Apple Pay Later, initially planned to launch alongside iOS 16 in September 2022, has finally made its much-anticipated debut. The service is now rolling out to a select group of users across 45 US states, following multiple delays due to undisclosed technical setbacks.
This new service enables eligible users to apply for loans ranging from $50 to a maximum of $1,000, allowing them to make purchases while avoiding upfront payments. Repayments are structured in four installments across a six-week period, with no interest or additional fees imposed. The amount granted is determined by the applicant's credit score, with a lower score resulting in a smaller loan.
Apple Pay Later is integrated into the mobile app of Apple Wallet and features a comprehensive calendar that provides notifications of upcoming payments. If users struggle to repay the loan, Apple is willing to collaborate in devising a new repayment plan. Inability to settle the debt will render the user ineligible for future loans.
To use the service, customers must connect a bank or debit card to their account, but credit cards are not permitted. Apple's decision to exclude credit cards is aimed at preventing users from accumulating debt to repay existing loans.
There are specific prerequisites to access the Apple Pay Later service. The feature is currently unavailable in Hawaii, Nevada, New Mexico, North Carolina, Wisconsin, and all US Territories. Applicants must also be at least 18 years old (19 in Alabama) and reside in a supported state with a valid physical address. Additionally, users need to have an iPhone or iPad updated to iOS 16.4 or iPadOS 16.4, respectively, with two-factor authentication enabled.
Eligible users can apply for the loan through the Apple Wallet, after which the provider runs a "soft credit pull" to evaluate their financial standing. Rejected applicants will receive an email from Apple explaining the reasons behind their disqualification.
There are some restrictions on how the loan can be utilized. The funds will be available on the merchant's checkout page, under the Pay Later option, for a period of 30 days. Any unused funds beyond this timeframe will necessitate reapplication. Loans must be spent in a single transaction, as leftover amounts cannot be transferred or reused. Furthermore, only online retailers and apps that support Apple Pay are eligible to receive the loan, but it doesn't limit purchases to Apple products exclusively.
Apple Pay Later doesn't currently support in-store payments. While users pay no fees for the service, Apple does profit from it by collecting a percentage of the fees that installment payment plan provider Mastercard charges retailers.
Apple has firmly set the loan cap at $1,000 for this service, suggesting that customers seeking to finance more expensive items, such as a MacBook Pro, should explore other avenues like the Apple Card, which spreads payments across a more extended period. The company plans to extend Apple Pay Later support to all eligible US customers this fall as Apple Financing, LLC, begins reporting to American credit bureaus. However, at present, no global expansion plans have been disclosed.