Apple introduces Apple Pay Later

https://www.apple.com/newsroom/2023/03/apple-introduces-apple-pay-later/

by dm • 3 years ago

211 329 3 years ago

This seems like a logical and interesting service that should drive quite a few sales for Apple as people impulse-buy status symbols they shouldn't really try to afford.

My big concern with using some of these "pay later" types of services is that it seems incredibly risky to your credit score even if you do everything right and pay it off on time.

If Apple or anybody else can clarify on this point, that would be great. Otherwise, I'd never touch this.

jpollock2• 3 years ago

They typically don't pull a credit score, or register a loan. They try to maintain a continuous auth for the next month's payment.

That essentially lowers your credit card limit by the payment amount for the lifetime of the loan.

If any single payment fails, they will then try and go for the remainder.

logicalmonster3• 3 years ago

I don't think a credit pull is the biggest concern here.

Couldn't using this reduce the average age of your accounts, which is a big factor in credit score calculation?

imwithstoopid3• 3 years ago

I hate this entire industry...Klarna, Affirm...now Apple BNPL

sad that Apple has had to resort to "financializing" their own customer base

shagie3• 3 years ago

When I bought my Centris 650 in college, I bought it using a loan that was initially set up by Apple.

I don't see anything surprising or new about this other than that Apple has an easier way of managing that loan than a book of paper that you ripped one out each month and sent it in along with a paper check.

zitterbewegung• 3 years ago

iPhones have been financed and or given 0% loans by nearly every carrier and they have $51 billion dollars cash on hand. Providing their own loans makes sense regardless.

MarkSweep• 3 years ago

Oh wow, they actually are doing their own loans instead of taking the usual route and having a bank provide the financing. From the press release:

Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc., which is responsible for credit assessment and lending.

justinator• 3 years ago

I mean I had an Apple Loan for students way back in 2000 with an APR % that would have made me pay $8,000 for a 400mhz G4 had I followed their payment schedule...

AdamJacobMuller2• 3 years ago

I saw one of these while checking out on Uber Eats recently.

#1, no, I don't want to spread my $50 worth of sushi out over 4 months

#2, if you do need to do that, maybe you shouldn't be ordering from Uber eats?

It seems extremely parasitical. I'm equally bothered that these companies are doing this and that some consumers feel the need to do this (and think this is a good idea)...

bootloop2• 3 years ago

If you think you need this you certainly shouldn't use it.

soupfordummies• 3 years ago

Need... STUFF!

koromak• 3 years ago

BNPL schemes are (or at least were as of a year ago) destroying Gen Z. This one may be less destructive as it doesn't look like interest rates are a thing, but still. Don't get into the habit of spend ing money you don't have.

erulabs• 3 years ago

Speculation, but the lack of interest rates is probably more destructive. The profit here comes from more usage on Apples cc system rather than some other bank taking the rake. Apple is incentivized to make “spending money you don’t have” as easy as possible - it directly benefits from it - and thus makes it even more appealing with no interest rates.

MisterPea• 3 years ago

Is there any data on this? Not trying to refute, just genuinely interested in impact over generations.

lavezzi• 3 years ago

This is honestly disgusting predatory behaviour which seems to be rampant in Fintech right now. The majority of people they are targeting for this service shouldn't be put in the position to have this available to them.

red-iron-pine• 3 years ago

right now

lol wut. son, spend 10 minutes reading about payday loans, many of the big economic crashes, shady practices by banks, and crypto. fintech isn't a thing, it's just a way to enable already existing behaviors that finance does all the time; it's always been predatory.

fomine3• 3 years ago

But buying a MacBook Air can be a best investment if a person want to be a developer or designer. I agree that it's generally bad, especially for wasting for something like fashion or too expensive iPhone Pro.

bootloop2• 3 years ago

You don't need an MacBook if you want to be a designer or developer. The premium you pay for Apple products is not an investment.

kart23• 3 years ago

This is gonna make a major dent, if not kill Affirm and all the other companies in the BNPL space. Having it integrated is just so convenient.

thot_experiment• 3 years ago

I'm not sure about that, grain of salt because I did no research to back this up but aren't apple users in general wealthier and therefore less likely to be the market for this sort of thing?

keiferski4• 3 years ago

Supposedly 87% of American teenagers have an iPhone, so Apple does seem to have a wide range of customers.

https://www.howtogeek.com/778355/new-study-says-87-of-us-tee...

exizt88• 3 years ago

Yeah, the commenters here are missing a HUGE disruption in the BNPL market. Klarna was already ailing — I wonder if they can survive this punch. Interesting to see how BNPL industry will respond.

oh_sigh• 3 years ago

What's the value proposition of a zero interest/no fee buy now pay later scheme? Is it just reaming folks who miss a payment? A loss leader getting more users into the Wallet ecosystem?

pythko2• 3 years ago

I found this video to be a good explainer: https://m.youtube.com/watch?v=R1JaMRpcDrQ&pp=ygUbQnV5IG5vIHB...

It seems like many of them act like credit cards and charge the merchant a percentage, since they “drive consumption” and encourage people to buy stuff. Of course, this fee will likely be added into the price that all consumers pay, so as these get bigger, we all will be subsidizing interest free loans to people in the form of 1%-3% higher prices. Much like credit cards are today.

pastor_bob3• 3 years ago

making buying higher priced items easier to stomach. This is clearly targeted to people with good credit.

SkyPuncher3• 3 years ago

This is clearly targeted to people with good credit.

The commercials for Apple Pay have me thinking the exact opposite.

* People with good credit don't need to manage their monthly credit payment. They simply pay it all off.

* People with good credit also don't really need to apply for an emergency credit card (unless they happen to forget their wallet).

My impression is many of these products are akin to loan sharks. They loose/break even on "good" borrowers, but make loads on people who are "so close" to being able to fully repay.

scrollaway• 3 years ago

It makes products more “affordable” (emphasis on the quotes) by spreading the payment for them over multiple salary cycles. That TV you didn’t buy because you couldn’t afford it? You told yourself you don’t need it, but now that you can mechanically pay for it, you “need” it so you’ll buy it.

