Users in the United States will be able to split the cost of Apple Pay purchases into four equal installments over the course of six weeks, with no interest or fees.
Apple will manage financing and credit check services through its wholly-owned company, according to a report. Apple announced its foray into the expanding buy now, pay later (BNPL) business this week at the Worldwide Developers Conference in Cupertino, California.
According to Bloomberg, the new company, Apple Financing LLC, has the necessary state financing permissions to provide the services and will operate independently of the main Apple organization.
Apple Pay Later, a new feature embedded into Apple Wallet, will be available with the iOS 16 iPhone operating system, which will be released later this year.
It will be the company’s first time handling financial services on its own, such as loans, risk management, and credit assessments.
Third-party credit processors and banks have backed the company’s financial solutions thus far. For example, Goldman Sachs backs the Apple Card credit card in terms of lending and credit evaluation.
“Apple Pay Later enables consumers in the United States to break the value of an Apple Pay transaction into four equal payments over the period of six weeks, with no interest or fees,” Apple announced on Monday.
The new service would allow users to “view, track, and refund Apple Pay Later payments within Wallet.”
Apple Pay Later looks to be limited to Apple users in the United States for the time being. It’s unclear whether Apple consumers in the UAE will be able to use the service.
During the coronavirus pandemic, the BNPL business model, which allows consumers to make online purchases and spread out interest-free repayments, has grown in popularity.
Global BNPL transaction values were $120 billion in 2021 and expected to reach $576 billion by 2026, according to data analytics firm GlobalData.
BNPL was responsible for 2.3% of the global e-commerce market. In other words, the survey discovered that for every $100 spent, $2 went towards a BNPL transaction.
According to CNBC, Apple will conduct a light credit check to guarantee that borrowers can repay the loans, which are believed to be capped at $1,000, within the specified time frame.