Apple’s getting into the easy debt game of buy now, pay later

Ready to extend some short-term loans.
Ready to extend some short-term loans.
Image: Reuters/Peter DaSilva
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As borrowing gets more expensive, Apple is looking to make it easier for consumers to make purchases in the short term. The tech giant is stepping into lending to its iPhone users with its own “buy now, pay later” (BNPL) feature called Apple Pay Later.

Bloomberg reported that Apple was headed in this direction almost a year ago. Now the launch of the new offering is imminent, and is part of Apple’s broader ambitions in financial services. (The company launched a rewards credit card in 2019 with Goldman Sachs).

The new feature is expected to launch in September, with the release of iOS 16, and allows borrowers to pay for items in four installments over the course of six weeks with zero interest and zero fees.

In a C+R Research survey of 2,000 American consumers, 60% had used BNPL at least once.  Though some reports have shown that nearly a third of users can’t keep up with their buy now, pay later payments.

BNPL offered through fintech companies is often targeted at younger consumers and financially underserved communities. With only a soft check required, the BNPL lenders aim to fill in the gap for anyone with a poor or nonexistent credit history, according  (pdf) to researchers at the Federal Reserve Bank of Kansas City.

The lending practice is similar to layaway and credit card services. Interest rates for BNPL are lower than the average credit card interest rate and the product is more readily available than layaway, but BNPL credit is also extended without consideration for whether or not consumers can take on more loans, the researchers noted. Meanwhile, merchants often gain more new customers, repeat customers, and larger purchases.