Apple Announces Buy Now, Pay Later Plans With Apple Pay

Apple is planning to join the buy now, pay later movement, according to an announcement at its Worldwide Developers Conference on Monday. The tech giant plans to launch Apple Pay Later, a service that will be integrated with Apple Pay.

Apple Enters Buy Now, Pay Later Sector With an Immediate Edge

Apple’s plans to launch Apple Pay Later with its iOS 16 update, which is expected to be available to the public in September 2022.

The tech company’s buy now, pay later (BNPL) service will allow Apple users to split up the cost of a purchase made with Apple Pay into four equal installments over six weeks—that’s one payment on the date of the transaction, then one payment every two weeks after that. The service won’t charge any fees or interest.

Users will be able to use Apple Pay Later when they’re checking out with Apple Pay or in the Apple Wallet. However, the service will only be available for online and in-app purchases, not point-of-sale transactions.

BNPL services exploded in popularity during the first couple of years of the coronavirus pandemic, growing in users by 102.3% year over year in 2021, according to Insider Intelligence. However, that growth rate is expected to slow to 56.1% in 2022, 11.7% in 2023, 7.1% in 2024, and 5.4% in 2025.

The news comes during a time of uncertainty in the BNPL sector. One major player, Klarna, which has 34.8 million users, according to Insider Intelligence, has seen its valuation drop from $46 billion under a year ago to the low $30 billion range for new fundraising. Then, the company laid off 10% of its employees via a pre-recorded message.

Additionally, regulators have expressed concern that some BNPL players may be violating consumer protection laws and exacerbating financial struggles for users.

Apple enters the sector already with a competitive advantage. With Apple Pay Later integrated with Apple Pay and Apple Wallet, users don’t need to involve a third-party service and can activate and manage their payments directly on their Apple device.

“With Apple Pay Later, Apple takes a huge step forward in realizing its consumer financial services ambitions. This will further pressure BNPL fintechs, which are already facing regulatory, competitive, and investor tailwinds,” wrote David Morris, principal analyst at Insider Intelligence, in an email to Investopedia. “Apple Pay Later joins the just-launched Tap to Pay on iPhone, which lets merchants accept Apple Pay payments on their iPhones without any additional hardware, and its Apple Card credit card and Apple Cash digital prepaid card, strengthening the overall appeal of these offerings.”