After an extended pre-launch period, Apple launched Pay Later yesterday. Pay Later allows users to split purchases into four payments, spread over six weeks with no interest and no fees.
How it works: Based in Apple Wallet, users can apply for Apple Pay Later loans of $50 to $1,000. These short-term loans can be used for online and in-app purchases made on iPhone and iPad with merchants that accept Apple Pay.
- Apple uses a soft credit pull during the application process.
- After a user is approved, they will see the Pay Later option when they select Apple Pay at checkout online and in apps on iPhone and iPad, and can use Apple Pay Later to make a purchase.
- Once Apple Pay Later is set up, users can also apply for a loan directly in the checkout flow when making a purchase.
- Apple plans to report Apple Pay Later loans to U.S. credit bureaus starting this fall.
Pay Later is being rolled out slowly, as Apple randomly selects users to participate in the new program.
Apple's deepening foray into financial services: Apple Pay Later is offered by Apple Financing, a subsidiary of Apple. This arm is responsible for credit assessment and lending.
- For merchants, Apple Pay Later is enabled through the Mastercard Installments program.
- Goldman Sachs is the issuer of the Mastercard payment credential used to complete Apple Pay Later purchases.
For its part, Goldman Sachs, which has backed the Apple Card since its launch, has significantly changed its commitment to its digital retail banking offering, Marcus. After restructuring its groups under the Platform Solutions group led by Stephanie Cohen, the bank is more focused on powering financial services for 3rd parties like Apple, as opposed to going direct to consumer.
BNPL now: Apple's entry into BNPL comes as the industry anticipates more regulation. Buy Now, Pay Later is also facing growing blowback from customer protection organizations because of how BNPL has been marketed as a better alternative to revolving debt. See Tearsheet's coverage of BNPL.