Apple Pay Later launches after a six-month delay
Apple on Tuesday announced a soft launch of its long-awaited buy now, pay later (BNPL) service option for Apple Wallet. The company is inviting a few, select users to access a prerelease version of Apple Pay Later, with plans to offer it to all eligible users in the coming months.
Apple Pay Later was initially anticipated to launch last September. It will allow users to split the cost of their purchases into four interest-free payments spread over six weeks.
Consumers apply for Apple Pay Later loans of $50 to $1,000, which can be used for online and in-app purchases made on iPhone or iPad with merchants that accept Apple Pay.
"There’s no one-size-fits-all approach when it comes to how people manage their finances," Jennifer Bailey, vice president of Apple Pay and Apple Wallet, said. "Many people are looking for flexible payment options, which is why we’re excited to provide our users with Apple Pay Later,"
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Apple Wallet allows users to track and manage loan payments
Apple highlighted the ease of access users would have to their loan activity through Apple Wallet in its announcement.
Users can see the total amount due and track and plan their payments. Before payment is due, users will also receive notifications via Wallet and email. Apple users also must link a debit card from Wallet as their loan repayment method as a preventative measure to help users from taking on more debt to pay back loans.
Credit cards will not be accepted as a loan repayment method, Apple said in the announcement.
"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," Bailey said.
The BNPL space has come under regulatory fire over concerns that these products may push consumers to make poor financial decisions – mainly to spend more than they may have otherwise without the credit option.
For example, BNPL users are more likely to suffer financial distress than non-borrowers. They are also more likely to use high-interest financial products like overdraft, payday, pawn and auto title loans, a recent Consumer Financial Protection Bureau (CFPB) survey said.
BNPL borrowers also tended to have lower credit scores – the average BNPL borrower scored in the subprime category (580-669), while the credit scoring for non-users averaged as near-prime (670-739), according to the CFPB's report.
If you have used BNPL to pay for a large purchase and need help making your payments, you could consider using a personal loan to help you pay off your debt. Visit Credible to compare multiple personal loan lenders at once and choose the one with the best interest rate for you.
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Apple addresses privacy issues
Apple also addressed regulatory concerns over privacy and security related to its new BNPL product. The company said in its announcement that Apple Pay Later purchases are authenticated using Face ID, Touch ID or passcode.
"Users' transaction and loan history are never shared or sold to third parties for marketing or advertising," Apple said.
Apple's plan to expand its fintech footprint into BNPL with its Apple Pay Later product was met with regulatory concern over what impact its entrance would have on the space. Regulators' top concern was how Apple, and other big fintech companies looking to offer BNPL services, would use customer data.
The CFPB, which does not currently oversee BNPL providers, plans to issue guidance or rules that would bring the sector in line with the standards that Congress has already established for credit cards, the agency said in a report released last September.
Are you looking to fund a large purchase but don't want to use BNPL? A personal loan could be a good alternative. You can visit Credible to compare personal loan rates and lenders and find the option that works for you.
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