Apple is testing its ‘buy now pay later’ option

In June 2022, during the Worldwide Developers Conference, Apple Inc. announced that it would be offering a “Buy Now, Pay Later” (BNPL) service called Apple Pay Later with iOS 16. That did not happen, even after the iOS update in September last year. In a footnote on its iOS 16 webpage, Apple stated that its Pay Later service would “come in a future update for qualifying applicants in the US for purchases online and in apps on iPhone and iPad.”

Fast forward to this month, and according to the tech giant’s retail staffers, Apple has expanded an internal test of its upcoming Pay Later service to thousands of retail employees, signaling that the long-awaited feature may be nearing a public release. Like any other BNPL services, the offering would let shoppers split the payment for purchases into installments. The company previously rolled out a test for corporate employees.

Although the Pay Later service is running behind schedule, the offering is part of a broader push into financial services, which is seen as a significant growth opportunity for the tech giant. The iPhone maker even set up a wholly owned subsidiary last year called Apple Financing LLC to launch Apple Pay Later. That allows the company to handle lending itself, sidestepping partners. 

Who will be able to use Apple Pay Later?

Overall, the company is working on a homegrown infrastructure for financial products to help decrease its reliance on banking partners. According to a recent Bloomberg report, decisions on Pay Later users will be based on past spending with apps and devices. “The Apple Pay Later service will evaluate borrowers based on their spending history and even which of the company’s devices they own,” it stated.

Once made available, the Pay Later system will be integrated into the Wallet app on the iPhone and allow users to complete an Apple Pay purchase over four installments during the following six weeks. When customers sign up, they are asked to give an amount they would like to borrow, and the system returns with an approved total.

Apple Pay Later will also examine whether customers have applied for an Apple Card credit card, and the other cards linked to their Apple Pay accounts. With past financial products like the Apple Card credit card, the company has used a similar rollout strategy, where retail staff get to test it out for around a month before a public debut. 

The lending criteria were revealed as part of a test of the service with Apple employees, who can now use the option for their purchases. The evaluations determine whether the company is willing to lend money to applicants and how big an amount it will approve. Many testers had loan approvals for US$1,000 and under.

Bloomberg also said that the Apple Pay Later loan offered will expire after 30 days, and applications will sometimes require a copy of a government identification card, full social security number, and two-step verification on an Apple account, according to the notes in the test version of the service. Loan status with the new service won’t affect access to other company services, as with most BNPL services.