Apple Inc. (AAPL) is wading into the Buy Now, Pay Later sphere, as the low-barrier loan practice comes under closer scrutiny.
Apple's program will allow customers to spread purchases over a six-week period with zero interest or fees. Plans for the program were unveiled at the company's World Wide Developer conference last year with an initial plan to roll it out in September 2022.
- The flexible plan will allow users to borrow from $50 to $1,000.
- Payments can be tracked directly through Apple Wallet.
- Apple Financing will report Apple Pay Later loans to U.S. credit bureaus starting this fall.
Select users will be able to use a pre-release version of the buy now, pay later service immediately, the company said Tuesday. Apple plans to roll out the program to all eligible users in months to come.
Apple users can apply for a loan of $50 to $1,000 directly from Apple Wallet. A "soft pull" will be done and will not impact users' credit scores. The service will be provided by Apple Financing LLC, which will begin reporting payment information to U.S. credit bureaus beginning this fall.
Users can then make a purchase with merchants that offer Apple Pay and track their payments directly in the Apple Wallet. Users will be able to track their "buy now, pay later" balances in multiple ways—the total amount due, the amount due within 30 days, and a calendar view will all be available. Users also will receive wallet alerts and email notifications when a due date is approaching.
Apple is late to the buy now, pay later game. Companies like Affirm (AFRM), Afterpay and Klarna have popularized the service and are currently under financial pressure and regulator scrutiny.
Online shopping that soared during the pandemic proved to be a boon for the major players in the space, which later saw fortunes turn last year. Klarna suffered a precipitous market valuation drop, and Affirm’s stock fell drastically from its 2021 peak.
Regulators are keeping an eye on the industry, in hopes of making rules similar to those on traditional financial products. The Consumer Finance Protection Bureau has determined that buy now, pay later customers are often more financially vulnerable and are studying the industry. The government’s consumer watchdog has voiced concerns that programs like these encourage consumers to rack up too much debt.