Apple Pay Later: How the new iOS 16 feature lets iPhone users buy now, pay later

The imminent release of iOS 16 for iPhone — which takes place on all compatible iPhones Monday, September 12 — will add a new “Buy now, pay later” functionality to Apple Pay, the iPhone’s mobile payment application. BNPL services allow you to finance your purchases by spreading the cost over a short period without interest or fees.

Pay Apple comes with Apple Wallet, the iPhone’s digital wallet app that also includes Apple Card and Apple Cash. Apple Pay lets you electronically store your debit and credit cards and make purchases online or in physical stores; Apple Card is a digital credit card issued by MasterCard and Goldman Sachs; and Apple Cash is a peer-to-peer payment service.

Apple’s entry into BNPL financing with Apple Pay Later comes at a time when many retailers are accepting payments from BNPL apps such as Affirm, Klarna and Afterpay. Most of these apps offer similar short-term interest-free payment plans, while a few offer longer installment plans with varying interest rates.

Learn everything there is to know about Apple Pay Later, including how it works, where it will be accepted and when it will be available.

How does Apple Pay Later work?

Apple Pay Later lets you split the cost of purchases into four equal payments spread over six weeks. The first payment is due when you make your purchase, and the remaining payments are due every two weeks thereafter.

Once Apple Pay Later is released, you’ll have two options when completing a purchase: Pay in Full and Pay Later. Selecting the latter option will bring up a payment schedule showing the amount of each of the four payments and the date they are due.

Stores and merchants won’t have to implement changes to accept payments through Apple Pay Later. Transactions will occur as before – the only difference will be how back-end payments are made.

MasterCard payments, the credit card company’s white-label BNPL service, will provide merchant payments for Apple Pay Later. Apple has created its own financial subsidiary – Apple Financial Services – which will handle loan approvals and credit checks. Banking partner Goldman Sachs will be the official issuer of the loan.

Payments for Apple Pay Later must be made with a debit card; you cannot use a credit card. You can set up automatic payments or make additional payments at any time. Each BNPL purchase will be reviewed and approved or rejected using a soft credit check.

Apple Pay Later does not plan to charge fees for late payments, although it may use late payments as an excuse to reject future BNPL loans. No maximum or minimum purchase amount has yet been announced for Apple Pay Later – an expected purchase range is $25 to $1,000.

When can I use Apple Pay Later on my iPhone?

Apple Pay Later will be included with iOS 16, Apple’s latest operating system update for iPhone. It is not yet clear whether or not Apple Pay Later will be included with the launch of iOS 16 on September 12, or if it will be added to future point updates. iOS updates regularly, adding new features and fixing bugs.

Apple Pay Later was not mentioned to the public Apple “Far Out” event on September 7stating that the service likely won’t be included in the initial release of iOS 16. At its WWDC event in June, Apple said Apple Pay Later would launch “in the fall.”

Apple traditionally releases its latest operating systems to the public alongside its latest phones. The iPhone 14 will be made public on Friday, September 16 and pre-orders are already open.

How is Apple Pay Later different from Apple Card monthly payments?

Apple Card Monthly Payments is an Apple program that allows you to finance the purchase of some Apple products when using the Apple Card credit card. The length of the 0% APR period for these purchases depends on the product. Installment plans range from six months to two years.

Apple Pay Later is not limited to Apple products nor does it require the use of Apple Card. With Apple Pay Later, you’ll be able to fund purchases using a debit card, Apple said, as long as it’s connected to Apple Wallet. Additionally, the interest-free installment period for Apple Pay Later – six weeks – is much shorter than the payment plans offered by Apple Card monthly installments.

What else will iOS 16 add to Apple Wallet?

Another new feature in Apple Wallet is Apple Pay order tracking, which allows merchants to provide customers with detailed receipts and delivery statuses for products purchased through Apple Wallet.

Apple is also expanding support in Apple Wallet for driver’s license and identity cards. Next Colorado and Arizona IDsApple Wallet adds support for 11 more states.

These driving licenses can be used at certain Transport Security Agency checkpoints. They can also be shared with other apps that require identification, such as alcohol purchases through Uber Eats.

Apple Wallet is also adding key sharing support for locations like hotels, offices, or automobiles. New features will allow users to share keys with friends or associates using email, text messaging or other messaging apps.

What other online services allow you to buy now and pay later?

Some existing online payment systems offer short-term “buy now, pay later” financing similar to what Apple Pay Later offers. PayPal’s Pay in 4 program works very much like Apple Pay Later, except purchases are limited between $300 and $1,500.

BNPL App Sezzle also uses a four-payment over six-week system, but allows users to defer one payment up to two weeks later at no cost and to defer other payments for an additional fee.

Other BNPL applications such as To affirm and Klarna offer interest-free installment plans for short periods or longer installment plans that add a variable interest rate.

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