It also allows the sellers to increase their prices or even simply upsell without pricing out their own consumer base.

abudabi123• 3 years ago

Capitalist cannibalisation a level-up from Amazon's pets and cattle categorisation on the fair-game userbase? Accounting minded players game the system to their benefit maximising purchasing power on credit over a timespan.

florbnit2• 3 years ago

My SO recently bought an electric bike using this sort of scheme, not from Apple obviously, but the monthly payments toward the 3500$ bike were less than what it cost to commute to work using public transport before that. So it turned from an being a non trivial investment to an obvious thing to do.

The value proposition to me seems to be that they sold a bike at 3500$ they would not have sold otherwise and they can deal with the payment being made over time rather than all at purchase time.

For the user the value proposition is that value adding purchases like this can be made and paid off while they provide value.

rootusrootus5• 3 years ago

That situation is close to the textbook example for when a debt hawk like Dave Ramsey would tell you it was okay to use a credit card. When you are actually using it to facilitate an investment in your future, not just buying toys. The additional zero-interest aspect is icing on the cake.

imtig3rman• 3 years ago

Apple using its cash surplus to slowly become a bank.

comte7092• 3 years ago

They’re partnering with Goldman Sachs, as they have in the past. Goldman is providing the actual banking services.

zyang• 3 years ago

"The fruit bank will have its due".

scottyah2• 3 years ago

This is Warren Buffet's forte, allocating massive amounts of capital. Since Apple is his first/only tech company, I wonder if he's playing a part in this.

shagie3• 3 years ago

This is a traditional path for many large companies.

https://en.wikipedia.org/wiki/Ford_Motor_Credit_Company

https://en.wikipedia.org/wiki/Discover_Card

bakugo• 3 years ago

I will never understand this obsession Americans have with debt.

imwithstoopid3• 3 years ago

https://www.imf.org/external/datamapper/HH_LS@GDD/CAN/GBR/US...

USA is bad but not the worst, this is a global plague

armatav• 3 years ago

Funny how more debt is green in this IMF chart.

scottyah2• 3 years ago

A dollar today is worth more than a dollar tomorrow. Pair that with American Optimism and trusting the Fed, debt just makes sense. It's basically temporal arbitrage.

rootusrootus5• 3 years ago

I still don't understand this obsession everyone else has with finding reasons to criticize Americans. Especially when it's frequently based on ignorance.

The other reply to your comment is pretty instructive. There appears to be a positive correlation between how wealthy a country is and how high the household debt load is.

jahewson• 3 years ago

China is almost as bad and Norway and Sweden are worse. Basically, if you have lots of money, you have access to lots of credit.

umeshunni• 3 years ago

Apple Pay users can split purchases into four payments with zero interest and no fees

What's the business model for all these BNPL companies if they have zero fees and zero APR?

Are they counting on some % of users requiring extensions?

Are they getting a % of transaction value as fees?

pb7• 3 years ago

Increasing sales by reducing the obstacle of not having all of the money now.

jstanley• 3 years ago

Are they getting a % of transaction value as fees?

Yes, this. And it's worth it for the merchant because they make more sales. patio11 has a good article about it: https://www.bitsaboutmoney.com/archive/buy-now-pay-later/

okdood64• 3 years ago

Affirm charges merchants a fee for sales.

GeneralAntilles• 3 years ago

The merchant pays at least double the rate compared to a normal credit card transaction fees. Merchant pays more for the payment processing and gets better conversion.

https://www.bitsaboutmoney.com/archive/buy-now-pay-later/

lotsofpulp11• 3 years ago

But Apple BNPL applies to all merchants that accept Apple Pay. I cannot imagine that Target/Albertsons/Trader Joes/Costco/etc agreed to pay an extra 3% in payment processing fees if their customer chooses to use Apple BNPL.

jankassens• 3 years ago

I understand this is instead of the 2% cash back that Apple Card pays on full payments.

I assume the merchant fees are the same either way.

rootusrootus5• 3 years ago

I understand this is instead of the 2% cash back that Apple Card pays on full payments.

That would reduce the appeal a little. And that's different than their own-store policy on their card -- if you buy from Apple with an Apple Card on the installment plan, you get the 0% for 12 months or whatever, and you get the 3% cash back too.

Thanks for the 2% comment, by the way. Made me go look, since I only recall it being 1% (for most things). Turns out it's 2% whenever I use my Apple Watch to do the transaction. Works for me!

boplicity• 3 years ago

Transaction fees charged to merchants for these types of payments can be as high as 10%. That's pretty substantial.

lotsofpulp11• 3 years ago

I do not think Apple negotiated with every merchant that accepts Apple Pay for a higher fee for Apple BNPL payment. The fact that any Apple Pay transaction qualifies makes me think the regular payment processing fee for a credit card is what Goldman Sachs/Apple get.

dualboot• 3 years ago

Lots of answers here but for the merchant it's an alternative to a "sale price" to drive a transaction.

djhworld• 3 years ago

retailer likes it because it increases prospect of sale + it incentivises people to add more things to their basket

skybrian• 3 years ago

It's both a form of credit and marketing. Some people don't like credit cards for whatever reason.

It's not a lot of credit since you have to pay it back pretty quick, but it does have a similar benefit to paying with a credit card and then paying the monthly statement.

rswail• 3 years ago

If it works like here in Australia, the merchant pays a very high fee, but in return, there are no chargebacks and the BNPL financer pays straight away.

So in return for a high rate (merchant fee for AfterPay here in Australia is 4+%) the merchant gets guaranteed payment and no chargeback risk. The BNPL service makes money on the merchant fees and on the fact that this lending appeals to young people and those with low credit scores.

