Apple Now Rolling Out Its Buy Now, Pay Later Offering (BNPL)

03/29/2023 CUToday

CUPERTINO, Calif.–Apple is finally launching Apple Pay Later, its version of the buy now, pay later (BNPL) offerings that have taken hold over the past several years and eroded credit card volume in the process.

In announcing the offering, Apple said users can use the service to apply for Pay Later loans of $50 to $1,000 and then repay those loans through four payments over the course of six weeks with no interest or fees.

Apple Pay Later exists within the Apple Wallet and is designed to allow borrowers to avoid paying the full price for a product right away. Apple announced the service in 2022, but its launch was delayed due to what were called “technical and engineering issues.”

‘No Impact on Credit,’ But…

According to Apple, users can apply for a loan within the Apple Wallet “with no impact to their credit,” but the company notes in the fine print that the Pay Later loan and payment history “may be reported to credit bureaus and impact their credit,” the Verge reported.

Once approved for a loan, users will start seeing the Pay Later option at checkout in apps and online on the iPhone and iPad. Apple further said in a statement that users will be able to view and manage their loans within the Wallet app and that they’ll receive notifications when payment is due.

The service is not yet available to everyone. According to Apple, “randomly selected” users will receive invites to obtain early access to Apple Pay Later. The service is only available in the U.S. and for online and in-app purchases on iOS 16.4 and iPadOS 16.4.

Apple Handling Financial Side, Too

Unlike its earlier partnership with Goldman Sachs when it launched its credit card, with the BNPL offering the company will be handling the financial side, as well, through a new subsidiary, Apple Financing LLC, which the company says “is responsible for credit assessment and lending.”

The company did, however, partner with the BNPL program Mastercard Installments to enable Apple Pay Later, while “Goldman Sachs is the issuer of the Mastercard payment credentials,” according to the Verge.com analysis.

Apple Financing LLC will begin reporting Pay Later loans to credit bureaus starting in the fall, the company said.
Concern by Credit Unions

BNPL solutions such as that from Apple have raised strong concerns within credit unions for numerous reasons, including the loss of credit card transactions/loans by members, and the fact members can get into financial trouble due to too many BNPL purchases without that debt appearing on credit reports.

Numerous efforts have been announced or are underway within CUs to respond with BNPL financing solutions of their own.