
Compare by category
Compare by credit needed
Compare by issuer
Get advice
Looking for the perfect credit card?
Narrow your search with CardMatch™
Personal Loans
Student Loans
Other Loans
Loan calculators
Looking for the perfect credit card?
Narrow your search with CardMatch™
Best of
Brokerages and robo-advisors
Learn the basics
Additional resources
Looking for the perfect credit card?
Narrow your search with CardMatch™
Get the best rates
Lender reviews
Use calculators
Knowledge base
Looking for the perfect credit card?
Narrow your search with CardMatch™
Car insurance
Homeowners insurance
Other insurance
Company reviews
Looking for the perfect credit card?
Narrow your search with CardMatch™
Retirement plans & accounts
Learn the basics
Retirement calculators
Additional resources
Looking for the perfect credit card?
Narrow your search with CardMatch™
We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for . The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Terms apply to the offers listed on this page. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.
At Bankrate, we have a mission to demystify the credit cards industry — regardless or where you are in your journey — and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to:
At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next.
Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers.
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers.
We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
This content is powered by HomeInsurance.com, a licensed insurance producer (NPN: 8781838) and a corporate affiliate of Bankrate.com. HomeInsurance.com LLC services are only available in states were it is licensed and insurance coverage through HomeInsurance.com may not be available in all states. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
Apple recently confirmed a longstanding rumor: It’s launching a buy now, pay later (BNPL) service that will be known as Apple Pay Later. It’s part of the upcoming iOS 16 release which is expected to debut in beta form next month and more broadly in early fall.
According to the company’s press release, Apple Pay Later will allow users to split eligible transactions into four interest-free installments to be paid over six weeks. No fees of any kind will be charged. The announcement notes that Apple Pay Later will be available everywhere Apple Pay is accepted online or in-app. That includes an important (and subtle) clarification. Most in-person Apple Pay transactions will not be eligible for Apple Pay Later, at least initially.
The lack of in-person availability is surprising since Apple Pay is compatible with the vast majority of brick-and-mortar payment terminals. Its scale is much more limited online and via apps. Major buy now, pay later players such as Affirm and Klarna started off by partnering with online and app-based retailers and are in the process of rolling out debit cards linked to installment plans that extend BNPL’s reach everywhere debit cards are accepted. I expected Apple to offer a BNPL service with a similarly broad reach.

For now, Apple Pay Later feels like a loss leader that’s intended to boost Apple Pay usage. In 2021, seven years after it debuted, Apple Pay was used in just 6 percent of eligible transactions, according to PYMNTS.com.
When an iPhone user pays with a credit card linked to Apple Pay, Apple reportedly receives 0.15 percent of the transaction price. Because Apple Pay Later won’t assess interest or fees, the economics will probably become less favorable since they’ll have to account for delinquencies and defaults. Unlike Apple Pay, which is just an intermediary, there’s credit risk associated with Apple Pay Later. Interestingly, Apple is taking on that credit risk itself, unlike Apple Card which outsources that risk to Goldman Sachs. And that’s only one of the risks facing Apple and other BNPL providers.
BNPL was a hot sector in 2020 and 2021 as the pandemic led to an e-commerce boom, but things have gotten tumultuous, to say the least. As of June 8, Affirm’s stock was down 77 percent since Jan. 1. And privately held Klarna, which is currently seeking a new fundraising round, appears to have lost about a third of its value over the past year. E-commerce growth has slowed, borrowing costs are rising and the CFPB is asking tough questions about the BNPL business model.
“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately too,” CFPB Director Rohit Chopra said in a statement. “We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”
Because it won’t charge interest or fees, and only offers short-term financing, Apple Pay Later could escape the worst of the scrutiny. But you might be surprised how much trouble some people can get into with BNPL. NPR recently aired a fascinating (and terrifying) profile of a 20-year-old college student who quickly got in over her head with a series of seemingly innocuous BNPL purchases. Spending 50 bucks here and 50 bucks there on exercise equipment, clothing and other impulse buys peddled by social media influencers quickly left her buried in debt.
You could say the same thing about credit cards, of course. There’s a reason why people say they’re like power tools: potentially very useful, but also potentially very dangerous. On the plus side, credit cards are much more tightly regulated than BNPL. On the downside, they often represent larger, more open-ended lines of credit.
Many see BNPL as a tool for young people without much credit and without much money. That’s still mostly true. I think BNPL works best when it’s used to isolate a specific large purchase. For instance, I could see the benefits of paying for a $1,000 couch or television in installments, particularly if you are able to take advantage of a longer-term low- or no-interest plan.
Klarna and Affirm offer some payment plans that last multiple years, although the interest rates can vary tremendously, so it’s important to check the fine print. Your rate could be 0 percent or 30 percent or something in-between. If you can get two interest-free years, you would need to pay less than $42 per month for that $1,000 item. By contrast, someone paying off a $1,000 purchase over two years at the average credit card APR of 16.68 percent would incur $182 in interest charges.
I think Apple Pay Later should expand into these longer-term plans. And besides the standard clothes, electronics and furniture, I see a lot of potential for financing various types of services. That could include everything from medical, dental and veterinary bills to travel and more. But these higher price tags are going to require longer payback periods than four payments over six weeks.
Adding an in-person component could be very lucrative, although it could be too tempting for some consumers. For example, Klarna has a partnership with Chevron and Texaco that allows customers to pay for gas in four interest-free installments spread over six weeks. I know gas is expensive, but that strikes me as robbing Peter to pay Paul. If you can’t afford the gas now, what’s to say things will be different in six weeks? And you’ll probably have to fill your tank again — probably multiple times — before you’re done paying off the first wave of installments.
Kicking the can down the road in that fashion feels like a payday loan, albeit one with an interest-free price tag. Keep in mind that credit cardholders who pay in full already have an interest-free grace period ranging from a few weeks to a couple of months, so it feels like this is aiming at an indebted audience that could easily fall behind on payments.
Of course, it’s not up to the BNPL industry to make moral judgments. They’re offering financing tools and consumers can use them as they wish. I do, however, think the CFPB should regulate these products as the loans they really are.
Still, despite its current challenges, BNPL could live long and prosper. It’s smart for Apple to have some skin in the game. The company is slowly building a financial ecosystem that also includes mobile payments, a credit card and peer-to-peer transactions. BNPL is a worthwhile addition to the toolbox.
In its current incarnation, though, Apple Pay Later feels like a relatively tentative first step. I’ll be interested to see if and when it expands to more merchants and offers longer payoff cycles encompassing a wider range of purchases.
Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
Bankrate, LLC NMLS ID# 1427381 | NMLS Consumer Access
BR Tech Services, Inc. NMLS ID #1743443 | NMLS Consumer Access
© 2022 Bankrate, LLC. A Red Ventures company. All Rights Reserved.

source

Laisser un commentaire