It's an extension of what used to be called "lay-by" here, but in that case, the merchant wouldn't release the item until it was paid in full.

kruuuder• 3 years ago

Feels like Apple is more and more seduced/mesmerized by the opportunity to provide random consumer services that promise large revenues. Why add yet another new product to your portfolio when you're still struggling so much with software quality?

azemetre• 3 years ago

Because companies don't get punished for poor software quality, if they did Oracle would cease to exist.

geodel• 3 years ago

I'd say Slack, but it seems very popular with cool crowd.

rykuno• 3 years ago

Why are people upset about this? Huge win for the _responsible_ consumer. If something is 0% interest, its free money.

rootusrootus5• 3 years ago

My guess - people think it is fooling unsophisticated customers into making poor financial choices and buying things they should know they can't afford.

But I'm with you, I don't see it as a big deal. I routinely take advantage of the 'no interest installment plan' for my Apple toy purchases on my Apple card. Why wouldn't I want to hold off on giving them my money for as long as possible, especially in an inflationary environment?

BenSahar• 3 years ago

Even outside the current inflationary period, I like using no-interest financing to give myself the option of paying for something over time.

I don’t typically finance anything I can’t afford to buy outright. I just like to feel like I have extra breathing room in the case of some emergency.

not_your_vase• 3 years ago

Responsible people have already a lot of easy choices for short term free money. Banks almost literally throw credit cards at people, with 45-60 days without any charge (and even with cashback) - assuming that you can afford it.

BNPL usually don't target these people.

kimbernator5• 3 years ago

My credit card is 0% interest if I pay it off, and I get all sorts of benefits from it. Why would a responsible consumer use this over a credit card?

zeroonetwothree• 3 years ago

Credit cards already let you pay for stuff up to 60 days later with 0% interest. This new service is shorter term than that.

gmd63• 3 years ago

If a loan is 0% interest, I can guarantee you it comes with a price. And it's most likely paid by people who don't understand it.

pythko2• 3 years ago

It’s free to end consumer, but these schemes make money by charging a percentage to merchants. And those merchants will compensate by bumping up their prices a little to cover the transaction costs.

In the best case, these are pointless services that only transfer money to the finance industry. In the worst case, they incentivize people to spend money on things they can’t afford (and also transfer money to the finance industry).

lxgr6• 3 years ago

If your credit card pays you back 0% in rewards/cashback, you're the one leaving money on the table.

If you pay a credit card in full, you also don't pay interest, and you usually get at least a month to do so as well.

If you don't pay on time, though, you lose big – with both credit cards and BNPLs.

acd• 3 years ago

What are the financial incentives for Aplle to providing this service for free? US interest rates currently being close to 5 percent.

SkyPuncher3• 3 years ago

Likely a percentage of the transaction. In this case, a part of a larger transaction that people can now "afford".

brundolf• 3 years ago

With "zero interest and no fees", what happens in these products if somebody falls behind, or even just decides not to pay?

karaterobot• 3 years ago

Good question! I don't see anything about it, other than that it'll damage your credit history.

To me this seems like a recipe for trouble, I'll stay away from it.

There's also a part of my brain that jumps to: "if you missed a payment, would they just lock you out of your laptop by some remote command?", though there is no indication of this, and it seems unlikely (as of now).

rootusrootus5• 3 years ago

Same thing that happens when you refuse to pay your credit card bill, I assume. Annoying bill collectors, maybe a court judgement, and for sure a dramatic cut in your credit score.

Ocerge• 3 years ago

My laptop died recently, and I went with an M2 MBP. I went in expecting to pay it in full, but with no interest/fees, why wouldn't I choose this? It beats inflation, even if only minimally.

Seems predatory towards people who are buying stuff they can't afford, otherwise I don't see how they make money (minus the overpriced laptop I just bought, I guess).

__derek__3• 3 years ago

If you're in the US and have good credit, you can do better by opening a credit card with a 0% APR period for 12+ months in addition to a sign-up bonus (e.g., Chase Freedom Unlimited, Amex Blue Business Plus), although that takes a little more effort.

Rimintil• 3 years ago

Chase Freedom Unlimited
After the intro period, a variable APR of 19.49%–28.24%

I suppose it isn't an issue if you pay your card off every month, but that's a high APR.

SkyPuncher3• 3 years ago

In that case, this is essentially just a credit card (without the benefits/protections).

The use case here seems to be people who would not actually be able to pay this off in a month.

lotsofpulp11• 3 years ago

The use case is people who do not qualify for a traditional 2% cash back or equivalent credit card. Surely Apple does want people who can pay their Apple BNPL debt per the schedule.

imwithstoopid3• 3 years ago

you probably aren't the target

the target is uneducated (in the financial sense) consumers who are enticed into making purchases they might otherwise not make (and probably shouldn't make)

Apple probably wants to get at the consumers who are still buying cheap Android phones who will be bowled over by the psychology of splitting the purchase price into installments

gnicholas7• 3 years ago

It only applies up to $1,000, and if you used an Apple Card you'd get 3% back on your purchase. If your purchase happened at the beginning of your credit card month, you'd also get 4 weeks of free float, versus the 6 weeks you get here. Doesn't seem like an amazing deal, if a reward credit card is an option, and assuming they'd give you the same thousand dollars of credit.

basch• 3 years ago

Isn't max credit card float closer to 7 weeks? If you buy something the day after statement close, it takes 4 weeksish to issue another statement, and is due in another 3 weeks. Obviously if you bought at the wrong time in the cycle, the day before statement close, your float can be as little as 3 weeks.

Ductapemaster• 3 years ago

I think the OP is referring to the financing options available for larger hardware purchases, which is separate from this program.

I bought my M1 MBP using the financing they offer and it was 24 months, no interest, _and_ you do get the 3% back immediately upon purchase. They also set up the payment plan for you so you do not have to worry about missing a payment and getting charged interest you were intentionally avoiding.

