Apple officially enters buy now, pay later space

The increasingly popular buy now, pay later (BNPL) flexible payment solution market has a major new player.

Almost a year after media reports first circulated suggesting it was getting set to launch a BNPL solution connected to its Apple Pay digital payment service, the tech giant is releasing Apple Pay Later as part of several new upgrades to its Apple Wallet mobile wallet solution. These upgrades are part of a wider operating system update known as iOS16.

Instead of paying the full price of a purchase outright when checking out with a credit or debit card, BNPL enables shoppers to break the total purchase into smaller payments, often without interest, that can be billed to a personal account. 

Apple Pay Later is designed to provide users in the U.S. with a seamless, secure way to split the cost of an Apple Pay purchase into four equal payments spread over six weeks, with zero interest and no fees of any kind. Built into Apple Wallet, Apple Pay Later enables users to view, track, and repay Apple Pay Later payments within Apple Wallet.

Users can apply for Apple Pay Later when they are checking out with Apple Pay, or in Apple Wallet. Apple Pay Later is available everywhere Apple Pay is accepted online or in-app, using the Mastercard network. Additionally, the Apple Pay order tracking feature provides users with detailed receipts and order tracking information in Apple Wallet for Apple Pay purchases with participating retailers.

Initially offered by specialty flexible payment platforms such as Klarna and Afterpay, BNPL offerings have more recently sprung up from established payment providers such as Mastercard and  PayPal. In addition, advertising platform StitcherAds recently introduced Flexible Payment Promotions, a solution that enables retailers to promote buy now, pay later (BNPL) installments across ad units on Facebook, Instagram, Pinterest, and Snapchat.

According to data from eMarketer, more than 45 million U.S consumers (ages 14 and older) used a BNPL platform in 2021, up 81.2% over the previous year.

Apple builds on payment options
Apple has been expanding its digital payment capabilities since first introducing Apple Pay in 2014. One of its most significant payment innovations leading up to Apple Pay Later was its 2019 widespread launch— the no-fee Apple Card.

Apple Card is built into the Apple Wallet app on iPhone, connecting it to the Apple Pay digital payment service and providing users the ability to manage their card on their phone. With no card number, CVV security code, expiration date or signature, Apple Card has a unique card number created for each user on their iPhone and stored in the device’s secure element, which is a special security chip used by Apple Pay. In addition, every purchase is authorized with facial recognition or biometric touch, as well as a one-time unique dynamic security code.

Apple expands Wallet support for keys, IDs
As part of the iOS16 upgrade, keys and IDs in Apple Wallet are getting expanded support. Users can use their ID in Apple Wallet for apps requiring identity and age verification. To help ensure privacy and security, only the necessary information required for the transaction will be provided to the app, and the user can review and consent to share it using Apple Face ID or Touch ID biometric verification solutions. In addition, users can securely share their home, hotel, office, and car keys in Apple Wallet through select messaging apps.