Tech giant Apple announced that it would launch its Buy Now Pay later (BNPL) service – Apple Pay Later – along with its new operating system, iOS 16 later this year. The announcement was made at its annual developers’ conference (WWDC) event early this week.
Apple Pay Later, to be built into the Apple Wallet, will allow buyers split purchases up into four equal payments over six weeks, without paying interest or fees.
According to the company, it plans to fund loans off its corporate balance sheet and its treasury department will decide the exact mechanism it will use to fund the loans and funding sources may shift over time. Loans and creditworthiness decisions will be handled by a wholly owned subsidiary, Apple Financing LLC
To ascertain if a customer is credit worthy or not, Apple says it plans to use a soft pull of a customer’s credit and other data, such as the customer’s purchase and payment history with Apple in both its stores and online services such as the App Store.
To use the pay-later service, Apple customers will have to connect a debit card to their Apple Pay account to fund repayment of the loans. A quarter of the purchase price for approved loans will be due at the time of purchase, and, like other debit card transactions, Apple will run an instant check to ensure there are sufficient funds to cover the upfront payment.
Apple says it will offer the loans anywhere that Apple Pay is accepted, both online and in physical retail stores. The payments to merchants will be made over the MasterCard network through a payment credential issued by Goldman Sachs.