It's a great option if you are on top of your finances, but the point remains that it can easily be used to live outside of your means.

babypuncher2• 3 years ago

Apple Card has had BNPL for Apple Store purchases for a while, and it's not subject to the $1,000 limit that this new service is.

hammock2• 3 years ago

When you do BNPL you forgo the credit card rewards you would otherwise get, which can easily be valued at 3-5% of the purchase (I.e. more than the benefit of taking the free credit)

vineyardmike2• 3 years ago

Remember, it beats inflation in a theoretical sense, but only if you actually will do something with the extra cash today. If your salary won’t change during the loan, and you’re not investing the money you didn’t spend, then you’re not realizing any gains against inflation. In fact, you’re just giving yourself less money tomorrow, when inflation should make other goods more expensive.

535188B17C93743• 3 years ago

Hypothetically, you could pop that money into a checking account with extremely marginal interest and still make money. Better in your pocket than Apple's, I guess.

r00fus2• 3 years ago

My savings account makes 3.5% interest.

My only catch is this loan requires a soft credit report - I have a freeze on most of my credit scores (used to be there were only 3 now there are a few more). Even a soft pull will hit that barrier.

9999000009995• 3 years ago

It's very easy for this to push people into buying more than they need.

90% of people are fine with an M1 Air, the last time I went to an Apple store the sales clerk straight up refused to sell me one. He basically told me I didn't know what I was talking about and kept trying to sell me a pro.

I asked him 3 times to sell me an Air, and ended up leaving in frustration. Not before he pitched buying a pro on an Apple line of credit instead.

If I come into a store and tell you what I want to buy, we're not having a conversation. You have no idea what or who I'm buying it for.

Best Buy doesn't do this, I was able to get my Air without an argument and walk out.

If anything, this pay later stuff will make the issue worse. You'll go into the Apple store to be told you might as well get the most expensive thing they have in stock, it's zero down anyway!

SoftTalker3• 3 years ago

If you want to talk about what 90% of people are "fine" with, honestly it's a Chromebook.

I have a Chromebook I bought in 2018 for something like $200, and it's "fine" for gmail, online banking, youtube, and other casual stuff. I have an ssh app on it to use for work, and that's "fine" as well. Most people don't need more than this.

jeffy902• 3 years ago

Do the apple sales people get commission? I seldom enjoy working with people looking to influence me to do something so that they can grow their comission.

wincy• 3 years ago

That’s crazy! I use my M1 Air for everything and it’s excellent. I would have asked to talk to his manager.

tnel77• 3 years ago

I get trying to upsell you, but why would you turn down a sale? Make the suggestion and then let the customer purchase whatever they want. A sale is a sale, no?

scyzoryk_xyz• 3 years ago

This is what they used to be good at - not trying to sell you too hard.

I guess that has changed - I also had several strange unpleasant interactions lately. Either difficulty buying something, or annoyance being sold on something more or something else.

ksec2• 3 years ago

Like I said many times and keep being downvoted, their Apple Store KPI does not align with the original Apple Store experience.

lm28469• 3 years ago

Same reason I can eat a single donut and be fine while my best mate won't stop until the box is empty

People make poor decisions, a lot of people make poor financial decisions, what is a great tool when you're educated is a catastrophe for others

The new wave of "pay later" payment systems is clearly a way to artificially boost consumption in the short term

shostack• 3 years ago

Is it just that? Or is this Apple doing the math and deciding the risk they assume is less than they save from credit card fees?

sorenjan• 3 years ago

Seems predatory towards people who are buying stuff they can't afford, otherwise I don't see how they make money (minus the overpriced laptop I just bought, I guess).

That's exactly why they're doing this, to get people who can't afford Apple's products to buy them anyway. Compare with what Tim Cook said in February:

The price of the most expensive iPhone model has increased by more than half — from $962 to $1,600 since 2009 when adjusted for inflation — but Apple CEO Tim Cook doesn't appear worried about increasing prices.
During an earnings call with investors on Thursday, Cook said he believes people are willing to pay more because the phone has become "so integral into people's lives."
"I think people are willing to really stretch to get the best they can afford in that category," Cook said, responding to a question on whether the increasing average sales price over the last few years is "sustainable."

"Willing to really stretch" is just another way of saying "spending more than they should".

kylehotchkiss• 3 years ago

Apple Card already had financing for laptops, in a more compelling monthly plan instead of 6 weeks. Same no-interest/fees setup.

pastor_bob3• 3 years ago

Users will be asked to link a debit card from Wallet as their loan repayment method; to help prevent users from taking on more debt to pay back loans, credit cards will not be accepted.

So in addition to the soft pull requirement, it's clear this is almost exclusively targeted at people with good finances.

Not being able to use a credit card is a huger bummer though. Buying something like a macbook pro is a decent way to meet the minimum on a credit card with a signup bonus if you're not a high rolling spender normally.

WirelessGigabit2• 3 years ago

The problem is that you cannot pay debt with a credit card.

Same way like you cannot pay your mortgage with a credit card.

dcchambers• 3 years ago

One of the most valuable life lessons my parents ever taught me was "If you can't afford it now, you can't afford it at all."

YES, there is a time and place for financing (especially when interest rates were near zero and you have good impulse control) but the entire "buy now pay later" industry just reeks of preying on people that aren't as financially literate or have little impulse control, and I won't touch the companies with a ten foot pole.

Honestly a bit disappointing to see this from Apple.

agentdrtran• 3 years ago

If your laptop breaks and you need a new one you are probably better off doing BNPL if you can instead of buying a cheap, crappy one now.

raincole3• 3 years ago

Well it's actually boiled down to if you make money with your laptop. I guess most people on HN are programmers so of course they do. But the question is not good laptop vs crappy laptop, it's consumption vs investment.

Aaronstotle• 3 years ago

I initially purchased my new iphone 12 in monthly installments, yes I could have paid for it outright, but I didn't see the point in paying ~1k upfront.

kimbernator5• 3 years ago

If you're referring to a carrier's zero interest payments on the full price of the phone, that's just smart. No penalty for borrowing. If there was interest involved, it gets fuzzier.

