The Dark Side of Apple Pay Later

It’s easier to pay later… and build debt now

  • Apple Pay Later will let buyers split payments into interest-free installments.
  • Apple will handle the finances itself via a new subsidiary company.
  • This new feature will launch with iOS 16 in the fall.
Someone paying at a store using an Apple Wallet on their smartphone.

Blake Wisz /

Apple is getting into the money-lending business, which could be as ugly as it sounds.

Apple Pay Later is Apple’s new buy now, pay later (BNPL) scheme, which will be added to Apple Pay this fall. Like Klarna and other BNPL services, it lets you split a purchase into four installments, payable over six weeks. The implementation is typical Apple—easy to do and protective of your privacy. But the downside is that Apple is getting its hands dirty rather than passing this off to a third-party provider.

"I think Apple Pay Later is a natural extension for Apple. They’re slowly building out a financial services ecosystem between Apple Pay, Apple Card, their peer-to-peer payments infrastructure, and now Apple Pay Later. I think personal loans could be a logical next step. But I also think there’s a lot more they can do with Apple Pay Later,” credit card industry analyst Ted Rossman told Lifewire via email.

Easy Pay

When Apple Pay Later goes live in iOS 16 and macOS Ventura later this year, you'll get an option to split your Apple Pay payments. You can pay in full, immediately , as you do now, or choose to pay later. The first installment is paid at the point of purchase, with three more payments due every two weeks after that.

The vendor doesn't know you have used Apple Pay Later–that part is between you and Apple, and the seller just gets the money as usual. The whole setup is interest free, so if you keep to the payments, it costs nothing extra.

Apple Pay Later Screenshots.


Because it's interest-free, Apple makes no money directly from its BNPL. Instead, it keeps making money from its merchant fees. According to The Conversation's Rajat Roy, BNPL is hot, with more than a quarter of online shoppers in Australia using it. The idea seems to be that Pay Later will grow the use of Apple Pay in general.

For the customer, the advantages are the privacy and security of Apple Pay, and the ease of having these services integrated into a payment method you already use. But that ease of use could be the problem.

Fast Debt

Fast and easy loans mean fast and easy debt. Knocking back payments isn't in itself a bad idea. It's a great way to shop for clothes online, for example, allowing you to order several sizes without breaking the bank, knowing that you'll be returning some of those items before later payments are due.

But if you let BNPL purchases mount up, they're every bit as bad as any other kind of debt and will have the same impact on your credit rating if you default. Psychologically, BNPL is attractive. If today's payment is just a quarter of the full ticket price, who wouldn't be tempted?

"The buy now and pay later do not bode well for all users. Younger generations (such as Generation Z and Millennials) and low-income households may be more vulnerable to the risks associated with using these services—and thus incur more debt," Stella Scott, co-founder of a UK payday loan company, told Lifewire via email. Buy now, pay later schemes may encourage them to acquire the latest gadgets and luxury items, conditioning consumers to make purchases without a financial plan. As a result, they may end up with huge loans and financial burdens."

Banking On Apple

According to Bloomberg's Mark Gurman, Apple's Apple Card partner Goldman Sachs will still provide the Mastercard mechanism for payments, but Apple will take care of the loans, credit assessment, and risk management itself, via a subsidiary called Apple Financing LLC.

Apple will have no problem financing loans. It has a huge pile of around $200 billion cash sitting around. One does wonder how it will square its famously customer-friendly reputation with overdue payment demands and late fees. It's going to be like Mickey Mouse showing up at your house with a baseball bat and a paper with your name on it.

In a way, this makes sense as Apple pushes further and further into various services to drive revenue growth. Fans of Apple's computers and apps, however, might worry that this new focus might hasten the decline of Apple's core business. On the other hand, if you're going to BNPL, then Apple will at least be the nicest way to do it. 

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