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Apple announced the launch of its “buy now, pay later” service, Apple Pay Later.
Nicholas Kamm / AFP via Getty Images
Apple
on Tuesday announced the launch of Apple Pay Later, the company’s long-anticipated entry into the “buy now, pay later” space.
The new service will allow consumers to split purchases made via Apple Pay through the Apple Wallet app on iPhones and iPads into four payments, spread over six weeks, with no interest and no fees. Apple (ticker: AAPL) said it is inviting select users to access the service Tuesday, with an expansion to all eligible users in coming months.
To buy something with Apple Pay Later, users can apply for a loan of between $50 and $1,000 through Apple Wallet with no impact to their credit, Apple said. The company does a “soft credit pull…to help ensure the user is in a good financial position before taking on the loan.”
Once approved, the user can select Apple Pay Later to buy things. Users can also apply for a loan in the checkout flow when making a purchase using Apple Pay.
The service is offered by Apple Financing, a unit that will handle credit assessment and lending. Apple said it would start reporting Apple Pay Later loans to U.S. credit bureaus this fall.
The service is enabled through the
Mastercard
Installment program—merchants don’t need to do anything to implement Apple Pay Later for their customers.
Goldman Sachs
is the issuer of the Mastercard payment credential used to complete the purchases.
Apple’s announcement is pressuring shares of
Affirm
Holdings (AFRM), which focuses on financing buy now, pay later transactions.
Mizuho analyst Dan Dolev wrote in a short research note that the news had been widely expected, and should already be discounted in Apple shares. Dolev maintains his Buy rating on Affirm shares.
“Overall, although the knee-jerk reaction is understandable, Apple’s move may only further solidify the BNPL category as legitimate,” he writes. “Buy.”
Affirm suggested in a statement that Apple’s entry into the market was good for the category. “More transparent and flexible payment options that can displace credit cards are good for consumers – especially when they have no late or hidden fees,” the company said. “Affirm has offered this for a decade through personalized payment plans with term lengths ranging from six weeks to 60 months. By underwriting every single transaction, we not only empower consumers but help merchants drive growth. The prize remains massive, and Affirm is well-positioned to win.”
Affirm shares were 8.5% lower at $9.35. Apple shares were off 1% at $156.62.
Write to Eric J. Savitz at eric.savitz@barrons.com