I'll amend this by saying that there's also another huge requirement for it to make sense: The new iphone must be necessary for any of this deal to make sense. If it was impulse bought because of this financing offer, then the financing has cost you >$1k

gnicholas7• 3 years ago

The interest rate on this is zero:

Apple Pay users can split purchases into four payments with zero interest and no fees

raincole3• 3 years ago

It sounds suspicious tho. So who takes the risk?

kimbernator5• 3 years ago

If you have impulse control and can properly conceptualize a loan, it could be a useful tool. In my experience, however, these kinds of programs don't target responsible spenders. People are pretty bad at thinking about monthly cost in terms of total cost.

freetinker• 3 years ago

It says “Apple Pay users can split purchases into four payments with zero interest and no fees.”

Seems like a good deal – Apple is giving away money for free, especially given current interest rates.

paxys2• 3 years ago

The BNPL industry isn't some big charity. They offer such deals to hook people in, knowing that a huge chunk of them will miss payments and then they can hit them with interest and fees.

hot_gril8• 3 years ago

The lesson I taught myself is to amortize everything so it's thought of as $/time. An upfront purchase has an opportunity cost.

Also, most people can't pay for a house upfront. Mortgages are effectively govt-subsidized, so you usually want one anyway. I directly care what the house will cost me per month, and the bid price is only part of that.

danpalmer2• 3 years ago

I used to have this opinion, and I try to take as little debt as possible. However, I've change my opinion in recent years, and I now think it's based on a privileged position that not everyone is in.

Buying a new phone today rather than once I've saved up is a luxury, but buying a replacement phone today rather than being without a phone for ~months while saving up could bring with it significant costs – making it harder to access employment, healthcare, or to socialise. Similar examples would be things like car repairs.

Cash flow is worth something, businesses have known this forever, and people living paycheck to paycheck are typically experts in how to make their money work as well as possible because they're so close to the edge. I trust them that if they think this is the best option for them, it probably is. Payday loans are in the same category here (and businesses call them "commercial paper").

Now, I'd love to live in a society where this isn't necessary, but that's not the world we live in, so I'm in favour of these things being available for those who need them.

SoftTalker3• 3 years ago

A more practical version of this rule is "don't use long term debt to pay for short-term expenses"

When buying a car, or house, or maybe something like a phone that you will use continuously for a number of years, you can make an argument that it's OK to pay for that item over the same time period.

Where people get into more trouble is buying consumable stuff like clothes, food, etc. on to a credit card that they don't pay off every month, and then they end up paying for a box of macaroni or package of underwear over many years (at typically double-digit interest rates).

oogetyboogety• 3 years ago

Payday loans are in the same category but in terms of predatory financial options i feel as though they are a million times worse. I even question how apps like Dave work on this type of model.

paxys2• 3 years ago

Exactly. Taking a 15-30 year loan to buy a house makes sense. Using Affirm or Klarna or Apple Pay Later to buy groceries or a new laptop does not.

mateus1• 3 years ago

I agree in spirit but buying things in installments is just a reality here in Brazil and in a lot of other countries.

It's a loan like any other. When used correctly it can be a democratizing function for people who are poor but need important things like phones, fridges, and stoves.

thesuperbigfrog• 3 years ago

> Honestly a bit disappointing to see this from Apple.

They can't raise prices on the latest iGoodies if no one can afford to buy them.

Buy Now Pay Later can ensure users "can afford" the latest iGoodies instead of having to wait for the price drops on not-the-newest iGoodies.

They are being innovative and enabling their own business to succeed despite the current economic conditions.

aeontech• 3 years ago

This is probably sarcasm, but, financing for iGoodies has been available for years. That's not what this feature is :)

kitsunesoba• 3 years ago

I haven't traditionally made use of services like this, but am I correct in that one might be able to make small gains with them, much as is possible with credit cards?

For example if there's a large purchase one needed to make and had the cash on hand for, wouldn't it be smarter to let most of that cash accrue some interest in one of the many 4%+ interest savings accounts now available while making payments on the 0% interest BNPL?

ericpauley• 3 years ago

In theory yes, but this is way less beneficial than just using a credit card.

The average maturity date on Apple (and others) BNPL is 3 weeks. Credit cards have a minimum payment deadline of 3 weeks from the statement without accruing interest, and on average you'll get another 2 weeks on top of that depending on when in the cycle you made the purchase. So you're getting at least the same average time to accrue interest, plus you're getting credit card rewards of 1-5%.

lotsofpulp11• 3 years ago

No, you are better off with a simple credit card that gives 2% cash back.

This is for people who cannot get approved for a credit card.

pram• 3 years ago

I’ve used the existing payment thing to buy a MacBook Pro on my Apple Card back in 2021. I mean at 0% interest seems like it’s all in your favor if you’re not spending like a dumbass.

cal852• 3 years ago

I am surprised to see Apple getting into the "buy now, pay later" game, as it's always seemed like a murky industry that works by exploiting poor people who aren't very good with money, and not something I'd expect Apple to want to be associated with. Can anyone steelman it for me? Is there a way of looking at this industry/practice other than "exploitative and predatory"?

tantalor• 3 years ago

From the press release:

[users want] flexible payment options

Being able to spread some large purchase over multiple pay periods seems like a obvious use case.

kzrdude2• 3 years ago

Credit cards are commonplace, aren't they? They offer buy now, pay later any consumer product already.

But sure, it's exploitative, they want a piece of that already existing cake.

jonfw• 3 years ago

When businesses buy now and pay later, it’s smart business. When consumers do it, they’re being taken advantage of?

MagicMoonlight2• 3 years ago

A credit card lets me delay payment for a month otherwise it’s 30% interest. These schemes let me delay for multiple months for free otherwise it’s 8% interest.

It’s 1000% better

n8cpdx• 3 years ago

I feel like Apple has lost their way with the focus on services.

