How does Apple Pay Later work?

Apple Pay Later logo as seen in Apple Wallet

Apple Pay Later allows users to split purchases into four payments, spread over six weeks with no interest and no fees, the company says (Courtesy of Apple)

(NEXSTAR) — If you’re currently a user of Apple Pay — the technology giant’s mobile payment system — you may notice a new feature in your Apple Wallet. The company says some randomly selected users will begin seeing the option to “Apple Pay Later” on Tuesday, with a wider release of its flexible payment system coming in the next few months.

Here’s how it works, according to Apple:

(Courtesy of Apple)
  1. Users can apply for loans valued between $50 to $1,000 via their Apple Wallet
  2. If you’re wondering: Does Apple Pay Later affect my credit score? The answer, according to Apple, is that application for one of these loans will have “no impact.” Instead, a soft credit pull will be performed to determine your eligibility
  3. If you’re approved, you’ll see the option to Pay Later when you use Apple Pay at checkout online or at participating in-person retailers
  4. Apple splits purchases into four payments with 0% interest and no fees, the company says

“There’s no one-size-fits-all approach when it comes to how people manage their finances. Many people are looking for flexible payment options, which is why we’re excited to provide our users with Apple Pay Later,” said Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet.

Apple also says users can apply for loans “directly in checkout,” meaning decisions are made relatively quickly.

Apple Pay Later joins the ranks of other popular “buy now, pay later” systems like Klarna, Affirm, and Afterpay. According to a 2022 LendingTree report, these types of financing programs are popular — 62% of the 1,040 respondents said they’d used these options five or more times. A whopping 81% said they’d likely use it again.

Buy now, pay later services have been scrutinized for their ease of use and possible predation on younger, less knowledgeable consumers. LendingTree’s survey also found that 59% of users were Gen Z consumers and 47% were millennials. Two-thirds of those surveyed also said they purchased more than they would have if they had had to pay upfront.

Back in 2021, Credit Karma reported that despite buy now, pay later services being more popular than ever, 34% of Americans surveyed said they’d fallen behind on at least one payment. Seventy-two percent of those who did fall behind said they believe it negatively impacted their credit scores.

“The idea of buy now, pay later programs have been around for ages. Similar to layaway programs used by previous generations, buy now, pay later services can be a great tool for people who wish to make a purchase and break up their payments into smaller, more manageable dollar amounts,” Colleen McCreary, financial advocate at Credit Karma, said in 2021. “Unlike layaway plans, however, missing a payment toward BNPL loans can have a negative impact on your credit score, which can make it harder for you to borrow in the future.… Ultimately, there are pros and cons to every financial product. Be sure to weigh your options and read the fine print before agreeing to the terms.” 

As with its Apple Pay system, Pay Later is enabled/issued by Mastercard and Goldman Sachs.

Nexstar Media Wire

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