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Apple steps into BNPL with introduction of Apple Pay Later

The service will be available through Apple Pay

Apple company building concept
Photo (c) Paul Souders - Getty Images
The annual Apple developers conference saw a wide range of announced innovations this week, but one of the most significant may be the tech giant’s foray deeper into financial services.

The company announced that it is expanding its Apple Pay digital wallet to include a buy now, pay later (BNPL) function called Apple Pay Later. Annie Millerbernd, one of NerdWallet’s financial experts, says the company that is most known for the iPhone is moving deeper into financial services.

“Apple Pay Later will present heavy competition for existing BNPL brands because now every Apple Pay user can split up their payments without the help of a specific BNPL app,” Millerbernd said in an email to ConsumerAffairs. 

Familiar ecosystem

Apple Pay Later takes advantage of an ecosystem that is familiar to millions of consumers who won't have to learn how different BNPL platforms behave. They won’t have to guess about late fees or what happens if a purchased product is returned.

“If you have just one service helping you split payments and it’s the same one every time, you might be able to better understand the product,” Millerbernd said. “In a 2021 NerdWallet survey, one-third of BNPL users said they used this option to afford multiple items they wouldn’t have been able to get otherwise.” 

But there could be a downside to that. As we’ve recently reported, a growing number of BNPL users have fallen behind on payments, even to the extent of putting financial pressure on lenders.

“Given Apple Pay’s wide availability, there’s a good chance that more people will opt for BNPL and that could create a lot of headaches for those who struggle to keep track of their expenses,” Millerbernd said.

Stiff competition

Apple is taking on some pretty stiff competition that has had several years to accrue a head start. According to the Wall Street Journal, the five most popular app providers downloaded through Apple’s App Store and the Google Play Store, including Affirm and Klarna, counted an estimated 7.5 million monthly active users in May. That’s a breathtaking 44% increase from a year earlier.

Apple says the Apple Pay Later function will be available wherever Apple Pay is accepted online or in-app through the Mastercard network. Apple said users will have the ability to spread out the cost of a purchase into four equal payments over six weeks. As a plus to users, Apple said there will be no fees or interest.

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