If they are going to focus on services, they should make them best in class. I expect best in class software, but Apple Music still doesn’t have anything like Spotify Connect and it is still incredibly slow and unreliable software (for what it is).

I don’t understand how tarnishing the premium brand with BNPL is worth it long term. And I especially don’t understand how all of their 0% interest offers will make sense in a world of 5+% interest rates.

pathartl• 3 years ago

They've been taking the shotgun approach for a while. Their product isn't any individual component, it's the platform as a whole. Why people want a company that sells: - Phones

- Computers

- Tablets

- Headphones

- AR headsets

- Cars

- Watches

- Streaming boxes

- Speakers

- Email

- Video streaming subscriptions

- News aggregation

- Fitness routine subscriptions

- Music streaming subscriptions

- Video game subscriptions

- eBooks

- Apps

- Cloud storage

- Credit cards

- BPNL

is completely beyond me. Yes there's stuff in there they haven't announced. Yes there are a lot of accessories and services not listed.

I'm probably a Microsoft shill at this point, but I am a .NET dev running Windows and I have a Microsoft 365 family subscription and bought an Xbox. All of my hardware is from other manufacturers. My finances are not tied to MS. I can't think of another company that has gotten the amount of blind trust that Apple has.

cal852• 3 years ago

Is Spotify Connect distinct from Spotify?

pastor_bob3• 3 years ago

Apple card already allows you to pay in monthly installments with no interest and gives you back 3%: https://www.apple.com/apple-card/monthly-installments/

hot_gril8• 3 years ago

For people who qualify

keiferski4• 3 years ago

This business practice seems to have become popular lately. It really gives me a bad feeling, probably because the idea of getting your customers into debt (to your own company) in order to buy your products just seems wrong at a fundamental level. I don't want to live in a world where everything is either rented or paid for with a loan.

I can obviously understand why it makes sense from a strictly money point of view, but what is the business strategy against this? All I can think of is pushing a brand message that is explicitly anti-debt and builds its reputation on treating its community of customers well.

carlosjobim2• 3 years ago

Most people are extremely irresponsible with their money, which means that they don't have much disposable cash. So you will lose sales if you can't offer financing to them. No individual will want to have more than 1 Iphone, so once you've sold to those who can afford it or have the discipline to save up for it, you'll have to find a way to sell to those who can't afford and don't have the discipline. Prepare for all consumer goods in America and Europe to be offered on Buy-Now-Pay-Later plans as standard within 3 years.

gumby2• 3 years ago

Feels to me that something like this cheapens Apple's brand.

I don't mean to imply that they had an expensive brand and this changes the demographic (I hate businesses like that), I mean their brand, as far as I can tell, is "high quality, thought through, and works well".* This feels like they are exploiting their existing customer base.

* Pls don't argue if you disagree on the actual quality or whatever. This is about how it looks to me that they position themselves. Feel free to argue about how they might be positioning themselves :-)

keiferski4• 3 years ago

I agree completely. Maybe it's just nostalgia, but I really cannot imagine Apple doing this under Steve Jobs' management. He would have rejected it simply for seeming tacky and reminiscent of products in low quality industries.

DavidPeiffer• 3 years ago

I was thinking the same thing. My understanding was prior to iPhone, phones were purchased outright, typically costing a couple hundred dollars, and there wasn't such a thing as paying off the phone as part of your monthly cell phone bill.

I have always purchased my phones outright, but am curious if there are fees, interest, or a higher total cost of payments via financing (fees and interest on missed payments).

That's the only justification I could use to say "maybe Steve would be good with it".

gumby2• 3 years ago

The original Mac, in 1984, was offered with a financing package because it was so expensive. And yes, that was when Steve Jobs worked for apple.

hot_gril8• 3 years ago

They already cheapened their brand beyond this when they created a credit card. CC is another form of BNPL, but more importantly, it's the most gimmicky business out there.

lotsofpulp11• 3 years ago

They did not create a credit card. Goldman Sachs (GS) does all the financial work, and gives Apple a cut for the branding.

Same thing here. GS is doing the underwriting, Apple is just providing the tech to be able to access the customer at the point of sale and make a split second automated offer for GS to lend money.

Edit: I was wrong about GS doing the underwriting. The website states:

Apple Pay Later is offered by Apple Financing LLC, a subsidiary of Apple Inc., which is responsible for credit assessment and lending. Apple Financing plans to report Apple Pay Later loans to U.S. credit bureaus starting this fall,5 so they are reflected in users’ overall financial profiles and can help promote responsible lending for both the lender and the borrower.

sithadmin2• 3 years ago

This is nothing new. Apple's been in the BNPL finance game since the original iMac was introduced - so if they're tarnishing the brand, they've been doing it since they completely rebooted the brand.

In 1998, you could finance a G3 iMac with a loan for ~70 months of $29 payments. They also started up a store-only credit card finance option sometime in the early aughts via Barclays.

hn_throwaway_99• 3 years ago

Ahh, more "innovation" from the tech industry. So much BS that is easily a net negative to society.

Saturday Night Live had it spot on years ago: https://youtu.be/R3ZJKN_5M44

judge20205• 3 years ago

Is there some sort of insurmountable tech debt over at Apple that requires these slow rollouts and long development cycles? They announced Pay later at WWDC 2022, and it's just now releasing, and the Savings account was announced in October and would be available "in the coming months", but is only just now (likely) coming out - and given Pay Later is still limited release, I imagine the savings account feature will be as well.

CharlieDigital• 3 years ago

It probably has less to do with tech and more to do with regulatory, legal, support structure, and process design.

gnicholas7• 3 years ago

I've never used a BNPL service, partly because I didn't know if it would complicate the process of returns. Does anyone know if there are complications, for example, if you buy two items and return one of them? Does the merchant give you cash that you then end up using to pay off the full BNPL amount? Or does the refund get routed the other way, to the BNPL service, and then eventually to you?

