Apple Pay Later: Everything We Know About the New Free Buy Now, Pay Later Feature | #ios | #apple | #iossecurity

This story is part of WWDC 2022, CNET’s complete coverage from and about Apple’s annual developers conference.

What’s happening

Apple has announced a new free financing feature in Apple Wallet that lets you pay for purchases over time for free.

Why it matters

As inflation continues to impact households, “buy now pay later” (BNPL) services have become a popular payment option, and Apple’s entry will likely become a major player.

What’s next

Apple Pay Later will launch with the release of iOS 16, expected in September 2022.

Apple has embraced the spirit of buy now, pay later through a new feature the company announced Monday at its annual World Wide Developer Conference. Called Apple Pay Later, the feature is wrapped into the new iOS 16 for iPhone and will be part of Apple Wallet. Apple Pay Later will let you pay for goods or services over time through installments — for free. In other words, you won’t be hit with interest or extra charges as long as you make your incremental payments. 

Apple Wallet is the iPhone’s digital wallet app that provides three main services — Apple Pay, Apple Card and Apple Cash. Apple Pay allows users to store debit and credit cards and make purchases online or at businesses; Apple Card is a credit account issued by Mastercard and Goldman Sachs that works like a standard digital credit card; and Apple Cash enables peer-to-peer payments.

Apple’s foray into free financing comes at a time when many retailers are accepting payments from “buy now pay later” (BNPL) apps such as Affirm, Klarna or Afterpay. Most of these apps provide similar short-term interest-free payment plans, while others also provide longer installment plans with variable interest rates.

We’ll share everything there is to know about Apple Pay Later right now, including how it will work, where it will be accepted and when it will be available. Apple unveiled Pay Later and iOS 16 alongside new versions of its MacBook and iPad. Here’s everything Apple announced at WWDC. 

How does Apple Pay Later work?

Apple Pay Later will let you split the cost of your purchase into four equal payments that are spread over six weeks. The first payment is due when you first buy, and the remaining payments are due every two weeks after that.

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 displaying the amount of each of the four payments and when they will be due.

According to Corey Fugman, Senior Director for Wallet and Apple Pay, who spoke about Wallet during the WWDC keynote address,  Apple Pay Later will be available “anywhere that Apple Pay is accepted, in apps or online.” It’s not certain yet if Apple Pay Later will be available for purchases made at brick-and-mortar stores.

Stores and merchants will not have to implement any changes in order to accept payments through Apple Pay Later. Transactions will occur as they did before — the only difference will lie in how back-end payments are made.

Goldman Sachs works as a banking partner for Apple — it isn’t completely clear if the bank will also be funding the upfront costs of Apple Pay Later. Bloomberg first reported on Goldman Sachs and Apple’s plans for Apple Pay Later in July 2021.

There’s no indication yet if there will be a minimum or maximum purchase amount for Apple Pay Later. A similar offering from PayPal restricts purchases with free financing to amounts between $300 and $1,500.

When can I use Apple Pay Later on my iPhone?

Apple Pay Later will be included with iOS 16, the next planned update of Apple’s operating system for iPhone. The beta version of iOS 16 is already available for developers who have an account. In the WWDC keynote, Apple indicated that the first public beta version of iOS 16 will be released sometime in July.

Apple has traditionally released its newest operating systems to the public at the same time as its latest phones, as it did with iPhone 13 and iOS 15 in September 2021. The iPhone 14 is expected to be released in September 2022, and it’s likely that iOS 16 will also be released at or near the same time. 

How is Apple Pay Later different from Apple Card Monthly Installments?

Apple Card Monthly Installments is an Apple program that lets you finance the purchase of certain 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 restricted to Apple products nor does it require the use of the Apple Card. With Apple Pay Later, you’ll be able to finance purchases using the credit card of your choice, as long as it’s connected to Apple Wallet. Also, 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 is new in Apple Wallet for iPhone?

Another new feature in Apple Wallet announced at WWDC is Apple Pay Order Tracking, which adds the ability for merchants to provide detailed receipts and delivery statuses for purchased products to customers via Apple Wallet. 

Apple also announced expanded support in Apple Wallet for driver’s licenses and identification cards. Following IDs from Colorado and Arizona, Apple Wallet expects to add support for 11 more states in the near future.

These driver’s licenses can be used at select Transportation 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 support for sharing keys for locations such as hotels, offices or automobiles. New features will let users share keys with friends or associates using email, text messaging or other messaging apps.

Like Apple Pay Later, the Apple Pay Order Tracking, driver’s license and key-sharing features will be made available to the public with the full release of iOS 16, expected in September 2022.

What other online services let you buy now and pay later?

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

BNPL app Sezzle also uses a system of four payments over six weeks, but adds the ability for users to reschedule one payment for up to two weeks later at no cost and postpone further payments for an additional fee.

Other BNPL apps such as Affirm and Klarna offer interest-free installment plans for short periods, or longer installment plans that add a variable interest rate. 

For more coverage of WWDC, learn about the upcoming MacOS Ventura, new fitness and workout features for the Apple Watch and all of the new features announced for Apple Maps.

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