Apple introduces a new feature allowing installment payments with Apple Pay.
Apple has announced a new feature for its mobile payment service, Apple Pay, which will give users the option to make purchases and pay for them in installments.
The feature, called “Apple Pay Later,” enables users to split their purchases into four payments over six weeks with no interest or fees.
The giant tech explains it as a convenient way for users to apply for loans within the Wallet app, without negatively impacting their credit scores. The app uses a soft credit pull to evaluate the user’s financial status before granting the loan.
Once approved, the Pay Later option is made available to users, and they can split their purchases into four interest-free payments, accessible when selecting Apple Pay at checkout.
This innovative feature not only provides a flexible and convenient payment option for users but also takes their financial wellbeing into consideration.
In addition, users can apply for loans ranging from $50 to $1,000 through Apple Financing, which can be used for online and in-app purchases at any vendor that accepts Apple Pay. The loans are part of a “buy now pay later” programme that allows users to defer payments until a later date.
At present, “Apple Pay Later” is only available to a select group of users who were chosen at random to participate in the launch and did not launch in Qatar yet.
However, the company has plans to roll out the feature more widely in the near future, making it available to more users.
This move by Apple is part of a wider trend in the finance industry toward offering flexible payment options to customers. As the popularity of buy now pay later programmes continues to grow, it is expected that more companies will follow in Apple’s footsteps and offer similar features to their customers.
According to a recent survey conducted by Lending Tree, more than 40% of Americans have utilised “buy now, pay later” services. Despite no statistics at present when it comes to the Gulf nation, such a feature is slowly being introduced in the region using several online shopping outlets, and it is continuing to grow.
With the launch of “Apple Pay Later,” the company is entering an already-crowded market. The payment option has become increasingly popular, with total loans reaching $24 billion in 2021, up from $2 billion in 2019, according to a CFPB report.
Although Apple claims the feature is intended to promote users’ financial health, the loans may cause some consumers to accumulate more debt.
While the loans may seem like a convenient payment option, users must be cautious not to fall behind on payments and incur fees.
“Apple not allowing customers to link to a credit card is a unique feature in its BNPL product that should limit the ability of borrowers to pay off one form of debt with another form of debt, though it does not fully address our broader concerns over the structural and cyclical challenges the buy-now-pay-later business model continues to face,” Michael Taiano, senior director, Fitch Ratings said in a statement to CBS MoneyWatch.
The Apple Wallet and email notifications are intended to help users keep track of their payments. The rise of buy now, pay later loans has forced regulators to play catch up, but the CFPB has also observed a steady increase in the number of borrowers who fall behind.
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