For users of a reward card, this alternative probably isn't that useful. I'd miss out on 2% cash back, and the zero-interest period is only 6 weeks, which is just a couple weeks longer than the zero-interest period on a credit card (which bills you once a month, effectively giving you 0-4 weeks of zero-interest). I can see how it could be good for younger folks who need to build up credit and can use this to do so responsibly.

roody15• 3 years ago

Yuck my two cents. Apples jump into financial services and pay as you go services model has really rubbed me the wrong way. If i get another settings alert that I need to setup apple wallet, sign into icloud or now perhaps a notice that I can “pay later” …… geez I already purchased you laptop … leave me alone and just work.

ketaminisiert• 3 years ago

I don't understand what an advantage there is if you finance a purchase but have to pay off the installments every 2 weeks. I doubt that there are so many people getting paid bi-monthly.

kevincox• 3 years ago

with no impact to their credit[4]
4. Upon purchase, a user’s Apple Pay Later loan and payment history may be reported to credit bureaus and impact their credit.

What? Doesn't that footnote directly contradict the text that references it?

hammock2• 3 years ago

“Users can apply for a loan within Wallet with no impact to their credit.”

Typically what people worry about are the cost of a hard pull when applying for credit. Apple is saying they will not do a hard pull

lotsofpulp11• 3 years ago

People should worry about having small short term loans on their credit report, because it could result in other lenders assessing them as a higher risk and therefore a higher interest rate.

For example, you use Apple BNPL, and then in a couple years you go to buy a house, and they see that you use a BNPL service, and so their underwriting classes you as a higher risk and you could end up paying 100bps more on a mortgage.

But the wording on Apple's website is fine since the whole claim is technically true:

Users can apply for a loan within Wallet with no impact to their credit.

suresk2• 3 years ago

My favorite part of all these "buy now pay later" services is going to buy some charging cables, a few bags of flour, or other small random stuff and being offered to split a $19 purchase into 4 equal payments.

bradgessler3• 3 years ago

Something to think about: if for whatever reason you can’t pay Apple, they will disable your iCloud account.

https://dcurt.is/apple-card-can-disable-your-icloud-account

I refuse to get an Apple Card until they firewall the two and make them independent of each other.

BiteCode_dev• 3 years ago

Does it mean your i-devices will stop working as well? At least the emails I assume, maybe imessages...

If google shots down your account, you are out of docs, youtube, gmail... This can literally kill your career.

Not to mentions all the "sign up with google/apple" you used.

bradgessler3• 3 years ago

I don’t think so, but it’s trending more in that direction as Apple spins up more services.

ezfe• 3 years ago

The linked post doesn't actually say "If you don't pay your credit card bill we disable your iTunes/iCloud"

What it actually says is "If you don't pay your credit card bill, we decline new transactions since you're at your credit limit. If your iCloud uses your Apple Card and that transaction is declined, then your iCloud may be disabled."

toyg2• 3 years ago

Apple apologists should probably work on replacing their "bUt GoOgLe!" routines, since people have largely moved on from the Google ecosystem as a whole - and in some cases, like this one, Google is not even present in the same market (credit cards).

JumpCrisscross2• 3 years ago

From the linked article [1]:

"...my bank account number changed in January, causing Apple Card autopay to fail. Then the Apple Store made a charge on the card. Less than fifteen days after that, my App Store, iCloud, Apple Music, and Apple ID accounts had all been disabled by Apple Card."

Wouldn't the same thing have happened if he didn't have an Apple Card, but instead had his credit card decline not only on their Apple subscriptions, but also the MacBook they traded in?

[1] https://dcurt.is/apple-card-can-disable-your-icloud-account

bradgessler3• 3 years ago

Not sure, but that’s a good point.

notesinthefield• 3 years ago

At what point is a situation so convoluted that it can be considered an edge case? Because this story seems like it would qualify! Not only did someone's bank account number change without intervention but it seems Apple also got something wrong about the purchase on two different occasions (saying OP bought an iphone, not a macbook and applying the trade-in to their card without confirmation)...I take your point. But, wow.

Im frankly surprised AC works this way, all of my interactions with AC support and Apple makesit seem like one wants nothing to do with the other.

WirelessGigabit2• 3 years ago

Well, no, if the credit card charge is declined they don't offer the service.

They don't owe you anything if the charge fails. So no-one loses.

If they charge your bank account for a credit card bill that you owe, and it fails, they lose.

efsavage• 3 years ago

He paid his iCloud with his Apple Card, but didn't pay the credit card bill properly, so they basically clawed back the purchase.

The analogy is that if I pay for Netflix with Amex and miss an Amex payment, they can't directly cancel Netflix. Eventually if I continute to not pay, they'll shut down the card and Netflix won't be able to charge and will then cancel themselves, but that's a much more flexible process.

It's always good to have a few "fire breaks" between your most important accounts (email, payments, domains, etc.).

joshmanders• 3 years ago

On the flip side since most people like to share scary stuff because when things are going right, nothing is worth sharing...

I put 75k or more worth of transactions through my Apple Card in 2022 and I've had nothing but wonderful experiences with the whole thing, including with Apple and Goldman Sachs.

stuff4ben• 3 years ago

Same. I use my Apple Card instead of cash or my debit card in almost all cases (except Costco where I have to use Visa and I have their card for that). I've averaged a little over $27K/year since 2019 and have had zero issues. GS has been great when I've had to dispute charges and they took care of everything. I love how seamless it is and it just works. Also, I am a self-admitted Apple-whore and am totally invested in their ecosystem FWIW.

Aunche• 3 years ago

The Apple Card is great because Goldman decided to get in the business of selling two dollar bills for a dollar as a growth hack. That's not something that will last forever.

wintermutestwin2• 3 years ago

You must not need to download those transactions as a CSV file. You can only pull it down one statement at a time!

Thanks Apple for making tax time just a bit more painful...

sneak2• 3 years ago

I closed my Apple card account when Apple refused to stop deadnaming me on it without court documents.

