Months after unveiling a major update to Apple Pay called Apple Pay Later, which allows users to split the cost of an Apple Pay purchase into four equal payments over six weeks without interest or late fees, Apple has finally launched the feature. But not for everyone — at least not yet.
Starting today, Apple says it’ll begin inviting randomly selected users to access a pre-release version of Apple Pay Later, with plans to offer it to all “eligible” users on iOS 16.4 or iPadOS 16.4 in the coming months. Apple Pay Later was supposed to debut with iOS 16, but technical and engineering issues delayed its release, Bloomberg reported earlier in the year.
The lucky Apple Pay users selected will be able to apply for Apple Pay Later loans of $50 to $1,000, which can be put toward online and in-app purchases made on iPhone and iPad with merchants that accept Apple Pay.
To get started with Apple Pay Later, users can apply for a loan within the Wallet app on iOS. They’ll then be prompted to enter the amount they’d like to borrow and agree to the Apple Pay Later terms. A soft credit pull will be performed during the application process, Apple says, and — after a user is approved — they’ll see a “Pay Later” option when they select Apple Pay at checkout online and in apps on iPhone and iPad.
A user’s Apple Pay Later loan payments are displayed in Wallet. A calendar view shows a user what’s due for all of their loans over a 30-day period.
Apple isn’t technically offering Apple Pay Later itself. Rather, the credit assessment and lending is being handled by Apple Financing, a subsidiary, which plans to report Apple Pay Later loans to U.S. credit bureaus starting sometime this fall. As for the merchant side, Apple Pay Later is enabled through the Mastercard Installments program, with Goldman Sachs serving as the issuer of the Mastercard payment credential used to complete all Apple Pay Later purchases.
Apple Pay Later goes head-to-head with buy now, pay later (BNPL) services from PayPal, Affirm, Klarna, Sezzle and countless others. Grand View Research predicts that the BNPL could be worth $39.41 billion by 2030.
To wit, BNPL remains incredibly popular among consumers. More than 51% of Americans said that they’d tried a BNPL service as of March 2021, according to one survey. And Accenture estimates that the number of BNPL users in the U.S. reached 45 million in 2021.
But BNPL products are under increasing scrutiny from regulators, some of whom argue that the BNPL business model is unnecessarily risky. In a survey last year by Credit Karma, more than a third of respondents who’d taken advantage of BNPL plans reported falling behind on payments.
“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,” Apple VP of Apple Pay and Wallet Jennifer Bailey said in a press release. “Apple Pay Later was designed with our users’ financial health in mind, so it has no fees and no interest, and can be used and managed within Wallet, making it easier for consumers to make informed and responsible borrowing decisions.”