AmEx et al never disrespected me thus.

itsoktocry• 3 years ago

"wonderful experiences"?

It's a credit card. You tap it and pay for stuff...

layer82• 3 years ago

Number of transactions would have been more informative than the total dollar amount.

jeffy902• 3 years ago

I've been loving apple card. I love that the rewards come in cash rather than airline points, so it's really easy to use the rewards.

bdcravens• 3 years ago

A number of other credit cards do that as well (Capital One and Discover are the ones I've personally experienced)

commoner3• 3 years ago

For US residents, the Apple Card is not a competitive credit card. There are enough credit cards with no annual fees offering at least 2% cash back on all purchases that the Apple Card's 1% back on general purchases is not a good value. Just about every credit card issuer in the US supports Apple Pay as well, allowing these 2% cash back cards to match the Apple Card's 2% on Apple Pay purchases.

twostorytower• 3 years ago

It's 2% back anytime you use Apple Pay, though. Which I use, a lot, and it's nice not to think about which card to use in that scenario, which I imagine was their point. I know there are plenty of cards that will give 2% cash back on any transaction, too.

tempsy2• 3 years ago

getting 3% back on apple purchases plus 0% interest for 12-24 months is pretty nice.

given theres no annual fee i don't really see the downside if you buy apple products.

pwinnski12• 3 years ago

People keep saying things like this, and rarely offer up the name of any better card when asked.

Apple Card offers 2% cash back on all Apple Pay purchases, which... exactly matches my no-fee card from Chase. Except I have to choose how to use the 2% from Chase when it eventually is available, while I can spend Apple's 2% the next day via Apple pay. I threw the metal card in a drawer when it arrived, so if your goal is tell people not to use the physical card, then sure, I'm with you. But I don't think that's the primary use of the card.

foogazi• 3 years ago

Inise it because it was really easy to add my college age child’s account - and flows directly into the iOS payment system

Not sure other cards offer the same simple process

azinman2• 3 years ago

None have privacy guarantees, and usually those rates are extremely subject to change, require quarterly activation, variable APR, high foreign transaction fees, or many other annoyances.

euroderf• 3 years ago

Just "disable" ? At what point do they toss your data in the trash ?

wackget• 3 years ago

This is just what the world needs during a cost of living crisis.

elif• 3 years ago

Nothing says "consumers financial interests" like selling them expensive electronics and clothing they can't afford..

neets• 3 years ago

At what point does apple become a state in and of its own right?

ape4• 3 years ago

Another Apple "invention" that was all ready invented decades ago.

hulitu• 3 years ago

Wow. I can finaly afford an iPhone 14 Pro. /s

Oh lord won't you buy me a Mercedes-Benz. My friends all drive Porsches, i must make amends...

pphysch• 3 years ago

How easy do these deferred payment systems make it to manage the cognitive load of such volatile "long-term" payments? Do people just set up autopay?

Having a set of monthly rent/utility costs is fine, cause they aren't particularly volatile.

Credit card microloans are also fine because they are all managed under 1 balance.

squeaky-clean• 3 years ago

I can't find information on how Apple will specifically implement it, but Sweetwater has a similar thing (they're a music gear shop) and it's auto-billed. You're essentially signing up for a 3 or 6 month subscription service where the monthly bill is 1/3 or 1/6 of the total cost of goods.

annexrichmond• 3 years ago

Apple Pay Later allows users to split purchases into four payments, spread over six weeks

So you basically have to start paying early, every 1.5 weeks. This seems worse than credit cards where you don't have to pay it up to like 60 days later.

It also seems strictly worse for users than other BNPL's like Affirm where many purchases can be paid over the coarse of several months or years.

latchkey• 3 years ago

Responsible lending is providing collateral and then taking out a loan against that collateral. Don't spend what you don't have. This is not that.

armchairhacker• 3 years ago

They should introduce "Apple Pay Never" and make it so I can just buy stuff without paying for it at all.

sircastor• 3 years ago

Well, you wouldn't really be buying stuff at that point...

kernal• 3 years ago

And just like that all of the other pay later services just took a massive haircut.

bobleeswagger• 3 years ago

Kind of surprised it took Apple this long to jump on the defer everything train.

AVTizzle• 3 years ago

If you're short USD, I guess this makes all the sense in the world.

lumb63• 3 years ago

It does not speak much confidence about the economy for Apple to be making their own “pay later” mechanism.

MagicMoonlight2• 3 years ago

God I wish the full Apple pay features were available outside the US

w10-1• 3 years ago

Interesting given that JP Morgan lost $1B last year on the Apple card due to failing to correctly model the creditworthiness of customers.

Also surprising that the 3% transaction fee on cards has held up for decades; one would expect that competition would bring it down. Instead, it's created an opportunity for all sorts of businesses.

What I like most about this is that the Apple UI makes it dead-simple to see exactly what you spent and what you owe. To my mind, this is the huge benefit of Apple Pay services: instead of mindlessly throwing the card into any slot and getting a shock at the end of the month, you see your status at any time, including what you just bought. I believe this has huge benefits for people living hectic lives to manage their finances.

Apple's ability to win in personal financial services depends on their ability to reduce the errors, friction, and confusion that lead to support calls and missed payments. Unlike banks and cards that depend on a plethora of dark fees that confuse consumers, Apple's gambit is to smooth it out, particularly for the unsophisticated. If Apple can set the standard for the industry, I'm all for it. (Yes, I'm lookin' at you, GE Capital.)

Are services a distraction for Apple? Goodness, Apple is the economic size and complexity of a small country. Rather than dumping money into buying unrelated companies or X-moonshots that only puff egos, Apple management seems focused on incrementally extending the Apple way where it makes sense: to bring goodness to TV and credit cards and underserved markets, to tax their supply chains with best practices, etc. I wouldn't do it any differently.

Apple introduces Apple Pay Later

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